Nearly 80% of All-Inclusive Resorts Are Now Luxury or Upscale

By Nathan Brooks

Nearly 80% of all-inclusive resorts have shifted into the "luxury or upper upscale" segment over the past two decades, according to Bernstein analysts. That's the headline number from a note the firm published on Friday, and it reframes a corner of the travel industry many investors still associate with packed buffets and weak drinks.

The transformation is real, not cosmetic. Bernstein says all-inclusive properties — once "synonymous with the most generic budget vacations," with brightly colored beachfront hotels vacationers never leave — now feature Michelin-starred chefs and yoga and wellness retreats. The driver is simple: the travel industry is chasing higher-income travelers who can weather inflation and offset potentially shrinking profits.

The demand signal backs it up. Google searches for "all-inclusive" resorts have significantly outpaced searches for hotels and cruises, particularly this year, the analysts noted.

Why are stressed consumers booking all-inclusives?

Bernstein's answer is certainty. As costs for gas and other essentials climb against the backdrop of the Iran and Russia-Ukraine wars, consumers have come back around to logistical and financial predictability.

"Consumers now face a deluge of choice when planning their trips — with hundreds of potential resultants, bars, activities and excursions to choose from," the analysts wrote. An all-inclusive, to a degree, does the planning for vacationers, giving them a wide range of activities without the taxing preparation a trip outside a resort demands.

The broader context matters here. Higher fuel costs have dinged industry profits and left travelers frustrated with flight disruptions and higher fares. United Airlines and Southwest Airlines both cut their profit outlooks this week. Like the concert industry, travel is increasingly relying on wealthier consumers who are less sensitive to price increases.

The deals are already on the board

Big operators aren't waiting. Royal Caribbean announced last month it would take a 50% stake in all-inclusive chain Sandals to gain more access to wealthier customers — though some analysts questioned whether the move fits the cruise line's family focus.

Hyatt went further back: last year it bought Playa Hotels & Resorts, which runs all-inclusives in Mexico, Jamaica and the Dominican Republic. And in 2022, InterContinental Hotels and Iberostar Hotels & Resorts signed a partnership to expand access to all-inclusive resorts, citing "increasing traveler desire for high-quality experiences and stress-free holidays, particularly post-COVID."

The customer base is shifting too. Bernstein says families are increasingly seeking hassle-free trips, while younger shoppers make spending decisions based on convenience. "Brands have realized consumers are willing to pay for both quality and convenience rather than just the latter, and have started to deliver elevated concepts," the analysts wrote.

What does this change for developers and investors?

The economics may be the most underrated part of the story. All-inclusive resorts offer longer booking windows and longer stays — steady, predictable business that city hotels can't match. They're also cheaper to build: construction in the Dominican Republic and Jamaica runs around 55% to 80% of the per-room cost of a U.S. hotel, and labor outside the U.S. is generally cheaper as well.

Scale compounds the advantage. These resorts sometimes run to thousands of rooms, spreading fixed costs across more customers. "The result is that every additional room tends to make the economics more attractive," the Bernstein analysts wrote. "Larger resorts create efficiencies that are difficult for smaller hotels to replicate."

For practitioners, the takeaway is a two-sided market shift: demand is consolidating around affluent, convenience-seeking travelers, while supply is consolidating around large operators who can build cheap and scale fast. Expect the upmarket land grab — Royal Caribbean's Sandals stake being the latest marker — to keep accelerating.