Hospitality Insight
The all-inclusive edge: a smart bet for Caribbean and Central America investors
April 2025
The all-inclusive resort model has evolved significantly over the past decades, particularly in the Caribbean and Central America. Drawing on decades of on-the-ground experience across the region, and supported by our physical presence through offices in the Dominican Republic and Costa Rica, our team has closely observed the growing sophistication of this operating model.
With the Dominican Republic and Jamaica setting early benchmarks, and a longstanding tradition of all-inclusive operations in Puerto Plata, Punta Cana, and Jamaica, we have witnessed firsthand how the appeal of the all-inclusive concept has steadily expanded across the Caribbean and Central America.
Definition of All-Inclusive Hotels
According to the 12th Revised Edition of the Uniform System of Accounts for the Lodging Industry (USALI), all-inclusive hotels charge a package rate that includes the room, food and beverage, and entertainment. This contrasts with European Plan (EP) hotels, where rooms are sold separately, and food, beverage, and other services are offered à la carte or in optional packages. A further distinction is the accounting treatment of service charges.
Advantages of the All-Inclusive Model
From an investment perspective, the all-inclusive model offers several advantages. It simplifies the guest’s booking decision, often drives longer stays, enhances satisfaction, and creates brand loyalty. For owners, all-inclusive resorts tend to achieve higher and more stable occupancy levels and can offer predictable revenue streams.
In established markets like the Dominican Republic, Mexico, and Jamaica, strong airlift and consumer preference for hassle-free vacations have historically supported the all-inclusive model’s success. In established markets like the Dominican Republic, Mexico, and Jamaica, strong airlift and consumer preference for hassle-free vacations have historically supported the all-inclusive model’s success. In the past, guests often felt that it was difficult to venture beyond the resort boundaries. In response to shifting expectations, modern all-inclusive resorts have adapted by integrating diverse experiences, authentic local culture, and off-site excursions.
Customer Experience and Financial Impact
The all-inclusive structure promotes stress-free experiences, allowing guests to enjoy amenities without concern for incremental charges. This dynamic contributes to stronger repeat visitation and brand loyalty.
Financially, all-inclusive operations – when properly managed – can achieve healthy margins. Although operating costs, particularly in food and beverage, are higher, the contribution margins per occupied room can be favorable compared to EP properties. The latest USALI edition’s inclusion of all-inclusive-specific guidelines reflects the growing global significance of this model and enables more precise financial reporting.
Regional Nuances
While the all-inclusive model has proven resilient and successful across the Caribbean, operational nuances exist between destinations. Across all major all-inclusive markets such as the Dominican Republic, Mexico, and Jamaica, common success factors include an increasing focus on cost management efficiency, the incorporation of luxury and upper-upscale offerings, and the integration of authentic local culture and experiences.
Over the past five years, luxury and upper-upscale brands have entered the all-inclusive segment in these destinations, successfully adapting their offerings to meet rising guest expectations. These brands have developed highly competitive, experience-driven products, narrowing the historical gap between all-inclusive and EP resorts in terms of perceived quality, service, and personalization.
Margins can still vary by destination, influenced by factors such as labor costs, supply chain dynamics, and guest demographics. For example, Mexico benefits from extensive local food production, while Jamaica may experience higher operational costs due to greater dependency on imports.
Challenges for Owners and Operators
All-inclusive operations require disciplined cost control; mismanagement in food and beverage, entertainment, or labor can rapidly impact margins. Owners must continually innovate offerings to avoid commoditization, ensuring culinary experiences, entertainment, and excursions meet evolving guest expectations.
Significant upfront investment is required to create comprehensive, self-contained environments while also offering authentic, off-site cultural experiences that today’s travelers increasingly seek.
Emerging Opportunities
Based on our market analysis, new all-inclusive development opportunities exist in areas like Miches and Pedernales (Dominican Republic), the Pacific Coast of Costa Rica, and secondary beach destinations in Mexico beyond the traditional corridors. Panama and Belize are also emerging markets for differentiated all-inclusive concepts that combine local authenticity with high service standards.
Rising Trend: Adults-Only All-Inclusive Resorts
The rise of adults-only all-inclusive resorts reflects growing demand from couples, honeymooners, and groups of friends seeking curated, upscale experiences. These properties often command higher average daily rates (ADR) and offer more premium amenities, enhancing owner profitability and brand positioning.
Brand Expansion into All-Inclusive
Global hotel groups such as Marriott, Hilton, Hyatt, and Wyndham have expanded into the all-inclusive sector by launching or adapting brands to meet this market. This shift signals a broader evolution: all-inclusive resorts are no longer purely volume-driven but now cater to higher-end, experience-oriented travelers.
Moreover, the growth of the all-inclusive model is no longer limited to the Caribbean and Central America. As travelers globally seek convenience, value, and diverse experiences, brands are expanding all-inclusive offerings into new markets, including Asia. Familiarity with the all-inclusive concept is growing among international travelers, driving demand beyond its traditional strongholds.
For franchisors, all-inclusive properties represent an opportunity to grow loyalty programs, diversify portfolios, and license based on total property revenues, not just room revenues – creating attractive economics.
Conclusion
The all-inclusive model remains a strong avenue for owners, investors, and brands seeking growth in the Caribbean, Central America, and beyond. As guest expectations evolve, future success will depend on operational excellence, authentic differentiation, and financial discipline – now better reflected in industry standards like USALI.
Author
Dominican Republic Office
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