Opinion: All-inclusives are a challenge but also an opportunity

Opinion: All-inclusives are a challenge but also an opportunity

By Jane Ashton, Tui Travel director of group sustainable development

Tourism is one of the world’s biggest industries. According to the World Travel and Tourism Council (WTTC), the direct and indirect economic contribution of tourism was $6.6 trillion in 2012, accounting for one in every 11 jobs.

In some destinations (for example, the Canary Islands and Cape Verde) Tui Travel accounts for more than 20% of tourists.

A significant percentage of jobs, tourism-related businesses and tax revenues in destination countries result, directly or indirectly, from the provision of our holiday products and services.

Ideally, much of the revenue from tourism would stay in the local area, supporting livelihoods and benefiting local communities. But the issue of economic contribution is more complex than that.

Monitoring and improving the local economic contribution of a hotel is more challenging than measuring its environmental impacts, because it is dependent on a wide range of factors: the standard and value of services offered by the hotel; the hotel’s procurement policies, staffing levels and employment policies; the hotel’s management structure; and the amount of discretionary expenditure by customers in local shops, restaurants and bars.

The local economic impact of hotels has been thrown into the spotlight by the growth in demand for all-inclusive holidays – which include most or all food and drink in the holiday price.

In the four years 2007 to 2010, the market share of all-inclusives doubled from 17% to 34% in the UK, driven in part by difficult economic conditions in our source markets.

As well as quality holiday experiences, customers are looking for excellent value and financial peace of mind and, for many families, the existence of all-inclusive options may mean the difference between taking a holiday or not.

In response to this demand, Tui Travel made the decision to assign all-inclusive holidays to specific brand identities.

First Choice in the UK became solely all-inclusive from April 2012 and its Holiday Village and Splashworld hotels have become well established within the all-inclusive holiday market.

From 2014, SuneoClub will be the first all-inclusive concept designed by Tui Travel with customers from a variety of source markets in mind. However, we are aware that all-inclusive holidays evoke strong opinions.

They are sometimes singled out for criticism on the basis that they are perceived to bring less direct economic benefit to communities, because customers generally have a lower discretionary spend on their holiday.

In our view, the key issue is whether a hotel is being operated responsibly, whatever its board basis, with a view to maximising total local economic contribution, of which discretionary customer spend is only one part.

We believe it is vital we strive to measure and manage the economic impacts of tourism, as we do for environmental impacts, regardless of the challenges.

Recent research suggests all-inclusive customers do have a lower discretionary expenditure in the local community than non-all-inclusive customers in terms of food and drink.

But there is little difference when it comes to other types of spend.

The research also suggests that a key driver of all holidaymakers’ spend once on holiday is the motivation for their holiday – whether they were planning to just enjoy the sun and pool in their resort or were also keen to leave the property and explore the destination.

Tui Travel’s own experience is that all-inclusive hotels generally operate at higher occupancies and therefore employ greater numbers of staff, purchase more food, beverage and services, and hence have higher tax revenues than other types of hotel.

Customers staying on an all-inclusive holiday purchase up to 20% more excursions.

We are committed to exploring ways of making holidays – whatever their board basis – more sustainable in terms of local economic impact. This represents a challenge, but also an opportunity.

Tourism – including Tui Travel’s business – already makes a real difference to livelihoods of people across the world. Our wish is to further understand this and improve on it where we can.

This is the first of two articles on managing the impact of all-inclusive resorts. The second will examine how tour operators can help improve local economic impacts.


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