InterContinental Hotels Group and Iberostar Hotels & Resorts announced a long-term commercial agreement for resort and all-inclusive hotels. Iberostar is a family-run business based in Palma de Mallorca, Spain, with more than 65 years’ experience in the hospitality industry. Through this strategic alliance, Iberostar will retain 100 percent ownership. Up to 70 hotels (24,300 rooms) will be added to IHG’s system under the Iberostar Beachfront Resorts brand, which will become the 18th brand for IHG. This will boost IHG’s global system size by up to 3 percent.
The first properties are set to join the IHG system this December in locations including Mexico, the Dominican Republic, Jamaica, Brazil and the Canary Islands (Spain). Further properties in Spain and other resort destinations in Southern Europe and North Africa are anticipated to join IHG’s system over the course of 2023 and 2024.
IHG guests will be able to stay in a range of hotels, from family-friendly premium offerings to adult-only luxury, including: Iberostar Grand Paraiso (Riviera Maya, Mexico); Iberostar Selection Hacienda Dominicus (Bayahibe, Dominican Republic); Iberostar Grand Rose Hall (Montego Bay, Jamaica); and Iberostar Selection Anthelia (Tenerife, Spain). IHG has fewer than 20 resort properties in the countries where the Iberostar Beachfront Resorts properties are located, which means the agreement significantly increases and broadens IHG’s resort footprint, according to the company.
“As we continue to expand the footprint of our world-famous brands, we are always looking at exciting, sustainable growth opportunities in areas that can further enhance our offer for guests and owners,” said Keith Barr, IHG’s CEO. “Guests have told us of their wish for increased choice of resort and all-inclusive destinations within our brand portfolio. We are delighted to address that by working with such a well-respected, experienced and like-minded partner as Iberostar, and to see more amazing hotels join our system that continues IHG’s growth in so many of the world’s most attractive markets and destinations. Iberostar has successfully developed a leading presence in beachfront and all-inclusive properties in the Caribbean, Americas, Southern Europe and North Africa over many decades, and we are excited about the opportunities to further grow the brand’s footprint together.”
The portfolio of Iberostar properties will gain access to IHG’s enterprise platform, including its distribution channels and the IHG One Rewards loyalty program with more than 100 million members. IHG in turn will increase awareness of its current brands with a new set of travelers and meet a clear desire from guests and loyalty members for more resort destinations and the option of all-inclusive stays.
Iberostar and IHG share many company values, including a passion for sustainability and responsible tourism, with Iberostar’s Wave of Change movement outlining clear aims to move towards a circular economy, promote the responsible consumption of seafood and improve coastal health. As part of the agreement, IHG will work with Iberostar to create opportunities for joint sustainability initiatives that align with IHG’s 2030 Journey to Tomorrow responsible business plan.
The Iberostar Beachfront Resorts brand will be included in a new Exclusive Partners category in IHG’s brand portfolio, which will sit alongside its Suites, Essentials, Premium and Luxury & Lifestyle categories.
“This strategic alliance will enable Iberostar Beachfront Resorts to benefit from IHG’s industry-leading technology, deep skills and global scale,” said Miguel Fluxá, chairman, Iberostar Group. “Retaining 100 percent ownership of Iberostar allows us to continue to generate differentiation in the hospitality industry with a long-term vision for our employees, clients, tour operators, distribution partners and local communities that have been loyal to us during all these years. We will continue to stay true to who we are, preserving our philosophies and values of quality and sustainability.”
Further details on the agreement and financial overview:
- The agreement gives IHG a licence to the Iberostar Beachfront Resorts brand. The agreement has an initial term of 30 years and the option to renew for additional terms of 20 years upon mutual agreement.
- The agreement is expected to add up to 24,300 rooms across 70 properties to IHG’s system over the next two years. Of these, 27 properties (8,200 rooms) still require additional approvals from third parties in order to join IHG. The total of up to 70 properties would be equivalent to growth of 2.8 percent on IHG’s global estate of 880,300 rooms at the start of 2022. The first rooms are expected to come into IHG’s system in December this year, with these representing approximately half of the total rooms subject to the overall agreement.
- The 70 properties are all beachfront resorts. They exclude Iberostar’s other operations, such as its smaller portfolio of urban hotels, and also exclude Iberostar’s interests in Cuba. The approximate geographic split of revenues from the selected portfolio of 70 hotels in 2019 was: Mexico 22 percent; Dominican Republic 13 percent; Jamaica 8 percent; Brazil 5 percent; Spain 40 percent; other EMEAA region locations 12 percent.
- A pipeline of six further Iberostar Beachfront Resorts properties, representing about 3,000 rooms, is also expected to be added to IHG’s pipeline. This pipeline will increase as IHG and Iberostar work together to grow the brand’s footprint through the long-term commercial agreement.
- The total gross revenue of the existing portfolio of 70 hotels was approximately $1.3 billion in 2019, equivalent to growth of over 4 percent on IHG’s $27.9 billion of total gross revenue. Under the agreement, IHG will receive marketing, distribution, technology and other fees in a manner similar to its existing asset-light model.
- IHG’s fee structure will ramp up over a period through to 2025 as the hotels increasingly integrate onto IHG’s platform. By 2027, representing year five of the agreement, annual revenue recognized within IHG’s fee business is expected to be in excess of $40 million, with a broadly similar amount additionally recognized within system fund revenues.
- Reflecting integration investment, the net impact on IHG’s operating profit from reportable segments is expected to be modestly negative in 2022 and 2023. It is then expected to turn positive in 2024, before ramping up significantly from 2025 with the final step-up in the fee structure and the expected shift in distribution channel mix.
This is not IHG’s first foray into the all-inclusive space. The company’s boutique brand Kimpton Hotels & Restaurants signed its first all-inclusive resort in September. Kimpton Hacienda Tres Ríos Resort, Spa & Nature Park, along with the resort’s owner, Sunset World, and operator, Playa Hotels & Resorts, will bring the brand to the Riviera Maya’s Playa del Carmen in early 2024.
All-Inclusive Surge
A number of other major hotel companies and brands have seen the advantages in the all-inclusive segment.
Marriott International launched its all-inclusive platform in 2019. When the company acquired Starwood Hotels & Resorts Worldwide in 2016, Marriott assumed operation of its first all-inclusive property—the 406-room Westin Golf Resort & Spa, Playa Conchal in Costa Rica. The company announced it planned to further expand its all-inclusive portfolio in leisure destinations worldwide with a mix of new-build properties and conversions of existing resorts, including properties currently in the Marriott International portfolio.
By September 2022, Marriott opened the 30th all-inclusive property in its Caribbean and Latin America portfolio. The adults-only Sanctuary Cap Cana, a Luxury Collection All-Inclusive Resort in the Dominican Republic, marked the first luxury all-inclusive resort for Marriott.
In October 2021, Wyndham Hotels & Resorts introduced a partnership with Playa Hotels & Resorts to launch Wyndham Alltra, an all-inclusive resort brand that focuses on the upper-midscale segment. The first two properties under the license agreement—the 458-room Wyndham Alltra Cancun and the 287-room Wyndham Alltra Playa del Carmen, both of which are located in Mexico—transitioned at the end of last year. The third, the Wyndham Alltra Riviera Nayarit in Nuevo Vallarta, Mexico, opened two months ago.
In addition to the Playa partnership, this July Wyndham announced a commercial alliance with Spanish hotel company Palladium Hotel Group that added 14 all-inclusive hotels with more than 6,500 rooms to Wyndham’s Registry Collection luxury brand. The portfolio of TRS Hotels and Grand Palladium Hotels & Resorts managed by Palladium Hotel Group are in Mexico, the Dominican Republic, Jamaica and Brazil. Wydham’s all-inclusive portfolio stands at nearly 30 properties.
This story originally appeared on www.hotelmanagement.net.
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