Gay Nagle Myers
Gay Nagle Myers

How many is too many when it comes to all-inclusive resorts on one island destination?

On Aruba, where travel and tourism contributes 91% of the island's GDP, all-inclusive resorts currently make up 34% of Aruba's 5,543 transient rooms while 66% are European Plan (EP) hotels, i.e. properties that do not include food and beverage in the room rates.

It's a mix that has served, until now, as the foundation of Aruba's overall tourism industry development.

But concerns that the current ratio of all-inclusive to EP resorts is outdated and limits the number of guests who make use of local restaurants, and to foster what it describes as a balanced portfolio of on-island accommodations, the Aruban government has submitted legislation to Parliament that would cap the all-inclusive sector at 40% of total room inventory.

The legislation would also place an annual cap of 20% on all-inclusive room nights sold by EP hotels.

The decision to cap the growth of all-inclusive resorts stems, in part, from concerns voiced by Otmar Oduber, the minister of tourism, transportation, primary sector and culture, over the conversion of existing EP hotels on Palm Beach into all-inclusives, including the Riu Palace Antillas, which opened in October 2014 as a conversion of the former Westin Aruba.

Aruba currently has seven all-inclusive resorts: In addition to the Riu Palace Antillas there's the Divi Aruba All Inclusive, the Divi Village All Inclusive Villas, the Riu Palace Aruba, the Occidental Grand Aruba, Tamarijn Aruba All Inclusive and the Tamarijn Aruba All Inclusive Suites at Dutch Village.

Planned openings include Bahia's Luxury Baby Beach Don Pablo Collection in 2017 and Zoetry Isla Di Oro in 2018, which would shift the balance at or close to the proposed 40% cap.

Both the Caribbean Hotel and Tourism Association (CHTA) and the Aruba Hotel and Tourism Association have urged Aruba prime minister Michiel Eman to abandon the legislation. The groups argued it would be counterproductive to the health and growth of the tourism industry and would reverse the progress the destination has made in recent years. According to CHTA CEO and director general Frank Comito, the legislation would negatively impact employment levels, the cost and availability of airlift and government revenues and would reverse Aruba's growth in the global tourism arena. 

Comito said that excessive government interference in free enterprise "typically erodes business confidence, increases operating costs and stifles investment."

The CHTA also pointed out that the high-spending traveler represents the fastest growing market segment turning to all-inclusives.

"These travelers spend time and money outside of the hotel property and will spend more if enticed," the CHTA said, referencing Ernst & Young's 2014 Global Hospitality Insights Report, which cites the changing demographics of travelers, who are attracted to all-inclusive resorts at all price points.

The government and the Aruba Tourism Authority conducted analysis and research on the subject before the legislation went before Parliament; one key takeaway was that the offering of all-inclusive accommodations was less relevant to travelers than the quality of Aruba's beaches, culinary offerings and natural sites.

"We have a responsibility to analyze and apply this research to Aruba's policy," Oduber said.

Aruba's goal "is not to completely eliminate all-inclusive resorts, as we understand this market is considered to be the fastest-growing segment of the leisure travel industry in the next 10 years," said Ronella Tjin-Asjoe Croes, CEO of the Aruba Tourism Authority.

The goal is to remain competitive and create balance "while re-evaluating the policy every five years to ensure Aruba's best interests continue to be met," Croes said. "A healthy mix of on-island accommodations is crucial to the success of Aruba."

Aruba's visitor figures indicate growth in recent years, up about 14% in 2015, when the island welcomed 1.2 million visitors; figures from Q1 2016 indicate a 5.4% overall growth over the same period in 2015.

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