Royal Caribbean Group's deal to acquire a 50% stake in Sandals Resorts for about $3 billion is drawing largely positive feedback from analysts and industry insiders.
Peter Ricci
Peter Ricci, director of the hospitality and tourism management program at Florida Atlantic University, described the synergy between the two companies as "perfect."
"To mix and mingle the all-inclusive resorts with a cruise line experience is expected," said Ricci. "Travelers want experiences, they want fully inclusive, and the ships have done that in their own right."
And according to Ricci, all-inclusive vacations are "back with a vengeance," as inflation, gas prices and other macro-level uncertainties draw travelers to cost certainty.
"My vision is that the island destinations will integrate with the already-existing, amazing experience provided by Royal Caribbean," he said, adding that he envisions itineraries in which ship passengers can spend a few days in a destination at a Sandals or Beaches property, then potentially return home on a different Royal Caribbean ship, or options that allow guests to sail for three days, then stay on an island for two, and reboard the same vessel.
Vince Ciepiel of Cleveland Research Company said he sees similar potential. In a Sept. 23 note, he wrote that initial industry feedback suggests "a significant opportunity to capture more of customers' noncruise vacations through cross-selling, loyalty and shared commercial capabilities."
That loyalty component is part of the plan, with Royal Caribbean Group CEO Jason Liberty telling Travel Weekly that the companies plan to connect their loyalty programs.
According to Cleveland Research's initial assessment, more than a dozen Sandals resorts are within a 30-minute drive of cruise ports where Royal Caribbean calls, creating opportunities to "better leverage idle resort capacity."
Patrick Scholes
Truist Securities analyst C. Patrick Scholes wrote that senior travel executives he spoke with also see "strong crossover potential between the two customer bases, though of course this all depends on strong execution."
Ciepiel flagged some risks, including an increase in Royal Caribbean's exposure to the Caribbean region with "another capital-intensive, difficult-to-operate business."
He added that investors are likely to see the news as a negative for Royal Caribbean's plans for its Perfect Day Mexico private destination in the Mexican Caribbean, which have faced pushback from the Mexican government and environmentalists.
"This could be a message to Mexico that Royal plans to invest in building out a vacation platform regardless of whether the Mexican government wants to be supportive of that on their shores," wrote Ciepiel.