One of the Caribbean's leading all-inclusive players, Playa Hotels & Resorts operates 20 properties in Mexico, Jamaica and the Dominican Republic, including resorts under the Hyatt Ziva, Hyatt Zilara, Hilton and Panama Jack brands. The company's latest is the 750-room Hyatt Ziva and Zilara Cap Cana, which debuted in Punta Cana, Dominican Republic, this past winter. Hotels editor Christina Jelski recently met with Playa's executive vice president and chief commercial officer, Kevin Froemming, to talk about the company's newest property, a rebound in Dominican Republic tourism and ongoing challenges in the Mexico market.
Q: How do the family-friendly Hyatt Ziva and adults-only Hyatt Zilara in Cap Cana reflect Playa's expansion strategy moving forward?
A: This is our first ground-up development. The Hyatt Ziva and Zilara Cap Cana are sort of a culmination of what we want to do and our vision of what an all-inclusive should be. It fits well within our branding partnership with Hilton and Hyatt and our efforts to tie ourselves to a much broader audience.
If you ask me what our strategy is for Playa, one thing that's really important is that we're not trying to steal share from other all-inclusives. We feel that our concepts are broadening the all-inclusive marketplace to include a much larger audience. When you do that, everybody wins. The travel agents win, tour operators win, we win, the customers win.
Q: The Dominican Republic has seen visitor numbers drop precipitously following last year's wave of negative press. What are you seeing in terms of a possible rebound?
A: A comeback is definitely in motion, I think in no small part thanks to travel agency partners and the trade. They've helped to dispel a lot of the myths about the situation. And what doesn't change is the fact that the Dominican Republic is a neighbor of the U.S. It's very close and easy to get to. Part of the problem now is that we need the lift to come back. One of the challenges we have is the 737 Max issue, where all of those planes are grounded. I had dinner with [leisure sales director] Vic Kerckhoff of United, and he said their lift into the D.R. is down 14% this year. I asked him, 'Can we get it back?' He said, 'I just don't have the planes right now.' Those are going to be out of service at least through June of this year, and it takes a while to build new planes. I'm impatient, because I'd like to see lift come back quicker. What tends to happen if demand comes back but scheduled air doesn't come back fast enough is that more charters come into the marketplace. That could be an interim step before the airlines pick up. And hopefully the airlines will see that, as we're very much pro-scheduled versus charter.
Q: Mexico is also facing a rather challenging front, as key metrics like RevPAR and occupancy remain soft going into 2020. What do you think is primarily to blame?
A: I think it's a combination of the recent sargassum problem and some of the safety concerns that people have had about Mexico, coupled with the bigger issue being the vast amount of new development that's come into Mexico, particularly into the Yucatan Peninsula. For example, there's now Playa Mujeres, a completely new destination inside that Cancun market. And when you're adding another 15% or 20% of inventory into a destination and airlift only grows by 3% to 4%, what that does is put pressure on rates. It's one of the biggest challenges in that market, because we need to invest to keep our standards at a high level, but we also need to make sure that we're getting rates commensurate with that.
When it comes to the sargassum, there's now a global effort happening to deal with it. In the meantime, we spend the extra money and resources to make sure that our beaches are cleaned every morning by 7 a.m. We've also set up some barriers and designed runoffs so that the sargassum misses our beaches, and that minimizes the problem. The good news is that at this time of year, the sargassum is pretty much gone. And although last year was pretty bad, we've been told we should be seeing much less next year.