Defying predictions, millennials discovering value of all-inclusives

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A stay at the all-inclusive Hotel Xcaret Mexico includes underground river excursions.

Millennials are being blamed for killing everything from cable TV to the diamond industry, but contrary to widespread predictions, all-inclusive resorts aren’t likely to be joining that list anytime soon.

According to Chris Fair, president and CEO of the Resonance Consultancy, demand for all-inclusive vacations remains strong among travelers ages 20 to 36.

“The assumption that millennials aren’t as interested in all-inclusives isn’t accurate at all,” Fair asserted. “Based on our most recent survey of millennial travelers, roughly four in 10 reported that all-inclusives are their preferred type of accommodation.”

Resonance’s 2018 “Future of U.S. Millennial Travel” report, based on a 2017 survey of nearly 1,600 millennial travelers, indicated that 41% of millennials listed all-inclusive resorts as being among their preferred accommodations. Moreover, 45% of respondents identified all-inclusive packages as a “desirable” hotel amenity.

“There’s interest in all-inclusives not only among millennials in general but also among the most affluent millennials,” Fair said. “In October, we completed a study of affluent travelers, and among 18-to-34-year-olds with incomes of $180,000-plus [about 4% of the generation], 35% said all-inclusive resorts were one of their preferred types of accommodation.”

The data suggests that all-inclusives remain an attractive option across income levels, but for many millennials, perception of value is often a key selling point.

Krystal Aziz, a team leader travel specialist with Houston-based Modern Travelworks, said, “Budget is the biggest thing for millennials, especially for those just starting their career. They might have just purchased a new car or house, and because the cost of education has risen so much, they might also have student debt.”

Some 95% of Modern Travelworks’ wedding- and honeymoon-focused business is all-inclusive, and Aziz estimates that 70% of those bookings are being made by millennial clients ages 25 to 36. 

Amy McHugh, co-founder and director of sales for Lancaster, Pa.-based Dream Makers Vacation Services, said she has also seen younger clients gravitate toward all-inclusives once they realize that the category might deliver  more bang for their buck.

“We have clients in their 20s come to us and have these ambitious travel dreams, but they don’t always have the budget to support them,” McHugh said. “They also usually come to us not necessarily wanting all-inclusive, but once we actually look at resorts within their budget, they realize the all-inclusives are what they’re looking for.”

According to Fair, millennials are also changing as they mature.

“We typically think of millennials as being single and carefree,” he said. “But when you look at millennials who travel, which is around about 40% of the … generation, approximately 60% now have children.”

Resonance reports that close to half of millennial travelers said they planned to take family vacations sometime in the next two years, making family travel the demographic’s most popular vacation type.

“No matter how experienced or adventurous millennial travelers are, priorities change once they have kids,” said McHugh, who added that all-inclusives that embrace clients of all ages “can really make the family vacation experience much better.”

Geoff Millar, co-owner of Gilbert, Ariz.-based Ultimate All-Inclusive Travel and Ultimate Hawaii Vacations, estimated that 40% of his clients are millennials.

“As millennials get older, they start to better understand the appeal of all-inclusives,” he said.

But while millennials might value aspects of a classic all-inclusive experience, it’s also clear that the category has significantly evolved over the past decade. Fair observed that as it connects guests to local culture, community and experiences, “nowadays, the all-inclusive becomes more of a base camp rather than a gated enclave.”

Among the players pioneering the move to more active and destination-driven experiences are Grupo Xcaret’s Hotel Xcaret Mexico and AIC Hotel Group’s Unico 20°87°. Both debuted in Mexico in 2017.

A friendly-family concept, Hotel Xcaret Mexico has bet big on experiential offerings, encouraging forays to Grupo Xcaret’s ecoparks and granting guests unlimited access to activities such as underground river excursions and archaeological sites.

David de los Santos, Grupo Xcaret’s commercial hotels director, said, “When people think of all-inclusive hotels, they imagine an experience completely withdrawn from the destination. For millennials, priorities have shifted. … They want to see and experience the destination outside of the hotel limits.”

The bet appears to be paying off. More than half of Hotel Xcaret Mexico’s guests are in their 30s, he said, making millennials “a top segment” for the property.

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The Unico 20°87° on the Riviera Maya enables guests to mix and match experiences through its Unlimited Inclusions program.

In the adults-only sphere, Unico 20°87° has successfully built a millennial cult following, thanks in part to its signature Unlimited Inclusions program, which enables guests to mix and match a number of experiences at a reasonable cost. 

According to Frank Maduro, vice president of marketing for AIC, the strategy “gives millennial guests the freedom to curate their vacation as they please.”

Still, the war to win over millennial consumers is far from over. Jason Dorsey, a researcher at the Center for Generational Kinetics, said the question is whether all-inclusives are shifting fast enough. 

“The [millennial] generation is extremely event-driven, wants Instagrammable getaways, likes to know all the costs upfront and wants ease of planning,” he said. “The challenge is delivering on those while making it not feel one-size-fits-all.”

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