All For One, One For All

What will be the theme of the coming season? Let’s hazard a guess, shall we? How about all-inclusives? No prizes for guessing this. They have formed the theme for the past several seasons and they will be again – more so. And then again next year, and the year after.

There are two main hotel federations in Mallorca, one that is simply the federation of hotels and the other which is for the hotel chains. Not that the distinction really matters, certainly not when they are saying the same things: that the percentage of hotels offering all-inclusive is at a particular level and that the future growth is “unstoppable”. Whatever one thinks of all-inclusive hotels, it is hard to disagree with the head of one of the federations when he says that the sale of beds is what the hotels are in business for; it’s all a question of market demand and competition. This same hotels’ boss admits that is not an ideal system for any hotel, but ideal or not, all-inclusive is going to continue and to continue to grow.

There is always some question as to the exact amount of all-inclusive on offer. Partly this is because of the amount of upgrading that occurs once holidaymakers are in situ; it is partly also because of definitions. When the federations speak of 15% of hotels in Mallorca that are all-inclusive, do they really mean the percentage of hotels or the percentage of places? It would seem to be the former. On the face of it, this doesn’t sound that high, but it is misleading as well as being debatable. To restate – my estimation as to the total number of all-inclusive places available in Alcúdia, out of some 25,000 or so, is around 50%. The number of hotels is largely irrelevant; it is the figure for the number of places that is. And even then, one cannot be entirely sure because of those upgrades.

The situation with all-inclusive differs from resort to resort. Alcúdia, Playa de Muro and Can Picafort all have high levels; Puerto Pollensa has virtually no all-inclusive, and where it does exist – Club Sol** (and I don’t think it exists anywhere else in Puerto Pollensa, though I might be wrong) – it is an option as opposed to being the regular or only offer, and at these apartments one can also go for an all-inclusive drinks arrangement on top of, say, self-catering. It’s that definition issue.

Meanwhile, the federations have been having their say about the proposal that has come from the tour operators that there should be some sort of “mixed-offer” all-inclusive that involves outside bars and restaurants. What do they think about it? Not a lot. Indeed they consider that the suggestion is not viable on account of the complexity of administering such a system. And it isn’t just the hotels who think this. So also do the association of small- to medium-sized businesses and even the restaurants’ association.

Where such a system is already operating – apparently – is in Playa de Palma, but in this instance the outside establishments and hotels have the same owners. This is not unusual. In the resorts in the north there are examples of hotel groups which own restaurants: the Giardino restaurants in Puerto Alcúdia and Playa de Muro, for instance, are part of Garden Hotels and are located next to, respectively, the Alcúdia Garden and the Playa Garden. There are also examples of restaurants owned by hotels groups that are physically separated. Attached or separated, it makes no difference; if the hotel wishes to make an all-inclusive arrangement with restaurants it owns, that’s the hotel’s business. The system in Playa de Palma is not what the tour operators seemed to be on about, but unless they have got something else in mind, the idea would seem to be a dead duck; it is difficult to see how – in practice – such a system could function where different owners are involved. And no-one, apart from the tour operators, seems to think that it could.

** Putting this together, I did a little internet-looking, which is often quite illuminating in unearthing some peculiarities. For Club Sol, more than one site, including Holiday Watchdog, says that the apartments are a “few minutes’ walk from many bars and cafes”. I suppose it depends what you mean by “many bars and cafes” and by a “few minutes”. Twenty, thirty?

Any comments to andrew@thealcudiaguide.com please.

Battlefield: Hotels go on the all-inclusive offensive

There we were thinking that some new model of all-inclusive might be on the horizon, one that embraces bars and restaurants into the system. We might have been thinking this; the tour operators might have been suggesting it. The hotels don’t seem in any mood to go along with it. This is the impression formed by statements from heads of hotel associations in Menorca and Ibiza; there has not been a similar statement from Mallorca, only ones that are more veiled in their sympathy with views in other Balearic islands.

The other impression is that the hotels are going on the offensive in defending the all-inclusive offer. Or perhaps this does all tie in with the tour operators’ mixed-offer all-inclusive (discussed on 12 March) in that positions are being adopted, with the hotels taking an assertive high ground from which they might be seen as the good guys in admitting outside bars and restaurants into their all-inclusive “club”. The tour operators are demanding an increase in all-inclusive while at the same time wanting the so-called “complementary offer” to be a part of it. The hotels, seen as the villain in the all-inclusive piece, seem to want to play hardball.

The picture of bars and restaurants being painted by the hotels is one of complaining and of a failure to do anything to attract tourists. It is the hotels, so the argument goes, that assume all the risk and that make the effort; the complementary offer is being challenged to step up to the plate in attracting tourists. Moreover, the hotels’ line is that they have every right to challenge incentives such as happy hours and “menus” (presumably they mean menus del día) offered by bars and restaurants. This challenge comes and has come in the form of all-inclusive.

We seem to be heading to a state of all-out war between the hotels and the complementary sector. The hotels, in addition to all-inclusive, have been moving ever more into the territory once secured by the outside businesses – more entertainment, TV (Sky and football), even Sunday roasts. Entertainment may actually be cut back this summer as a way of reducing costs, but in mostly all other ways the hotels are attacking the complementary offer. This war could be a precursor to some truce or negotiated settlement, e.g. the mixed-offer all-inclusive, but what the hotels are angling at is that it should not be they alone who assume the costs and risks of marketing to get tourists to come in the first place.

The hotels are overstating the case; they are but one aspect of promotion. Nevertheless, they have a point when accusing bars and restaurants of only complaining and apparent inaction. And ever more, the complementary sector is seen as leeching off of the efforts made by the hotels. But this growing antagonism can also be seen as the result of shifting circumstances: economic conditions, stronger competition from other destinations and so on. For years, there was a symbiotic relationship between the two. This has gone or is going. It might only return if the tour operators are genuine in wishing to establish the mixed-offer.

One could accuse the hotels of being disingenuous. They are, together with government, town halls and tour operators, the frontline assault forces in tourism promotion. Clearly they are, and they know it, hence the possible disingenuousness. They are also, generally speaking, far better resourced than businesses in the complementary sector. (It might also be noted that some hotel groups run their own outside restaurants.) Their self-interests are served by co-operation, such as in being parts of local hotel associations which conduct their own marketing, but at least they do engage in co-operation. Does the complementary sector act in a similar way? Self-interest is even more extreme here. Do bars and restaurants band together to push a resort? Well, do they? I’m unaware of this happening. Where co-operation does exist, it tends to be as a means to kick against something – all-inclusives, the latest regulation. Negative rather than positive. And when something comes along which might require some co-operation, such as with the estación náutica concept in Alcúdia, self-interest comes to the fore; what has ever happened to this idea?

The hotels have thrown down the gauntlet. To quote, in translation, from yesterday’s “Diario”, the president of the Menorcan hoteliers says: “we do not see any effort at any time by the restaurant sector to bring tourists to the Balearics.” There is, in all of this, a horrible sense of bitching and bickering as the great edifice of tourism threatens to collapse around the hotels and as all the supply that has risen around them also tumbles and falls. Yet for the hotels to attack the complementary sector is – though they wouldn’t admit this – the consequence of their being beholden to the muscle of the tour operators; the reverse of the situation that once used to exist, a situation that used to allow for mutually beneficial co-existence with the complementary sector. The hotels are, therefore, going on a bullying offensive while simultaneously they are being rendered less potent by the masters of the industry – the tour operators. They are hitting out at the weakest link in the whole tourism supply chain, because it suits them to be able to try and cling to a power that is diminishing in a market that has changed fundamentally; they are less the victims of the all-inclusive war initiated by the tour operators than the complementary sector, but they are victims nonetheless, clutching at the spoils of war and abandoning their one-time compatriots in the bars and restaurants. Lines drawn for the battlefield.

Any comments to andrew@thealcudiaguide.com please.

In The Mix: The new all-inclusive concept

Word coming from the tour operators gathered at the ITB travel fair in Berlin is that there is a noticeable recovery in terms of bookings to the Balearics. Another word is that Turkey, as has been previously noted here, has limited capacity and will also see prices rising this year. All of which seems like good news, to which can be added word locally from some hotels, to the effect that bookings are indeed buoyant. This summer may witness healthy occupancy numbers and plenty of tourists passing through the airport, but the key issue is whether these tourists will be spending.

There is a further word emanating from Berlin. And that word (or words if you prefer) is all-inclusive. The level of all-inclusive bookings is set, according to one source, to rise to around 50 per cent, something that is likely to send tremors of fear coursing through the nervous systems of bar and restaurant owners. It’s that spending thing. However, there are yet more words. “Nuevo concepto.” New concept. The nuevo concepto is a concept that is referred to often. Even I use it when referring to things I do. Nuevo concepto is part of the everyday Spanish lexicon of business. There is now a move towards creating a new concept of all-inclusive. The idea isn’t really new as it has been one that I, and others, have wondered about for several years. What this new concept would mean would be the inclusion of bars and restaurants within the all-inclusive system. While I may have wondered about such inclusion, I have never explored it as a serious option. In theory it sounds good, but in practice?

The tour operators do at least seem to get the idea that tourists, despite their opting for all-inclusive, do not necessarily want to stay within the confines of their hotel. That they do is the result of the fact that they have already paid. It is this that has created the all-inclusive ghettoes and a ghettoised, bunker mentality among tourists who have little incentive to leave the hotel. It’s perfectly understandable. But these same tourists do not want their resorts stripped of the atmosphere generated by bars and the rest, which is the long-term, logical conclusion of all-inclusive that forces exclusion of these businesses and ultimately closure.

The new concept would, therefore, be a mixed offer. One such basis would be that the hotels continue to provide half board whilst embracing the guest in a system of all-inclusive which would enable the guest to enjoy the convenience of all-inclusive outside the hotel, thus bringing a benefit to the guest and to bars and restaurants. It all sounds very sensible. But.

Why are the tour operators coming up with this now? And indeed why is it that it seems to have fallen to the tour operators to raise it? Are the tour operators demonstrating hitherto unseen altruism towards bars and restaurants affected by all-inclusive? Possibly. There may be another reason. Depending on the hotel, the standard of what is on offer via all-inclusive can vary. Some of it is poor. Service can be slow, the food is not necessarily great, the drinks are local and not international brands. None of this is really the hotels’ fault. In the Bellevue interview last summer, I got an insight into this. The hotel would like to do more, but physically it is difficult. Physically and financially.

Opening up the all-inclusive offer to outside concerns may address the standard issue, but it raises all manner of questions. Could these bars and restaurants actually cope? Might their standards suffer? How would they be recompensed, when and by whom? Would all bars and restaurants be involved or might it be only a select few? This latter question could be a minefield. Let’s say restaurants “tender” for a contract with a hotel. What might this tender actually involve? “Incentives” maybe? Might it be the bigger, long-established restaurants that get the business, or those which already have aggressive marketing procedures linked to individual hotels? If only certain establishments were to benefit, the minefield would explode with the fury of those excluded.

Why would the hotels do any of this? Only if the tour operators tell them to. They, the tour operators, do not want low standards. But, and again it depends on the hotel, the whole point of some all-inclusive is that it is cheap. Restaurants would need to be paid. The consequence might well be an increase in price, though not in all instances. The hotel might be able to reduce some overheads directed at what is currently less-than-brilliant service or quality. It would also not be forced into making the sort of investment required to convert to full-on, higher-grade all-inclusive.

Ultimately, such a mixed all-inclusive offer would demand a collective responsibility on behalf of different parties, especially the hotels. I would take some convincing. In that interview with Bellevue, the notion of responsibility to local businesses, grown fat on the back of the hotel in the good old days before all-inclusive, was dismissed. Only if the hotel (and I’m talking of any hotel, not just singling out Bellevue) can see a business case in terms of lower costs but similar or increased profit levels, despite the transfer of some income to outside bars and restaurants, would the mixed offer work. Even then, there would be questions. If the hotels retained half board, which traditionally many have offered anyway (so this should not be contentious), what about things like all those free “Cokes” for the kids. One of the strongest arguments in favour of all-inclusive is the convenience factor. Would guests then be forced to leave the hotel grounds in order to water the children?

The mixed all-inclusive is an idea well worthy of exploring, and it would need a great deal of exploring. But it could, say could, be a remedy. And could, say could, be the salvation for not just bars and restaurants but also whole resorts. This has a long way to run though.

Any comments to andrew@thealcudiaguide.com please.