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All-inclusive holidays do not have to be all-exclusive to local economy

These are hard times, travellers are increasingly price sensitive and choosing an all inclusive holiday may seem their only alternative short from not going on holiday at all. So from a business point of view the recent increase of the “all inclusive” provision by tour operators may make short term sense. First Choice was the first to announce a bold move toward a full all inclusive approach to their products but we have been seeing the emergence of all inclusive as a major segment for years now. From a local point of view one may argue that having some income from a small multiplier effect (through employee wages) is better than not having one at all.

However the Association of Independent Tour Operators cannot see how First Choice can remain true to the sustainable tourism strategy promoted by TUI. Hotels often compete for resources such as water and energy with other industries such as agriculture or fishing. The small contribution of an all inclusive resort may not be near enough to counter balance the real costs such a hotel generates for the locals.

Kostas Trivizas Managing Director of Aeolus hospitality highlights the case of Greece by saying we have seen that ‘all inclusive’ in Greece or in other resort leisure markets means depressed margins for hoteliers, increasingly more alike services with little regard to individual guest taste and a slow death to the tourist community around the resort. The mass of Greek hoteliers and resort destinations in the Mediterranean have not been able to adapt, product manage and appeal to different market segments; yet this trend represents a marketing opportunity for these resorts that elect to stay out of ‘all inclusive’.

Tricia Barnet of Tourism Concern explains the harsh reality of how small the margins are for hoteliers in countries such as Greece and Turkey with an estimated contribution to the local economy of around 1.5 euro per visitor per night in Greece and all inclusive package negotiations between hotels and Tour Operators that push hoteliers to go as low as 20 euro per person, and that includes everything!

Things do not seem to be much better in the Caribbean. A film entitled “Jamaica for Sale” portrays a very sad picture of how all inclusive resort developments are damaging local communities. Tour operators may argue that there is no research but this film is as much a qualitative research as any. There is evidence there that allow a viewer to further conduct their own search on the web and come with a view point that considers both sides of the argument.

TUIs reaction suggests that they remain true to their commitment to sustainable tourism yet with all the negative examples around the world it will be a hard debate to win. Such a debate can only be won with actions not just marketing campaigns. But we should not expect Tour Operators alone to provide solutions. Government bodies should regulate the allowed percentage of all inclusive accommodation per area. Having said that we all know that the private sector runs in speeds very difficult for governments to mirror and that is why Tour operators as well as Hotel operators must ensure that they do their best to give a little back to local communities and ensure we are not going 40 years back in history for repeats of the Torremolinos effect.

More recently TUI responds with a pledge to conduct research into the effects of all inclusive hotels but one cannot help but wonder the likelihood that  such research would be independent without any bias from the very company that commissions the research. Furthermore the research is likely to focus on the effects of current all-inclusive hotels where the hotel was never an all-inclusive. What really needs to be investigated on top of what happens to a local economy when new all inclusive hotels are introduced, is what are the effects of hotels that were converted into all-inclusive before and after the transformation.

One may say “and what about the consumer” surely the power to chose is in their hands. Well the irony is that as I was working on this article I received an email from Thomas Cook that promoted all inclusive destinations. So that gave me the opportunity to look at this from a consumer point of view. Getting a 7 night all inclusive in a four star hotel in Corfu (including flights and transfers) in early May would cost a couple £667. The cheapest flights and cheapest four star hotel I could find in Corfu for the same dates would cost me and my wife £690 and that excludes any meals. It is easy to see why all-inclusive packages gain in popularity. What kind of cuisine a guest would experience in the all inclusive deal is not the main concern of a large number of consumers that may be financially insecure, but still need a holiday break.

So if the immediate answer lies with the Tour Operators, what can they do to ensure they not only minimise the negative impacts to the local economy but also help enhance the positive ones? TOs have the power to impose expectations from their accommodation providers. Expectations in the form of simple solutions that if embedded in the strategy of an all inclusive resort they could ensure that the resort’s positive contributions to the local environment far exceed the negative ones.

For example:

1. Ensuring that the resort employees a very high percentage of local employees that are paid a fair wage and allows them to progress through all management levels. This can be achieved by supporting educational programmes that ensures employees can progress through the ranks and reach even the highest of management positions.

2. Cultivating a sustainability culture that extends beyond the hotel team by ensuring that sustainability training and seminars are offered to the local population for free and not just its employees during the quiet months.

3. Utilising local suppliers and educating them in the reduction of packaging, effective recycling and reuse and wastage management.

4. Facilitating a rotating program that allows the exhibition of local retailer’s goods within the resort at no cost to the local small businesses.

5. Organising activities as part of the “all inclusive” package that take visitors outside the hotel. For example visiting local restaurants for some of the meals who have agreed to be part of the all inclusive deal.

6. Ensuring that as a company they show due responsibility to the sustainability of the local economy by ensuring the transparency of any revenue leakages and pleading a maximum percentage of revenue leakage at all times.

Although there are many more strategies that can be employed at no cost or very low cost to hoteliers it is increasingly difficult to identify high profile all inclusive operators that consistently engage in at least all five strategies listed above. As Tour Operators push their rates lower they find it increasingly difficult to make any profit let alone consider the effects of their business strategies to the local economy.

The lower the margins the more visitors are needed to ensure that profits are meaningful, and that numbers of visitors often begins to exceed the maximum number that any environment can sustain resulting in the killing of the  “goose that laid the golden eggs”.

All-inclusive tour operators have it within their power and it is in their long term interest to work only with resorts that show willingness to cooperate with the local community and provide both a meaningful contribution to the local economy as well as an enhanced experience to their all inclusive visitors.

Ioannis S Pantelidis is a Senior Lecturer in Hospitality at the University of Brighton, School of Services Management. Coming from a family of hoteliers and restaurateurs his research and consultancy focuses on online consumer behaviour in hospitality as well as sustainable strategies in hotels and restaurants. He is a Fellow of the Institute of Hospitality and a member of the Council for Tourism Concern.