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Puerto Vallarta News NetworkEditorials | Opinions | February 2009 

Making All-Inclusives More Inclusive
email this pageprint this pageemail usDaniel Gomez - PVNN


The past 20 years have seen a proliferation of all-inclusive resorts across Puerto Vallarta and Bahía de Banderas.
The past 20 years have seen a proliferation of all-inclusive resorts across Puerto Vallarta and Bahía de Banderas. While profits soar in the short-term, the long-term impact on the local economy can be devastating and may result in a long term loss of earnings for both hotels and the municipalities and serve to erode a destination brand's equity over the long term.

All inclusive resorts business model preclude the need for visitors to travel outside the compounds to experience the local culture and contribute financially to the local economy.

An IngentaConnect study recently reported that "all-inclusive packages lead to a reduction in a destination's revenue from tourism... and are causing a significant change in the distribution of tourist expenditure among economic agents. In particular, compared to other types of board, spending in the country of origin is higher for all-inclusive tourists, while spending in the destination is substantially lower."

It is estimated that up to 80% of all-inclusive revenue leaves the host country, the majority going to foreign-owned tour operators, airlines and agents. While there is little chance or desire of eliminating all-inclusive resorts, there are an increasing number of destinations and operators that are using creative techniques to give-back to the local economy while increasing their brand´s equity and the over-all experience.

Walk into an all-inclusive in Puerto Vallarta, Curacao or Hawaii and the only discernible difference between the three might be the language spoken amongst the staff. Therein lies the challenge: how to create a memorable destination experience if exposure to the local culture and environment is effectively discouraged by the resort's business model.

In order to differentiate the holiday experience from other resorts, tour operators and their partners will need to refocus on and promote the host destination's cultural heritage. Creating a strong brand experience to compliment a resort's amenities can eliminate the need to compete on price.

Organisations that offer distinguished and memorable experiences and leverage strong brands are less susceptible to price competition, the beginning of the end for any luxury product or service. By ensuring the experience on offer is authentic and unique and involving the local community, all-inclusive have an opportunity to become truly inclusive.

The Linkage Approach is an operating philosophy that is gaining momentum internationally for helping to stem the flight of revenue from tourist destinations. It requires big resorts and their partners to do more to ensure the income generated is spread throughout the host community.

The options are endless and benefit both the operator and host community. Sourcing local products and services rather than importing, organizing excursions that expose guests to local culture, creating co-branding opportunities with local business, tapping local talent to differentiate the holiday experience within the resort.

While arguably the majority of the revenue will continue to flow to the resort and out of the country, the amount retained by the community will increase and impact positively on the local economy.

A recent ODI briefing paper on the Linkage Approach in South Africa, where revenue flows to the local economy from all-inclusive resorts were particularly low, reported a sustained improvement in both the visitor experience and the local economy as a whole.

The benefits reported included enhanced customer satisfaction due to a more distinct service offering, distinctive brand offer - the resort becomes known for involving local community, greater local support for business, improved staff morale, marketing advantage and increased good will through word-of-mouth, amongst others.

There are numerous examples of local businesses partnering with international brands to enhance the holiday experience, from cruise lines to the scuba shops. Including micro to medium size business in the all-inclusive sector is the necessary next step in ensuring the income and resulting benefits are shared with the greater Vallarta community.

Daniel Gomez is a partner at Mijo, a strategic brand design and communications agency in Puerto Vallarta that understands the power of brands to inspire, bewitch and bewilder. To learn more about Mijo Brand Strategy Design, visit mijo.com.mx.

Click HERE for more articles by Daniel Gomez
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