All-Inclusive Hotels:
A Key for Latin America and the Caribbean’s Growth

Early Beginnings of the All-Inclusive

The traditional all-inclusive (“AI”) business model was originally conceived around the idea of a static vacation package that included lodging, meals, and entertainment under one fixed price. In the 1980s and 1990s, the concept expanded rapidly across sunbelt destinations in Mexico and the Caribbean and was highly popular among travelers seeking affordable, warm-weather vacations.
Despite tourism being an important driver of economic activity, many of these emerging destinations lacked sufficient infrastructure, air connectivity, and complementary tourism offerings. As a result, travelers often remained confined to large-scale resorts, limiting their interaction with the destination. Over time, however, tourism development and improved infrastructure allowed for more experiential travel, driving the evolution of the all-inclusive model toward greater personalization and authenticity.

Increased Product Differentiation

This evolution reflects a broader focus on differentiation, resulting in the emergence of new brands targeting specific segments and price points. Following the micro-segmentation perfected by major U.S. lodging companies, all-inclusive operators began developing distinct brands for diverse audiences. Examples include Apple Leisure Group’s six-brand portfolio (Sunscape, Now, Breathless, Dreams, Secrets, and Zoëtry), Iberostar’s Grand and Selection lines, and Sandals Resorts’ segmentation into Sandals, Beaches, and Grand Pineapple.
To enhance differentiation, some operators have formed creative partnerships with global lifestyle and entertainment brands. Playa Hotels & Resorts partnered with Panama Jack to create a new lifestyle resort brand, while Club Med collaborated with Cirque du Soleil to introduce an on-property experiential playground. Karisma Hotels, in turn, partnered with Nickelodeon and Margaritaville to deliver immersive themed experiences for families and adults alike.

New Players Entering the Market

As the segment grew, traditional European Plan (“EP”) hotel operators began entering the all-inclusive space—often through conversions or joint ventures. Brands such as Hyatt (with Ziva and Zilara), Hilton, and Wyndham sought to capture the segment’s potential, either by launching new brands or adapting existing ones. However, the 2008 global financial crisis slowed these efforts, delaying the entry of larger chains into the space.
Mergers and acquisitions accelerated in the following decade. Barcelo Group’s acquisition of Occidental Hotels & Resorts in 2015 and Playa Hotels & Resorts’ purchase of five Jamaica resorts from Sagicor Group in 2018 exemplify consolidation trends. Major investments by firms like Terranum Group, Equity International, KKR, KSL Capital Partners, and TPG further demonstrate institutional appetite for the all-inclusive segment.

The Role of Demographics and Demand

Rising affluence, expanding middle classes, and shifting travel habits—particularly among millennials—are reshaping the region’s tourism landscape. Millennials, who travel an average of 35 days per year, increasingly prioritize authentic, curated experiences. According to Expedia, 83 percent of millennials who vacation in Latin America and the Caribbean choose all-inclusive resorts, underscoring the format’s ongoing relevance.
Socioeconomic transformation across Latin America, combined with improving connectivity and digital distribution channels, continues to fuel demand for diversified all-inclusive products across midscale and upscale tiers.

Outlook for Investors

The all-inclusive model has become a legitimate, standalone hospitality segment characterized by continuous innovation and consolidation. With its proven resilience and high barriers to entry, it remains attractive to institutional investors seeking stable cash flows and strong brand affiliations. As destinations across Latin America and the Caribbean mature, the segment is expected to evolve even further—offering opportunities to integrate sustainability, technology, and local cultural experiences into future developments.
Ultimately, the transformation of the all-inclusive model is redefining how travelers experience Latin America. For investors and developers alike, it presents an opportunity to participate in one of the region’s most dynamic and adaptive segments—one that continues to balance scale, profitability, and authentic engagement with place and community.

Originally published by Rogerio Basso.
Republished and adapted by Impactum Capital Advisors.