Photographer: Luis Acosta/AFP via Getty Images

Leave the Hotel: Tropical Island’s Plans to Shake Up Tourism

  • Aruba limits all-inclusive packages to aid local industry
  • New rules will crimp growth of resorts that package vacations

Tired of tourists who rarely venture outside their resorts, and who leave their wallets locked in the hotel-room safe, Aruba is moving to limit all-inclusive holiday packages.

The Dutch Caribbean island, located 20 miles the north of Venezuela, has become one of the first places in the world to limit all-inclusive deals, which bundle accommodation, food, drinks and entertainment into one price. Regulations that came into effect in August cap all-inclusives at 40 percent of hotel rooms on the island. They currently make up about a third of the country’s 5,500 rooms.

Popularized by chains such as Sandals and Club Med, all-inclusives are one of the fastest-growing segments of the $550 billion hotel industry, and revolutionized tourism in developing countries from Jamaica to Thailand. Tourists gravitate toward such vacations because they’re budget friendly and easy for families reluctant to stray far from beach-side snack bars. Now, Aruba wants tourists to look beyond their resorts, said Otmar Oduber, the nation’s minister of Tourism.

“We are moving away from the trend,” Obuder said in a telephone interview. “It’s very important for us for tourism not to become a negative concept in the life of the people of Aruba.”

Spreading the Wealth

“The all-inclusive, particularly in the Caribbean, is a model that prevents other forms of tourism from flourishing because nobody is leaving the resort,” said Mark Watson, executive director of Tourism Concern, a U.K.-based charity that promotes ethical tourism. “People are flying in, going to the resort, not leaving, and then flying back out.”

The all-inclusives on Aruba include Divi Resorts and Spanish chains RIU Hotels SA and Occidental Hotels. Yvonne Swiezawski, a spokeswoman for RIU, which purchased an resort and reopened it as the all-inclusive Hotel RIU Palace Antillas, said the regulations will affect its plans to grow on the island and negatively impact investors’ perception.

“If the regulation of all-inclusive hotels does not allow us to grow on the island, we will be forced to reinvest somewhere else,” Swiezawski said in an e-mail.

The all-inclusive business is a significant part of a tourism industry that supports 85 percent of $2.6 billion economy, according to the International Monetary Fund, which said Aruba is the third-most tourism-dependent country in the world. The sector provides a third of all jobs on the island of 100,000 people, according to the U.K.-based World Travel & Tourism Council. Visitors to all-inclusive resorts spent 21 percent less on average than other tourists last year, the Tourism Ministry calculates.

Aruba isn’t the only place to be concerned by the trend. Last year, Greek Prime Minister Alexis Tsipras criticized the all-inclusive concept, which he said, “largely alienates tourism from the local economy.” In 2000 Gambia banned the sale of the vacations, although it later rowed back on the decision. In 2011, business owners in Majorca held a day of protests against the resorts.

Taking Risks

Aruba’s new regulations may help local businesses, but they also pose risks, said Bloomberg Intelligence analyst Margaret Huang in an e-mail.

“With a growing competitive market in parts of Mexico and with the threats of the cruise industry, which is essentially an all-inclusive experience, Aruba may lose its appeal as a competitive tourist destination,” Huang said.

The Caribbean Hotel and Tourism Association, a Florida-based organization that represents hotel owners, said it recommended Aruba take other approaches to enticing tourists to spend their money outside the resorts.

“Several all-inclusive developers, which were considering investments in Aruba, indicated to us that restrictions on the amount of all-inclusive offerings they would be permitted to provide would force them to reconsider their investments,” spokeswoman Adriana Serna said in an e-mail. “Today’s consumers want choices.”


Before it's here, it's on the Bloomberg Terminal.
LEARN MORE