Ennismore style drives Accor all-inclusive growth

LONDON – The race is on for growth in midscale and extended-stay segments – that’s where the headlines have focused the past few months. But the other race is in all-inclusive and last week Accor announced the launch of its ALL Inclusive Collection to aggregate development among brands ranging from Rixos in the Middle East and Turkey to its lifestyle and premier brands, including Fairmont, SO, Swissôtel, Movenpick. Soon Ennismore-led Mondrian, Hyde and SLS lifestyle brands will jump on the all-inclusive train, and it’s the attributes of those lifestyle brands where Accor/Ennismore is trying to differentiate.

Evidently, their ability to focus on programming, entertainment, food and beverage and the overall experience is striking a chord with owners and developers as Ennismore Co-CEO Gaurav Bhushan suggested all-inclusive is going to be the strongest development segment for Ennismore. “What we’ve learned is the power of programming and product, which I think is grossly underestimated,” he said.

Initial plans call for expanding to over 50 all-inclusive resorts in the next three years with a solid mix of both the luxury and premier segment assets. At least with 15 all-inclusive resorts across Accor and Ennismore brands are currently in the pipeline. “We’re still just getting warmed up,” Bhushan said. “Since Accor’s investment in Rixos in 2016, we’ve increased our pipeline three times and the pipeline that we have is extremely promising. We expect to go well beyond the 50.”

Bhushan said about 40% of growth is coming via conversion and predominantly in beach destinations. They have to manage all properties, they don’t invest equity, and destinations decisions are driven by airlift and access to key markets that they want to target. “Our focus is very much on the Middle East and Turkey, Southeast Asia, Central America, Mexico and the Caribbean. And it’s on Southern Europe,” he said.

The SO/Sotogrande, a golf and wellness spot in the Andalusian countryside, is actually an existing SO resort that was converted into an all-inclusive with extremely positive results, according to Bhushan. They are also converting the first Swissôtel to a 1,350-room all-inclusive resort from an unbranded property in Sharm el Sheikh, Egypt, with a water park, multiple dining options, a beach club and entertainment facilities. The Hyde Bodrum in Turkey is being developed into an adults-only experience with 211 rooms, six restaurants and bars and a unique pool at the center of the resort which will be programmed with a series of pop-ups and live performances.

Again, Bhushan is adamant about programming driving every development. “Yes, of course, we do buffets, but we do them in a very different way with a sustainable focus and a big focus on quality,” he said. “We’re doing bespoke restaurants. We’re doing concerts and live entertainment. Our kids’ facilities are extraordinary – it’s not an add-on. Everyone’s doing the same elements. It’s how you execute and the depth with which you do it.”

Ennismore and Accor have a minimum set of requirements for a property to become all- inclusive, starting with the necessary scale to provide a fairly significant experience to the guests who tend to stay for a longer period of time. “You need a multitude of facilities, multiple restaurants, a lot of entertainment facilities, wellness facilities, and significant facilities for children that is a whole world unto itself,” Bhushan said.

The result has been a financial performance proposition investor and owners find very attractive. “The brand can be determined, depending on the market, the quality of the asset and the position of the asset,” he added. “But the operating model that increasingly our investors are looking for is all-inclusive – if the property can take it.”

Investment for conversions have a wide range. Bhushan cited two assets in Cancun, Mexico, with one requiring minimal investment and another needing significant renovations that could be north of $50,000-70,000 per key.

TRevPAR premium for conversions can range from 20% to more than 100%, depending on the asset, according to Bhushan.

“Demonstrating above-market performance in our existing assets are the only thing in the end that our investors and partners look for,” he said.