Why Mexico, Caribbean all-inclusives are thriving

INTERNATIONAL REPORT – All-inclusive resorts in Mexico and the Caribbean appear to be defying hospitality industry headwinds.

Hyatt Hotels Corp. reported that its all-inclusive business in the first had significantly outperformed domestic U.S. leisure travel, with the booking pace up 7% for the second quarter and actualized April revenues jumping 9% year over year. The sector’s RevPAR was also up over 4% compared with the first quarter of 2024.

During a May 1 earnings call, Hyatt CEO Mark Hoplamazian described the company’s all-inclusive business as “very solid” and a bright leisure spot in the April and May period.

“The leisure picture is much weaker in the U.S. resorts than it is in the non-U.S. Americas,” he told analysts.

Bolstering Hyatt’s Inclusive Collection, which comprises more than 120 all-inclusive resorts across Latin America, the Caribbean and Europe, is what Hoplamazian called “consistency” from the dominant U.S. market.

That’s something travel advisors are seeing, as well.

Abbey Meyer, travel consultant and CEO of Altitude Travel, said bookings this year are “pretty similar” to last year’s for Hyatt’s Inclusive Collection, the agency’s top-selling brand. Meyer said there has been a slight dip in Mexico but more requests for places like St. Lucia, Barbados and other Caribbean locations.

Geoff Millar, co-owner of Phoenix-area agency Ultimate All-Inclusive Trave and Ultimate Hawaii Vacations, said factors driving demand for resorts in Mexico and the Caribbean include heightened concerns around the political climate, with some Americans worried about how they’ll be welcomed in other regions.

We are seeing an increase in Canadian travelers heading to the region. Canadian airlines and tour operators are also responding by expanding routes and increasing direct service, including several from new Canadian gateways.

Maureen Barnes-Smith

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“I do see a shift from people going to Europe to people now going to the Caribbean and Mexico because of the political situation, and people are afraid of how they’re going to be received,” Millar said.

He added that reports of overtourism in some European hot spots is tipping decision-making in favor of destinations where guests believe they can “actually relax” without worrying about local sentiment.

And while all-inclusive travelers still have a willingness to spend, Millar said, he has seen price sensitivity growing.

“Even if people want to go to the high-end resorts, they’re still looking for the best deal,” he said. “They’re doing a lot more price shopping this year.”

Even on the high end, all-inclusives have long been associated with value.

“I will often highlight one of the perks of an all-inclusive is really allowing you to stick to your budget,” Meyer said. “What you see is what you get. Outside of tipping for services, your trip is paid in full weeks before you even travel.

“Whereas in a trip to, say, Hawaii, it’s kind of a roll of the dice to see how much you end up spending. Those $20 mai tais can really add up.”

Hyatt said that 88% of the company’s Q2 all-inclusive business is already booked, providing high confidence in a continued strong performance.

However, that sector’s strength stands in stark contrast to slowing leisure demand elsewhere. Hyatt revised its full-year RevPAR growth outlook downward to 1% to 3%, anticipating relatively flat performance for the remainder of 2025.

“We have seen signs of slowing customer booking behavior, particularly in short-term leisure and business transient demand,” said Joan Bottarini, Hyatt’s CFO.

Canadians choose Mexico over the U.S.

A significant boost for Hyatt’s all-inclusives, the company said, is coming from Canadian travelers who are increasingly skipping the U.S. for their leisure vacations.

It's a shift that began earlier this year, amid escalating trade tensions and controversial remarks President Trump made about making Canada the 51st U.S. state.

“We have seen increases in Canadian travelers into Mexico and the Caribbean,” Hoplamazian said. “The Canadian travelers are basically adding a boost to overall results in Q1 and in terms of the pace that we see in the next couple months.”

It’s a shift that’s becoming more pronounced, said Maureen Barnes-Smith, vice president of sales and marketing for Unique Vacations Canada.

“We are seeing an increase in Canadian travelers heading to the region,” Barnes-Smith said. “Canadian airlines and tour operators are also responding by expanding routes and increasing direct service, including several from new Canadian gateways.”

McKenzie McMillan, a luxury consultant and supplier relations manager with Vancouver-based The Travel Group reported increased client interest in Caribbean and Mexico destinations, including a recent “last-minute uptick as clients planned their spring break or pivoted away from U.S. destinations.”

“We do expect specifically Mexico requests to increase as we head into the fall/winter booking season,” McMillan added.

Johanna Jainchill contributed to this report.

This story first appeared on Travel Weekly.