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Is all-inclusive gaining traction? Hilton thinks so

Playa Hotels & Resorts and Hilton on Monday announced a strategic alliance that will first introduce all-inclusive resorts this year in the Dominican Republic and Playa del Carmen, Mexico, and then eight additional all-inclusive resorts together by 2025. The properties will be owned and managed by Playa.

By the end of this year, Hilton and Fairfax, Virginia-based Playa Hotels & Resorts will introduce Hilton La Romana in the Dominican Republic and Hilton Playa del Carmen in Mexico, adding 1,269 new Hilton guest rooms to its global portfolio.

“We think this announcement significantly expands Playa’s total addressable market and allows Playa to greatly increase the number of resorts it can operate in each market, thereby enhancing Playa’s ability to potentially capture additional transactions and management contracts,” said SunTrust Robinson Humphrey analysts in a note about Playa. “Combining with Hilton efficiently introduces Playa to new guests given Hilton’s broad geographic sales and marketing footprint, particularly in the group space.

Hilton has 140 properties in the Caribbean and Latin America
Hilton has 140 properties in the Caribbean and Latin America

Playa owns and/or manages a portfolio consisting of 20 resorts (7,769 rooms) located in Mexico, Jamaica, and the Dominican Republic. Many of Playa’s hotels now and increasingly going forward are likely to be affiliated with major international hotel franchisors, which should positively impact margins. “We believe this will be highly valuable for Playa and will act as a major competitive advantage in the all-inclusive resort space,” SunTrust added.

In addition to growing the resort portfolio, partnering with Playa Hotels & Resorts also expands Hilton’s presence in the Caribbean and Latin America. Hilton currently operates nearly 140 hotels and resorts in the Caribbean and Latin America, including nearly 60 properties in Mexico. Approximately 90 properties are in the region’s development pipeline.

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