The pandemic has helped more hoteliers recognize that the all-inclusive segment sets up well for stressed out consumers looking for getaways that don’t require too many decisions to be made. Big brands such as Marriott and Hyatt are now rushing to add more all-inclusive properties to their portfolios and woo guests with the assurance of stress-free stays with all the trimmings.
That said, Adam Stewart, executive chairman of Montego Bay, Jamaica-based Sandals Resorts International, knows not only did his company pioneer the concept and help create demand for all-inclusive, he also continues to believe it sets the benchmark for the best in class.
“The future is about relevancy, authenticity, sense of place and luxury,” said Stewart, who learned so much from his pioneering father Butch, who died earlier this year and left his son the legacy brand. “We’re building rooms that cost us US$1.2 million per key. That is a real investment. Unlike our competitors, we own our hotels, which gives us supreme agility,” Stewart added.
Although Sandals’ total key count is only 6,000 over 25 properties, Stewart derives further confidence from the brand’s long-standing recognition and repeat rate of over 40%. Since the first Sandals property opened in Jamaica’s Montego Bay in November 1981, it has been a 40-year-long journey navigated by his legendary father. Now it is Adam’s turn to helm the company so widely known for its resorts across the Caribbean Islands.
Kickstarting this year’s 40-year anniversary celebrations of Sandals, Stewart said his focus is on building his family’s legacy, growth and innovation. He recently spoke to HOTELS to share more about his plans to keep the Sandals legend alive and well.
H: What is the most important lesson that you learned from your father? How do you keep the legacy alive and how do you evolve Sandals, especially as competition heats up in the segment? How is your style different from your father’s?
Adam Stewart: The most important lesson I ever learned from my father was to never stop innovating. He was genius in perpetual motion. To him, the highest goal was always to exceed expectations, which means to continue evolving and never resting on laurels. There is only the next opportunity to delight the customer.
From the beginning, Sandals has been on a mission to improve the all-inclusive experience. And while relentless innovation is the hallmark of the brand, it was in 2007, as the last great recession was beginning to stall bookings and stifle industry investment, that we made a bold decision and introduced the “luxury Included” concept that would change the trajectory of Sandals Resorts.
We reimagined the way we did and approached everything from suite concepts and partnerships to food and beverage and service standards. Everything.
By its very nature, the luxury market is resilient and from our deep experience in the honeymoon, bridal and weddings market — there are aspirational moments across audiences that only a luxury experience can satisfy.
We prefer to race to the top. As more and more hotel companies added breakfast and dinner to an EP rate and donned the all-inclusive label, it was becoming clear that folks would be competing on price. That was never our business model and so we decided we would compete on our own terms, offering more inclusions, incredible suites, premium locations and so on.
As for me, I am focused on building upon our family’s legacy and on growth and innovation, where we compete only with ourselves.
H: Sandals pioneered all-inclusive, couples-only resorts 40 years ago. Why are the major players starting to play catch-up now only now? How do you see Sandals competing with these big brands?
AS: The all-inclusive concept – and there are many variations, is the fastest growing segment of the hotel industry and Sandals not only helped create that demand but set the benchmark for best in class.
Always, we define excellence by exceeding expectations and giving our guests value for their money. This is why innovation is key. The future is about relevancy, authenticity, a sense of place and luxury. We’re building rooms that cost US$1.2 million per key. That is real investment. Unlike our competitors, we own our hotels which gives us supreme agility.
The ability to move on a dime to make things better and better and treating staff and customers like family has had the biggest impact on guest service and I think that’s the real Sandals difference. We have an authentic and meaningful connection with our guests, some who have enjoyed more than 1,000 room nights with us. We have a repeat rate of close to 50%. They are our best brand ambassadors.
H: What is the current size of your portfolio?
AS: Sandals Resorts International currently owns and operates 25 resorts under five brands – flagship Sandals Resorts for adult couples; family-friendly Beaches Resorts; private island Fowl Cay Resort: the private homes of Your Jamaican Villas and Grand Pineapple Beach Resorts.
The company has always punched above its weight in terms of reputation, and so while our total key count of 6,000 across Sandals Resorts and Beaches Resorts brands is small in comparison to the international players, we enjoy incredible worldwide awareness and an enviable repeat rate of well over 40%.
We are also very fussy about density. We could triple the room count of our properties, but we design them to feel like they are empty even if they are full.
H: What is in the Sandals pipeline? Are you developing ground-up or acquiring and repositioning assets?
AS: Sandals Resorts will double its current portfolio over the next 10 years through a combination of ground-up development, expansion of existing hotels and acquisition of assets. We have a bold plan for growth and, as we did during the last economic downturn when we purchased the former Four Seasons, now Sandals Emerald Bay in the Exumas. We are well-positioned and reinvesting in our business and in our home region.
Unlike the asset-light model favored by many hotel companies, Sandals is a rarity in the industry because we own all our hotels as well as the last parcels of best-in-class real estate in the Caribbean. We believe this gives us tremendous flexibility and the ability to address evolving customer desires and demands quickly.
We begin with five new resorts under development, three in Jamaica, our first in Curacao and our first in St. Vincent.
In Jamaica, our home country, we acquired Sandals Dunn’s River – which we actually operated in the 90s. It’s great to have it back in the fold and in addition to the original property, we purchased the adjacent land. Our first-phase development is focused on Sandals Dunn’s River, where we are spending US$125 million gutting the property and bringing it back to life. Phase 2 will introduce Sandals Royal Dunn’s River, a US$200 million investment that will operate like our sister hotels in Barbados, side by side resorts with complimentary services and amenities and more restaurant concepts and bars for guests to enjoy.
We’re also building our third Beaches Resort in Jamaica – Beaches Runaway Bay. In total, these three hotels represent more than US$500 million in investment.
Our first hotel in Curacao will debut in April 2022. This is our eighth destination in the basin and the first in the Dutch Caribbean. The property was owned by a private Dutch family, and later ran as an independent hotel. We’re spending US$75 million to bring it to our standards, a term we like to call the ‘Sandalization process’ and we’re introducing new concepts there that we know will delight guests.
In early 2023, we will unveil our first property in St. Vincent, a new Beaches Resort. Beyond our acquisition costs, we’re sinking US$200 million into this property and it will be a phenomenal escape for families.
H: Do you have capital partners to acquire?
AS: We use regional banks and finance each asset independently, one at a time. There are eight to 10 banks in the Caribbean that we have used for many years and have also been offered financing internationally and may look to the international markets more as we accelerate the growth plan of the company.
Examples of partners include CIBC Canadian Bank, which is financing Sandals Dunn’s River and Jamaican National Bank that has financed another development.
H: Any plans of expanding beyond the Caribbean?
AS: We’re a Caribbean company doing business in the Caribbean. This is our playground, and no one knows the region, the people and its possibilities better than we do. Sandals Resorts is the largest private employer in the Caribbean and our roots here go deep. I am a sixth generation Jamaican, and I am raising my children here. The Caribbean is our home and the link between tourism and the wellbeing of the local Caribbean communities where we operate is undeniable.
H: The pandemic has given the all-inclusive resort sector a major boost. How has Sandals performed throughout the pandemic and how has it performed in the last six months?
AS: The year 2019 was our best ever and as a group, 2020 finished not too far behind. We credit our incredible rebound in large part to the ‘Sandals Platinum Protocols of Cleanliness,’ which we introduced in early 2020 in partnership with the CDC, WHO and the local Ministries of Health in the countries where we operate. Our recently announced Sandals Vacation Assurance program is a continuation of this effort. It’s all about trust.
When we reopened in June 2020, the hotels were at 40% occupancy, by November that ticked up and today we’re full and heading into the best winter season we have ever had.
H: What is your forecast for the upcoming winter season? Do you expect to be able to drive rate, or have you been driving rate the past few months?
AS: Traditionally, September and October are usually challenging months to fill. This year, we are ahead of 2019 in arrival occupancy and we’re carrying this momentum into the winter. There is still pent-up demand, and I believe travel has a profound impact on families and people and they are making it a priority.
H: What are some of the challenges you have faced during the pandemic? What have been some of your remedies or fixes?
AS: The pandemic was a significant bump in the road, but I think the Sandals Platinum Protocols of Cleanliness were an important fix and part of the same strategy that inspired the development of ‘Sandals Vacation Assurance,’ which we launched early in September, a vacation protection program featuring an industry-first guarantee of a free replacement vacation including airfare for guests impacted by COVID-19 related travel interruptions. Trust is what will lead to travel.
H: What is your biggest challenge and opportunity moving forward?
AS: I believe they are one in the same – and that is our supreme focus on the Caribbean. My father built the only super brand to come out of the Caribbean, and in doing so, proved that the Caribbean can stand on the world stage, secure in its own unique offerings, heritage, and possibility. We believe in its authenticity, its beauty and in its people.