AMResorts continues to grow all-inclusive
02 DECEMBER 2014 8:34 AM
Resort management company AMResorts is poised for further growth with an inventory of nearly 14,000 rooms across six brands by year end.
PHILADELPHIA—Resort management company AMResorts has been in a state of continuous momentum since January 2013 when private investment firm Bain Capital made an undisclosed equity investment in AMResorts’ parent company Apple Leisure Group.
Thirteen-year-old all-inclusive specialist AMResorts reported 23.2% revenue growth for 2013 when seven new contracts were signed. Now the company is staying the course for another 25% revenue jump in 2014, according to Gonzalo del Peon, president of the company.
“The expectation on (return on investment) is very good this year because we are opening more hotels,” del Peon said. “We’re also expecting similar growth and revenues in 2015.”
By year-end 2014, AMResorts will have an inventory of nearly 14,000 rooms across six brands and 37 operational properties located throughout Mexico, the Caribbean and Central America.
“Our development team has a very clear strategy for securing future locations. We only want beach destinations in leisure markets in the Caribbean, Mexico and Central America,” del Peon said. “We’re not planning to expand to other regions yet as we believe there is still a lot of opportunity in these areas.”
The majority of properties are concentrated in Mexico, where 27 total resorts will dot the country’s Caribbean and Pacific Coasts following the 2015 additions of Secrets Akumal Riviera Maya and Breathless Petempich Riviera Maya.
This approach to such significant growth in a single country is by design, according to del Peon.
Delivering cost efficiencies to owners by centralizing certain operations is a cornerstone of AMResorts’ management practices. Whether managing conversions or new builds, AMResorts regionalizes procurement, allowing for centralized negotiation at the corporate level. Such purchasing practices are used to secure a wide range of products and services, from food and beverage to entertainment acts.
Brand reach, key openings
The cost optimizations that result from clustering resorts helped drive the launch of a sixth brand in late 2013 when Breathless Punta Cana opened as the company’s seventh Dominican Republic property. As del Peon tells it, the adults-only Breathless brand is similar to Secrets Resorts as both attract couples. But while the 12 Secrets properties are designed for romance, Breathless has more live music, DJs and pool parties.
In addition to Secrets and Breathless, AMResorts’ brand portfolio comprises Zoëtry, Dreams, Now and Sunscape.
“Unlike other hotel companies who want more flags in more destinations, we want to grow within one destination,” del Peon said. “Six brands for 37 hotels may sound like too many brands, but we want a stronger presence in destinations where we believe we can be successful. We have a greater marketing presence when we promote the entire destination with more hotels and more brands as opposed to being spread out in too many destinations.”
Breathless Petempich Riviera Maya will become the brand’s second property when it opens in 2016 in close proximity to the company’s eight other Riviera Maya resorts, including Secrets Resorts and the family-focused Dreams Resorts & Spas as well as Now Resorts and Spas.
The Dreams Buenaventura Panama Resort & Spa will open in 2016. Located in a gated, coastal community 80-minutes from Panama City, the property will be AMResorts’ second in Central America, following the November opening of Dreams Las Mareas Costa Rica.
Paralleling the similarities between Secrets and Breathless Resorts, the 12 Dreams Resorts cater to relaxing family vacations, while the four Now Resorts specialize in energizing getaways for families, singles and groups.
“Each of our family brands as well as our adults-only brands have different personalities, and it makes a lot of sense from an investment standpoint to have two hotels positioned for different market segments that share back-of-house synergies,” del Peon said.
Also in 2014, the company debuted in the United States Virgin Islands with the December opening of Dreams Sugar Bay St. Thomas.
“St. Thomas is part of the strategy to diversify our locations within the regions where we’re already located and further develop concepts that have already proven successful in the Spanish-speaking Caribbean,” del Peon said. “We believe there are many more opportunities in the English-speaking Caribbean where we think a lot of hotels are underperforming and where we can bring more value to investors and more tourism to these destinations.”
Operations and guests
Del Peon acknowledged there can be cost differences in operating a single AMResorts property in some locations owning to variations in labor laws and operational costs. Moreover, AMResorts’ primary target guests are American travelers, given the size of the market and its proximity to AMResorts’ locations.
But del Peon is frank: “Operations for an American-focused hotel are more expensive. But there are ways to justify additional operational costs if the product is of a certain quality so that we can exceed client expectations.”
The company supplements its business with Europeans and local markets, particularly on Mexico’s Pacific Coast. “Many of these markets respond well to a product that’s made for Americans,” del Peon said.
AMResorts’ success with Americans partially results from Apple Leisure Group’s other five companies, which serve as major distribution channels for AMResorts. Amstar is the destination management company for all AMResorts properties in Mexico and the Dominican Republic, while tour operators Apple Vacations and Travel Impressions along with online travel agency CheapCaribbean.com and the Unlimited Vacation Club sell stays direct to consumers.
“It makes more sense to work through these distribution channels rather than try to build relationships with 330 million American travelers,” del Peon said.