The Caribbean has long been a region of diverse holiday offerings. In one sense this is, of course, no surprise given how many territories make up the Caribbean family, but with the corporatisation and globalisation of the tourism industry over the years, the diversity of offerings that remain here is testament to unique businesses, and those who’ve built them.
While the resilience of so many small businesses in the tourism industry across the region is clear, so too are global headwinds invariably strong, and so often enduring. That’s why the future of the All-Inclusive Budget Hotel (AIBH) model in the era of corporate expansion and Airbnb is one that must consider a new path.
Between Two Holiday Models
For anyone who looks to a holiday on a Caribbean island, typically two options come to mind. The first is a vacation that provides a high-end experience from start to finish at an all-inclusive luxury resort; a chance to get away from the grind and toil of daily life back home, and sit on a lounger by a pool or on a beach with the knowledge that so much of what one usually needs to worry about on holiday — like arranging for meals and booking tickets for entertainment — is all taken care of.
Then there’s the second type of traveller: those who are perhaps briefly passing through, en route to an eventual holiday destination elsewhere; who are holidaying for a short time with a mix of business and pleasure, or perhaps are passing through exclusively on business. For these travellers, a high-end all-inclusive luxury resort isn’t the right fit. But neither may the rigmarole of an Airbnb be appropriate for them.
The AIBH fills this gap. But while the existence of this sector and its ongoing demand is an achievement in an era of established corporate giants like the major hotel brands and disruptors like Airbnb, it also faces the unique problem of the short-stay vacation trend.
More and more tourists now forgo the long holiday and opt instead for a short vacation. As a trade-off they will usually spend extra money on ensuring that the short vacation has all the trimmings of high-end luxury. In this scenario, Airbnb is unlikely to appeal, but neither will an AIBH. For AIBH providers in the Caribbean, there’s a risk of falling between the cracks.
Today’s Problem, Tomorrow’s Vacation
The advance of ship technology and the increased use of airplanes have seen transport become faster and more affordable than in decades prior, but there has been the knock-on effect of many vacationers having less time to travel than in previous years, and requiring a change in their travel horizons accordingly.
Put simply, when time is short, many who want to vacation can only do so if they stay closer to home. And though advances in transport may have improved travel times, the Caribbean is still thousands of miles from major population hubs like New York and London that have previously been big feeder cities for local tourism.
Those who do travel to this region from afar will often do so with a desire to take in the amenities for which the region’s all-inclusive luxury resorts are famous. If not, they may opt for a trip in their own country rather than travel overseas, utilising Airbnb in their native nation and following the trend of the ‘staycation’, where travellers choose a domestic holiday given the time pressures that don’t allow them to travel far.
The AIBH Advantage over Airbnb
Airbnb’s appeal has two key premises. Firstly, there’s greater flexibility with an Airbnb rental than can (usually) be found with a regular hotel booking. Secondly, Airbnb offers accommodation and opportunities for exploration that usually wouldn’t be available if relying only upon travel brochures or a travel agent for accommodation recommendations.
Unless partnered with Airbnb, a local AIBH is unlikely to have the reach and scope that Airbnb has. With the company valued at over US$ 31bn in 2018, an attempt at direct and head-on competition with it would often prove fruitless. Further, Airbnb not only has a Caribbean presence, but the capacity to draw short-stay visitors in major hubs like New York, London and beyond that a local AIBH provider couldn’t.
But where Airbnb has an advantage on its flexibility, it can fail on its personalisations and service. For a local provider of an AIBH, there’s the prospect of building a loyal customer base from one year to the next, and a reputation built not only on positive online reviews, but local word of mouth.
There’s also the flexibility of building local affiliate relationships with transport and tourism providers, and even other accommodation providers further afield, that the Airbnb model doesn’t naturally cater to. These advantages are not just ones that Airbnb will struggle to acquire anytime soon, but ones that the AIBH must press in future to maintain — and grow! It will be its market niche, especially as many major hoteliers, like Mexican giant Grupo Posadas which is set to expand into the Caribbean, have signified their openness to partnering with Airbnb.
Short and Sweet
Just as Airbnb’s arrival was incorrectly predicted to signify the apocalypse for small tourism providers (with some now having actually turned Airbnb into an asset, using it to boost bookings in their hotels), neither is the high-end, short-stay trend likely to capsize local small business tourism providers overnight. But the trend seen growing is a threat to the AIBH model.
The good news is the that the trend of short-stay vacations is growing, but gradually. As it does, a new emphasis upon drawing Caribbean tourists from the Caribbean (as well as growing markets in northern Latin America, and the southern US states) will become more and more important. It’s no secret that airfares to many Caribbean nations remain expensive, but it’s here that the AIBH has an opportunity to offset those costs with the promise of great but simple and affordable local accommodation.
The aim of the AIBH needs to be that even if more and more travellers do decide to stay closer to home, or arrive exclusively for high-end holidays, they’ll remain a sizeable audience to engage and entice by promising that a short trip into the region is possible and affordable, with a plane ticket and an AIBH booking combined.
