Newton Square, Pa.-based Apple Leisure Group is one of the largest sellers of vacation packages in the U.S. for travel to Mexico and the Caribbean and the managers of luxury resorts through AMResorts’ portfolio of brands, Zoëtry Wellness & Spas Resorts, Secrets Resorts & Spas, Breathless Resorts & Spas, Dreams Resorts & Spas, Now Resorts & Spas, and Sunscape Resorts & Spas.
Most recently, the company announced it closed the first half of the year with 12 new resorts and 10,000 rooms under development. The group also is focusing on growing its distribution companies in order to support the development of its other business units as a collective entity. Earlier this year, ALG and The Mark Travel Corporation signed a definitive agreement to join forces to create an integrated leisure travel and technology solutions company. The acquisition also significantly increased ALG’s distribution network and led to the renaming of ALG Distribution to ALG Vacations.
Although U.S.-based, the company has found a home in its global strategy. EVP and Chief Strategy Officer Javier Coll recently connected with Hotel Management to discuss the group’s global approach, what other U.S. investors can learn from its international game plan, and the opportunities and challenges that lie ahead.
1. What exciting new project(s) is in the works for your company, and why is it a good fit for your portfolio?
ALG is continuing to break records and advance its global expansion strategy through the launch of two new resort brands, the acquisition of new companies and entry into new markets across the globe. In May 2018, we announced that we are bringing AMResorts’
award-winning brands, Secrets Resorts & Spas and Dreams Resorts & Spas, to Europe. We also announced the creation of Amigo Hotels & Resorts, a new three-star all-inclusive resort brand catering to families and couples, emphasizing a high caliber of service and quality-driven [food-and-beverage] program.
In June 2018, AMResorts and Grupo Hotelero Santa Fe, one of Mexico’s hotel industry leaders, announced the signing of a strategic alliance where AMResorts’ new brand, Reflect Resorts & Spas, and Krystal Grand will partner starting July 1, 2018, in resorts in Punta Cancun, Los Cabos and Nuevo Vallarta. Overall, we see that Mexico has a wealth of opportunity, and we have the expertise to identify these opportunities for hotel owners and maximize their return on investment.
Additionally, in July 2018 we announced our entry into St. Martin with the signing of a new resort brand management deal to bring our Secrets Resorts & Spas brand to the French side of the island. We have deep roots in several countries in the Caribbean, and we have the largest pipeline of all-inclusive resorts in development in the region. Several of the most popular destinations in the Caribbean are easily accessible to North American travelers through nonstop or one-stop flights, making the region a key part of our growth strategy.
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2. U.S. investors are always looking for the next good deal. When it comes to global development for investors based in the U.S., what are some important things they should know?
There are several benefits to investing in the international hotel industry. Overall, it gives investors a solid opportunity to diversify their assets, which helps to achieve a higher risk-adjusted return. For example, several countries across the Caribbean and areas of Mexico are deeply committed to working in partnership with private businesses to grow their tourism sectors. That partnership accompanied with highly competitive tax exceptions and incentives from the government make it a highly attractive market to look to invest in.
3. Where does ALG like to be (in terms of geography, segment, etc.), and why?
Historically speaking, ALG has invested significantly across the Caribbean, Central America and in Mexico, where we have powerful distribution channels, partnerships with countries that offer reliable infrastructure to accommodate increased visitor numbers, and of course stunning beaches to attract travelers from North America. However, while we will continue to place our bets on Mexico, the Caribbean and Latin America, we are now also including Europe in our global expansion scope. To start, we are expanding our footprint in Spain, with an eye on highly popular beachfront destinations in the country.
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4. Some may say we are headed for a downturn soon. Do you agree? What do investors need to keep top of mind in order to keep their heads above water?
Yes, the market is a cycle and naturally it will experience a downturn just as we saw in 2008. In order to stay ahead of the competition, I recommend considering a brand conversion strategy, especially in markets where economic and political changes are on the horizon. Conversions will be especially critical where new construction is poised to oversaturate the market with guestrooms. For owners of existing hotel properties, it’s imperative to consider a brand conversion before the downturn. If planned and implemented well, property renovations can bring strong financial benefits.
5. Tell us about one opportunity and one challenge for your company over the next year.
Now more than ever, there is an opportunity for hotel owners to invest in the international travel market, as we’ve seen a steady increase in travel to the Caribbean, Mexico and Latin American regions. The U.S. government has issued millions of new passports over the past couple of years alone, so that’s a great sign.
A challenge we will definitely need to watch for is the potential oversupply of hotel rooms in specific markets that may cause softening of room rates. Again, considering a brand conversion will be key to staying ahead of the present competition.