Last updated: 08:52 AM ET, Thu September 22 2016

Aruba Enacts Limits On All-Inclusive Resort Proliferation

Destination & Tourism Brian Major September 21, 2016

Aruba Enacts Limits On All-Inclusive Resort Proliferation

PHOTO: Aruba passed new limits on all-inclusive accommodations despite opposition from the country’s hotel and tourism association. (Photo by Brian Major)

Defying objections from several hotelier organizations, Aruba last week modified its Permit Law to restrict the island’s percentage of all-inclusive resort accommodations to a maximum of 40 percent of the country’s hotel rooms.

The southern Caribbean island’s government also placed an annual 20 percent cap on all-inclusive room nights sold by “European plan” or traditional hotel properties.  

“Given Aruba’s high level of dependence on the tourism industry, we believed it was imperative to formulate policy that best meets the island’s general interest and to re-address policy in respect to accommodation providers on island,” said Otmar Oduber, Aruba’s minister of tourism.

“The new regulation will ensure all actors remain active in the tourism industry and allow for a healthy contribution to Aruba’s GDP, currently 91 percent reliant on tourism and travel,” he added.

In June, officials at the Caribbean Hotel & Tourism Association (CHTA) asked Michiel Eman, Aruba’s prime minister, to “abandon” the proposed legislation, describing any limit on all-inclusive accommodations as “counterproductive to the health and growth of the Aruba tourism industry.”

Government officials last week brushed those concerns aside. “Aruba’s government and tourism officials conducted the necessary analyses and formulated actions that specifically impacted the future of the destination’s all-inclusive sector,” said tourism ministry officials in a statement.

“The vision for a balanced mix of accommodations stemmed from research derived from more than 13 publications, suggesting a correlation between all-inclusive resorts and a decreased effect on local spending and immersion in local culture,” the statement adds.

Jim Hepple, president and CEO of the Aruba Hotel and Tourism Association (AHATA), said earlier this year Aruba’s government was motivated by concerns expressed in 2014 by local restaurant operators who claimed Aruba was attracting an inordinate number of all-inclusive hotels.

Hepple and CHTA officials have called described the modifications short-sighted, saying an all-inclusive limit would ultimately hurt employment levels, the cost and availability of air transportation and government revenues.

“Aruba’s goal is not to completely eliminate all-inclusive resorts, as we understand this market is considered to be the fastest growing segment of the leisure travel industry in the next 10 years,” said Ronella Tjin Asjoe-Croes, CEO of Aruba Tourism Authority.

“Rather, our goal is to remain competitive and create balance, while re-evaluating the policy every five years to ensure Aruba’s best interests continue to be met,” she said. “Ultimately, a healthy mix of on-island accommodations is crucial to the success of Aruba.”

The modifications include a “Grandfather Right” under which properties that prior to May 9 operated as all-inclusive resorts have received permits to continue those operations for 20 years.

Additionally, hotels that have not offered more than 20 percent of their inventory as all-inclusive are permitted to continue those operations. Hotels not exclusively all-inclusive resorts but with more than 20 percent of their inventory allotted to all-inclusive packages will have two years to reduce their percentage of all-inclusive accommodations to a maximum of 20 percent.

Asjoe-Croes said the new regulations also reflect Aruba’s acknowledgement of the impact of sharing economy providers on Aruba’s hospitality segment.

“Aruba embraces the concept of sharing economy and is exploring areas where [it] will add value to the community as well as the visitor,” she said. “As part of this proactive approach, we have entered into discussions with AirBnB to formalize a relationship with the online community.

“Our goal is to work together to drive more sustainable and unique tourism to the island,” she said, “help make Aruba a regional leader in the sharing economy and continue to position Aruba as a world-class tourist destination.”

Aruba recorded an island record of 1.22 million overnight visitors in 2015, a 14.3 percent increase over 2014, also a record year for the destination.

Aruba’s hotel sector also showed growth last year, with occupancy growing by 8.3 percent in 2015, while ADR increased 2.7 percent to $237.39. Aruba’s RevPar (revenue per available room) has steadily increased in recent years and in 2015 totaled $191.10, higher than the Caribbean average of $158 according to data from travel research firm STR.