Last updated: 01:25 PM ET, Tue June 14 2016

Hotel Groups Against Aruba Legislation To Limit All-Inclusive Resort Growth

Destination & Tourism | Brian Major | June 13, 2016

Hotel Groups Against Aruba Legislation To Limit All-Inclusive Resort Growth

PHOTO: Aruba’s hotel and tourism association is among the groups calling for Aruba’s prime minster to abandon proposed limits on all-inclusive resorts. (Photo by Brian Major).

Only four of Aruba’s 22 major hotels are all-inclusive properties. But the Dutch Caribbean nation’s tourism minister is backing legislation to establish new regulations on all-inclusive resorts and limit their future growth in Aruba.

In response, officials at the Caribbean Hotel & Tourism Association (CHTA) this past week called on Michiel Eman, Aruba’s prime minister, to “abandon the proposed legislation,” describing it as “counterproductive to the health and growth of the Aruba tourism industry.”

The legislation would “[reverse] the progress the destination has made in recent years,” said Frank Comito, CHTA’s CEO and director general.

"We urge stakeholders from government, the Aruba Hotel and Tourism Association (AHATA) and other interests to work together to fully assess the all-inclusive [segment],” the CHTA letter reads. The officials request Eman study and evaluate “offerings, trends and positive approaches to address some of the concerns which underpin the reasoning for the proposed legislation.”

Aruba’s parliament is currently considering the legislation, presented in April by Otmar Oduber, Aruba’s minister of tourism. Oduber’s bill stems from concerns first expressed in 2014 by local restaurant operators who claimed Aruba was attracting an inordinate number of all-inclusive hotels, said Jim Hepple, AHATA’s president and CEO.

Officials at Aruba’s Ministry of Tourism, Transportation, Primary Sector and Culture issued the following statement Monday: “Given Aruba’s high level of dependence on the tourism industry, it is imperative to formulate policy that best meets the island’s general interest and to re-address policy in respect to accommodation providers on island.

“As such, the Aruba Tourism Authority (ATA) in close collaboration with the government has conducted the necessary analyses and formulated actions, with a goal of fostering a healthy and balanced portfolio of accommodations on island, and consequently a healthy contribution to Aruba’s GDP.”

The tourism ministry statement notes that “Aruba ranks number one in the Caribbean in terms of relative size of total travel and tourism contribution to gross domestic product (GDP), with tourism/travel representing 91 percent of GDP and 93 percent of total Aruban employment, according to the World Travel and Tourism Council.

Aruba hosted 1.22 million overnight visitors in 2015, a 14.3 percent increase over the country’s record 1.07 million visitors in 2014, according to ATA data.

Despite the destination’s strong growth Oduber made it clear changes were planned, revealing at a 2015 meeting with AHATA his planned legislation would cap the number of all-inclusive hotel rooms available to travelers at 40 percent of the country’s accommodations, said Hepple.

Oduber also said Aruba’s existing hotel licenses would be revoked and replaced with licenses permitting the minister’s office “to determine how a hotel could market itself and set its prices.” Finally the minister said capping further expansion of all-inclusive accommodations in Aruba would achieve “a proper balance of tourist accommodation,” said Hepple.

The AHATA president said Oduber’s proposed legislation was driven in part by the October 2014 opening of the Riu Palace Antillas, which in previous years operated as a European Plan (EP) property under the Westin brand. Months earlier, said Hepple, the government intervened to ensure the former Radisson Aruba hotel, then up for sale, would not become an all-inclusive under the Riu brand. The property currently operates as the Hilton Aruba Caribbean Resort and Casino.

By the summer of 2015 Oduber had announced Aruba’s government was “extremely concerned at conversion of existing, well-established EP hotels on the Palm Beach strip being sold and converted into all-inclusive resorts,” said Hepple, leading to the meeting with AHATA.

Both Hepple and CHTA officials describe Oduber’s rationale as short-sighted. “We strongly disagree with the premise being advanced,” the CHTA letter reads, “and counsel that the reverse effect would occur should the legislation be adopted, ultimately negatively impacting employment levels, the cost and availability of air transportation, and government revenues, while reversing Aruba's enviable growth and positioning in the regional and global tourism arena.”

The letter adds, “Consumers determine demand and drive supply. The global growth of the all-inclusive accommodations sector is being driven by a significant and growing segment of the travelling public which prefers the offering.” 

In addition, the all-inclusive segment has broadened in recent years so that “the high-spending luxury traveler represents the fastest growing market segment turning to all-inclusives.”

Hepple also questioned the legislation’s structure, noting that at the time of Oduber’s announcement Aruba’s government “was in the process of entering into a deal with Bahia Principe Hotel Group to build 900 all-inclusive rooms in the south of Aruba.” A 124-room, all-inclusive Zoetry property is also planned for Aruba’s west coast, he said.

“So this meant that we have 5,300 rooms now of which 1,838 are all-inclusive. If the Bahia Principe and Zoetry were added to this that would make 6,324 rooms of which 2,862 (45 percent) would be all-inclusive,” said Hepple. “So what did this 40 percent cap mean?”

CHTA’s Comito said “both residents and travelers benefit from more and lower cost airlift generated by all-inclusive resorts.” He also noted that the Dominican Republic, Cuba, Cancun and Jamaica “have experienced the most growth in room inventory, most of it attributed to the growth of all-inclusive resorts” and “correspondingly, these destinations continue to experience the highest growth rate in tourist arrivals.”

The proposed legislation’s impact would extend beyond current market and dynamics and ultimately “determine who the owner could sell a hotel to inasmuch as if the purchaser wanted to operate it as an all-inclusive this would be determined by the minister,” said Hepple. 

He added, “This would severely impact the overall investment climate and investors perception of Aruba as being a safe place to invest.”

Hepple said AHATA officials “agree that some form of management of the tourism sector is necessary” and requested “a cooling off period to allow a further study of not only the all-inclusive issue but the impact of the dramatic increase in demand for non-traditional tourist accommodation,” including home-sharing models.   

He called these alternative accommodations “in many ways is a more serious issue in terms of its impact on our economy than the expansion of all–inclusive product.” 

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