When news broke last week about Royal Caribbean buying a 50% stake in Sandals and Beaches Resorts for $3 billion, my mind began racing with a bunch of questions, once I was able to pull my jaw off the floor.
I wondered what might change for the resorts? How will travel advisors be impacted? And how long before Royal Caribbean announces a Perfect Day Jamaica destination?
These were just a few of the questions that came to mind after reading the shocking news in the Financial Times. I was in Europe for a new river cruise debut, checking the news before I went to bed. Hours later when I woke up, the official press release confirming the reports was sitting in my inbox.
A few weeks ago, I was with Sandals executives at the annual travel advisor golf tournament, where they teased big things on the horizon. I couldn't get the scoop beyond how excited they were about the future ahead. Never did I think the news would be this big.
After reaching out to elite-level travel advisors, I discovered that the partnership was being met with mixed reviews.
The concerns included Royal Caribbean providing passes to cruise guests to visit Sandals and Beaches resorts. There are also worries about what perks Royal’s top loyalists might inherit to use at the resorts. Some advisors also expressed fears about what might happen to Sandals and Beaches resorts now that the brand has to answer to a board of directors and shareholders.
Mergers and acquisitions in the travel industry have been hit or miss, and these are two mega brands, so the initial unknowns are raising some flags.
And then there are questions about what will happen next.
Resort expansion is of course on the horizon. How could it not be? We knew the brand was already pouring in tons of money to expand Beaches Resorts, as well as spending $200 million just to renovate its Jamaica resorts impacted by last year’s hurricane. With even more money now to work with, building new resorts is a no brainer.
Sandals Executive Chairman Adam Stewart confirmed the expansion news to travel partners last week, while also reassuring advisors that Sandals will remain Sandals and Beaches will remain Beaches.
So it does not appear cruise guests will get day passes to Sandals or Beaches Resorts in the Caribbean.
At least, for now that is.
I have to think that will always remain the case. Sure, selling day passes to the resort for cruise guests would generate a significant amount of revenue. However, I think the backlash from loyalists would be too big of a risk for these brands to mess with. Both Royal Caribbean and Sandals have long said how much they value travel advisors as well.
What I could happening however, is land and sea packages being offered, which allow guests to stay at a Sandals or a Beaches resort first and then board the cruise ship from the Caribbean. Or maybe guests board a Royal Caribbean ship, sail for a few days, get off in Jamaica, stay at a Sandals for a few days and then board another ship to return to the states.
It's unknown know how much land Stewart actually owns in the Caribbean, but I imagine he’s well set up to build around the properties he already has. That’s what many advisors told me following the news. And with a massive cash infusion now, he has a lot to work with to buy more property if he chooses to.
I think expansion starts in the Caribbean first before any major global push happens. But one has to think they will venture over to Europe eventually, right?
I’ll toss out two predictions for this partnership: Perfect Day Jamaica or some new Jamaica Beach Club for Royal Caribbean will be here before the decade ends. And at some point over the next five years, I predict a Sandals Mediterranean will be announced.
Royal desperately needs another private island-type port of call in the Caribbean. With the initial plans for Perfect Day Mexico falling through, it makes perfect sense to build it (or something like it), in Jamaica instead. This should also ensure guests that cruise ships wouldn't be sending guests to the resorts.
The Mediterranean has seen the growth of all-inclusive resorts in the last few years, with ALGV's deal with Hyatt adding to that. Is there room for Sandals to move in and compete in that market? I think yes.
Another area that hasn’t been discussed as much is the technology support that Sandals and Beaches should benefit from thanks to new help from Royal Caribbean now.
Bottom line? Overall, this partnership is a good thing for the travel industry and for travel advisors.
Change can be scary, but both of these brands understand the true value of the advisor, and they each have superb executives leading the charge.
We’ve already seen the success of the last few years Royal has had under Jason Liberty. With Stewart still running point for Sandals following this deal, the brands both remain in excellent hands. I look forward to seeing what comes next and how it will benefit the travel industry at large.
Let me know your thoughts and follow me on social media: @EricBowman_
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