When news broke last week about Royal Caribbean buying a 50% stake in Sandals and Beaches Resorts for $3 billion, my mind went racing with bunch of questions once I was able to pull my jaw off the floor.
What all might change for the resorts? How will travel advisors be impacted? How long before Royal Caribbean announces a Perfect Day Jamaica destination?
These were just a few that filled my head after reading the shocking report from the Financial Times. I was in Europe for a brand-new river cruise debut, checking in on the news before bed. Hours later when I wake up, the official press release confirming the reports is 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 were on the horizon. I couldn't get the scoop beyond how excited they were about the future ahead. Never did I think it would be this big.
After doing some reach out to elite level travel advisors, I found the news was met with some mixed reviews.
The concerns are there about Royal Caribbean giving passes to cruise guests to visit the resorts. As well as what perks might Royal’s top loyalists might inherit to use at any of the resorts. Some worried about the resorts and what might happen 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 unknown raised some flags.
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 the Jamaica resorts impacted by last year’s hurricane. With even more money now to work with, building new resorts is no a 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 though. 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 could happen is land and sea packages where you stay at a Sandals or a Beaches first and then board the cruise ship from the Caribbean. Or maybe you board the ship, sail for a few days, get off in say Jamaica, stay at a Sandals for a few days, then board another ship to return back to the states.
Plus, I don’t 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 if he wants.
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 from 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 they’ll announce a Sandals Mediterranean.
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 come 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 the Royal Caribbean side now.
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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