All-inclusive hotels

The all-inclusives issue continues to dominate the tourist scene - not just in Alcúdia, but also in Pollensa and elsewhere. The manager of one up-market restaurant in the old town of Pollensa was laying the blame on all-inclusives for a less than great season. Wherever you go, you hear the same sort of thing. The problem is that, depending on your point of view, embracing the all-inclusive is a case of either being in bed with the devil or in bed with Madonna.

I have had some harsh words for all-inclusives here. Fundamentally I don’t see that conditions apply which make the all-inclusive (AI) something of a necessity. Personal security, remoteness, lack of infrastructure; none of these apply in Mallorca. And yet, the AI offer marches on.

There is no doubt that the AI attracts - in part - a low-rent market. We’ve heard enough of fighting and bad behaviour, of drunkenness, of kids hyper on Coke overdoses to know that such low rent exists. But it is not the whole truth. Far from it. There are plenty of people who opt for the AI for sound reasons. Some of them would rather go for something else, but the advantages are clear.

Today’s tourist is a savvy consumer. He or she can get information far more easily than was the case even ten years ago. This is a consumer much more attuned to extracting value for money from what is - let’s face it - a major annual investment. If by using the Internet and other sources, the consumer can learn that some 1000 euros can be saved going AI over other forms of holiday, you bet your life the consumer’s going to go for it. Why the Hell shouldn’t he or she? If that same consumer can discover from forums and other media that such-and-such an AI offers great entertainment for the kids and other factors that will guide a parental decision, then he or she will take it.

There are other factors. Take local costs. Mallorca is more expensive than it was. The Euro is at least partly to blame for this. The savvy consumer knows this, can find out the costs of beer, food, etc and make the calculations.

For many local traders, this is all bad news. It’s not that folk at an AI do not go out; that’s a complete fallacy in many cases. But the logic of the market is such that if you have paid once for something you have less or no incentive to pay a second time. Inevitably the out-of-hotel spend is going to come down and is coming down.

The fact is that the AI is not going to go away; much as some might will it to. And yet, within the context of this changing market, you still get people willing to take on premises, often at high rents, who then moan that the AI is ruining their business.

Calls (to politicians and even the King) for intervention in this market might stem the tide of AIs, but if a free market is operating then it is hard to see how without what might be deemed restrictive practice. The anti-AI lobby has classified the AI as operating a system of “imperfect competition”. It’s an attractive argument but it ignores the logic of the free market, and the logic of consumer choice.

There are those who feel that tourists in some way “owe” the places which they visit. This “owing” is made tangible in the form of local taxes. But there is the intangible “owing”. It’s cloud-cuckoo land. The tourist may well “love” a place and go back year on year, but they are still making a consumer purchase not engaging in an act of philanthropy. Sad to have to have to say it, but much as people might love a place, if what they really want (good value for money at an AI) is denied them by political act or other means, they will stop loving a place and go somewhere else.

The AI has changed the nature of the market. It is for the market to make an adjustment to it. Ultimately if the AI (and other factors, and let’s not just blame AIs) cause a fall in demand, then the supply has to alter. If that means less, then so be it. That’s a harsh appraisal but I think a realistic one.