ALLEGRO RESORTS: OWN AT ONE, OWN AT ALL

Source: Allegro Resorts/ Miami Sun-Sentinal

February 11, 1999
When Americans talk about "all-inclusive" resorts they are usually referring to France's Club Med or Jamaica's two well-advertised chains, Sandals and SuperClubs. Yet it is Allegro Resorts, a lesser-known company based in the Dominican Republic, that claims to be world's largest all-inclusive and now ranks as the fastest growing. Allegro Resorts owns or operates more than 30 all-inclusive resorts, with more than 7,500 hotel rooms -- where room, meals, drinks and other activities are included at a pre-set price.That's more resorts than Sandals and SuperClubs have combined. Unit availability through the timeshare division includes studios, 1-bedroom and 2-bedroom suites.

The majority of Allegro properties are in the Dominican Republic and Mexico, but the chain also operates in Tunisia, Egypt, Morocco and other sites. It also keeps a North American headquarters in Miami, employing about 100 people. This winter alone, it opened three new resorts, including properties in Antigua and Turks & Caicos, both Caribbean sites popular among U.S. tourists.

Timeshare owners in the United States and Canada are more familiar with Allegro's brands than the general public, as they have been traveling to and exchanging into Allegro's resorts for years. The company's timeshare division uses the "own at one and you own at all" approach, with an inner exchange system which allows owners to exchange easily into any of the company's resorts. Exchange fees are included in the low maintenance fee at Allegro, eliminating the need for owners to pay extra each year for an exchange-- as they must do to exchange through Resort Condominiums International (RCI) and Interval International, the two largest exchange companies in the vacation ownership industry.

Though it was Club Med that pioneered all-inclusives, Allegro has refined the idea, with separate brands for singles, couples and families. Plus, it added some features that Club Med hadn't -- such as unlimited drinks, a distinction that Allegro claims boots Club Med out of the all-inclusive group.

The brands operated by Allegro include: Allegro Resorts (formerly Diamond Resorts); Caribbean Village; Jack Tar Village; and the brand new Royal Hideaway.

"Between Mexico, the Dominican Republic and other Caribbean destinations, Allegro has grown at a faster rate than any of the other all-inclusives," said Scott Berman, a hospitality consultant at Pricewaterhouse-Coopers in Miami. "They're very reputable, with well-identified brands." Yet most Americans have never heard of the company for a simple reason: Until December, Allegro hadn't advertised directly to U.S. vacationers.

The chain built its business largely on charters from Europe and Canada, and limited its marketing mostly to travel agents and the travel industry. Now, that's changing. Allegro is launching its first U.S. consumer campaign to coincide with the start of its luxury all-inclusive brand, Royal Hideaway, which will cater more to Americans. The chain opened the first of its deluxe resorts in Playa del Carmen, Mexico, this December, complete with villa-style suites, 24-hour private concierge service and extensive spa facilities.

How did Allegro bloom so fast, with plans to expand in Costa Rica, Thailand and other sites? Hospitality consultants and executives cite mergers and acquisitions -- a favored growth strategy in the hotel business today.

Allegro was born as a merger, between the Dominican Republic's Caribbean Villages Clubs & Resorts and the Texas-based Diamond Hotels and Resorts. And it later bought the Dallas-based Jack Tar Village resort chain. In June 1997, two big U.S. investment companies bought in, supplying $200 million in equity and loans: Westbrook Partners, a New York-based real estate investment management firm, and GE Capital, a Stamford, Conn.-based financial services subsidiary of General Electric Co. That in turn helped open other doors. Last year, Allegro scored a $300 million revolving credit with a group of international banks, with Merrill Lynch arranging the deal and the Industrial Bank of Japan serving as agent.

Hospitality consultants see growing business for all-inclusives, such as with cruise ships, as many travelers seek the ease of a pre-paid package. "The all-inclusives are family friendly, offer perceived value, and sell fun, and for a certain segment of the market, that's important," said Berman. "I expect we'll be hearing a lot more about Allegro."