This story originally ran in the September 28th, 2017 issue of Travelweek magazine. To get Travelweek delivered to your agency for free, subscribe here.

TORONTO — Even if the 2017 hurricane season delivers more blows – and this year is already one for the books, with Harvey, Irma and Maria and now potentially Nate in quick succession – it would take more than a few storms to deter Transat from its plans to develop its own resort chain.

Back in July Transat A.T. Inc. announced it was offloading interest in one hotel chain to focus on the development of its own hotel chain in the Caribbean. The company signed an agreement with H10 Hotels for the sale of its minority 35% interest in Ocean Hotels, for US$150.5 million.

“Transat remains fully committed to becoming a full-fledged hotel operator and is selling its minority interest in Ocean Hotels in order to accelerate the development of its own hotel chain in the south,” said the tour operator.

Added Transat A.T. President and CEO Jean-Marc Eustache: “Owning a minority position in Ocean has been a valuable venture for Transat both economically and strategically, allowing us to develop an expertise and insight into the hotel business. Being a minority owner was no longer an interesting use of our capital as we embark on further investments in the sector. We want to control our own destiny, and this transaction is the ideal springboard for building a hotel chain that reflects our style.”

Transat says its wants its new resort chain, now in development, to reflect the company’s style. Seen here, an aerial view of Cancun’s popular Hotel Zone.

H10 already owns the other 65% as part of a co-venture created in 2007. The transaction is set to close Nov. 2.

Transat got its feet wet, so to speak, with the Ocean Hotels deal. “Transat has been interested by the hotel industry for a long time. That is the reason why we originally invested in Ocean Hotels together with H10, back in 2006,” said Odette Trottier, Transat’s Director, Communications and Corporate Affairs, in a recent interview with Travelweek.

Air Transat took to the skies back in 1987 with a flight from Montreal to Acapulco; 30 years later it carries nearly 4.5 million passengers to some 60 destinations in 26 countries. While Eustache says the recent hurricanes could negatively affect Q4 forecasts, the company has weathered plenty of ups and downs over the years as both an airline and a tour operator and so far it’s full steam ahead for the development of the new resort chain.

Vertical integration is crucial, says Trottier. “It becomes more and more important for leisure travel companies to control the actual products – the flight, transfers and excursions, and, of course, hotels,” she says.

The challenge, she says, is the time it takes to establish a brand “and build the critical mass.” And what’s the advantage? “You can design your offering to exactly match clients’ expectations.”

There are options beyond the Caribbean and Mexico for Transat’s new resorts, says travel agent Sandra McLeod, Owner, RedDoorTravel in LaSalle, ON. “Hawaii comes to mind. I often get clients asking about all-inclusive resorts there,” she says.

Sandra McLeod, Owner, RedDoorTravel in LaSalle, ON, says Transat got exactly what it was looking for out of its deal with H10: “Their ownership [in Ocean Hotels] allowed them to learn how to operate hotels and resorts.”

Moving forward, says McLeod, “they will be in full control rather than owning a share in a hotel or resort chain.”

As for what sort of resorts Transat will build, “time will tell,” says McLeod. “If I were to guess, I would say they will have a range to product because that has been their customer base. They have been focusing on bringing luxury into their offering so I imagine their resorts will have some luxury offerings but will also have family resorts as well.”

For her part McLeod says she would like to see “smaller resorts with beautiful settings unique to the area”, offering gourmet cuisine and unique activities, from cooking classes and shopping with the chef to fitness classes in well-equipped gyms, wonderful spas and enrichment lectures on various current topics and local history.

Any new Caribbean resorts looking to successfully fill a niche would also need to be environmentally friendly, and use social media and technology to their advantage, both in marketing and with interactive media at the resorts, she adds, noting that a ‘Waze’ type app could help guests find their way around the properties.

Interactive technology is coming onboard the cruise ships, most notably with Carnival Corp.’s wearable tech devices, Ocean Medallion, making their debut on select Princess Cruises ships starting in fall 2017, and MSC Cruises’ ‘MSC for Me’ bracelets.

And just like the cruise lines say their biggest competition is not with each other but with resorts, now any company looking to compete with its own Caribbean vacation product has to keep an eye on what the cruise companies are doing. “They are not only competing with the resorts but also with the cruise lines,” says McLeod. “The cruise lines are becoming more innovative in their offerings, especially in the mass market / big ships. The larger ships are now destinations in themselves so they are competing in similar markets [as the resorts].”

McLeod adds that with its new resorts, Transat “may decide to venture into areas that currently do not have a lot of resorts, which would be good to give clients more areas to travel to and be confident of accommodations and service. Hawaii comes to mind. I often get clients asking about all-inclusive resorts there.”

The number of all-inclusive resorts in Mexico and the Caribbean has skyrocketed in recent years, as a long list of hotel and resort companies have laid claim to prime beachfront space across many of the destinations and made no secret of their aggressive growth plans. Between established hotel chains, and new hotels developed by tour operators, the all-inclusive resort industry has become a crowded field.

Melia Hotels International now has 370 properties around the world and Mexico and the Caribbean dominate its network. RIU opened its first international hotel, Riu Taino, in 1991 in Punta Cana and now has some 30 resorts in Mexico and Caribbean sun spots. AMResorts, now with more than 50 properties across six brands including Secrets, Dreams, Zoetry and Breathless, is aiming for 100 by 2020, with a particular focus on Mexico.

Is there still a gap to be filled? “The demand is still there and we believe Transat can leverage on its 30 years of experience in offering the joy of vacation,” says Transat’s Trottier. “Canadian vacationers continue to love all-inclusive sun resorts. They are more and more knowledgeable and sophisticated, and the sun resorts develop specialties to meet travellers’ needs. This is why Transat offers, among others, holiday collections tailored to its customers’ lifestyles, vacation ‘musts’ and budgets [including] luxury, distinction, adult, family, solo and sun savvy.”

While Transat isn’t ready to unveil specific details about its own line of resorts, when asked what 3 words best describe a Transat resort experience now that the resort chain is in the planning phase, Trottier said, “good quality, joy of vacation and expertise.”

Trottier adds: “Exactly like air travel, the key to success in the hotel industry is excellence in execution, focus on details and a passion for customers.”

This story originally ran in the September 28th, 2017 issue of Travelweek magazine. To get Travelweek delivered to your agency for free, subscribe here.