Economics of All-Inclusive

One of the things I spent a bit of time thinking about on holiday was the economics of the whole all-inclusive aspect of the holiday. I can’t think of a better place for experiments on the value that we assign to things than an all-inclusive hotel.

Initially, I thought that there’s no way I’m ever going to ‘get my value’ (i.e. use more than I spend) on an all-inclusive. I’m small and my family are fairly small eaters (3 small children!) - neither my wife nor I are heavy drinkers. All-in-all, we’re presumably the kind of people who all-inclusives love.

However, the nature of an all-inclusive fundamentally alters our consumption patterns and offers a really good insight into what your life might be like if you were completely price insensitive.

We didn’t start drinking heavily every night, but the 11:30am cocktail by the pool? Sure. And to wash it down, I’ll have a slushy. Why not? Snack pizza before dinner? Of course. Again and again I found myself reaching for ‘just a little thing’ because it was there and it was free.

When it comes to the buffet, again, I made all kinds of wacky choices that I otherwise wouldn’t have made. I got a family round of swordfish steaks because I thought it’d be neat for the kids to try them. My little girl discovered she liked pan-fried salmon. My baby ate his own bodyweight in watermelon.

We all ate very differently to how we do at home when we have to consider purchase price, preparation time, storage method, amount of mess made etc. etc.

I think there’s a real chance to run sensitivity experiments at all-inclusive resorts - with absolutely no price differential (say, at the buffet)…what do we pick? And then there was the costed menu…most cocktails were included but some weren’t. How much better do those cocktails that charge have to be, in order to make them attractive over their free counterparts?

If a bar had a menu showing some cocktails at £8 and some at £16, would I spring for the £16 ones? Probably not. At the all-inclusive, some were £0 and some were £8 and let me tell you… buying the £8 ones wasn’t happening in a month of Sundays.

No real conclusion here, just the idle poolside thoughts of a first-time all-inclusive guest. It was cool to watch our food preferences change, and realise how much of what we ‘like’ is a function of cost and time and experience. And even though, as an economically rational individual, I broke even on my all-inclusive spending…the behaviour change the nature of all-inclusive engenders is worth any economic inefficiency I create along the way.