Royal Caribbean Group, one of the largest operators in the cruise industry and the highest valued in this sector, is negotiating to acquire the Sandals hotel chain located in the Caribbean. The value of this agreement is estimated to be over $6 billion.
Details of Sandals Hotels
Sandals, as a private operator, was established in 1981 and has 17 resorts under its brand, as well as three family-friendly resorts and two private destinations in the Bahamas and Panama. This company has developed as a luxury concept exclusively for couples and currently has locations in Jamaica, the Bahamas, Saint Lucia, Grenada, Barbados, Antigua, Curacao, and Turks and Caicos.
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Economic Impacts and the Future of the Cruise Industry
Sandals has significantly improved after the COVID-19 crisis, but this year it has lowered its growth forecasts. This is reported to be due to uncertainties in the U.S. economy and decreased demand for European cruises. Additionally, analysts believe that the Caribbean sector will face the risk of overcapacity, as new cruise ships are being built rapidly.
The proposed agreement is for Royal Caribbean to acquire a majority stake in Sandals, while some members of the Stewart family will retain their shares. This agreement is somewhat similar to the acquisition structure of Silversea, where initially a share of the Stewart family was retained and then the rest of the shares were acquired.
This is not the first time the cruise industry has turned to hotels. In the 1980s, Carnival Corporation purchased the Cable Beach Resort in the Bahamas and transformed it into the Crystal Palace Hotel and Casino. However, this project faced losses and was sold in 1994. Recently, luxury hotel brands like Ritz-Carlton and Four Seasons have launched ultra-luxury cruise ships as an extension of their brands.
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