Sandals Resorts, founded by Gordon “Butch” Stewart, may sell a 50 per cent stake of its business to Royal Caribbean Cruises.

The Caribbean hotel chain headquartered in Jamaica has been valued at US$6 billion.

If the deal is fully consummated, it would be the largest corporate transaction in the English-speaking Caribbean.

Royal Caribbean has been keen to diversify its operations and not be totally reliant on cruise shipping. Having a significant land-based operation would make it a behemoth tourism player able to cross-sell vacations.

It would also have a stake in the most recognised resort brand in the Caribbean. Royal Caribbean Cruises would become one of the leaders in the all-inclusive hotels across the Caribbean, with significant funds to expand the brand.

Sandals would be in a position to fend off rivals, particularly the Spanish who have entered the Caribbean over the last twenty years. 

Riu, Iberostar, and Melia have done well in Jamaica. Now Mexican operators are looking to encroach on Sandals’ turf, and Jamaica’s Minister of Tourism is courting  Saudi Arabian hotel investment.

For decades, Sandals was the undoubted king of the all-inclusive resort concept in Jamaica and other islands in the Caribbean after seeing off SuperClubs. However, in recent times it faces competition coming from many sides. Riu has the backing and financial support of airline TUI, and many of Sandals’ competitors have the resources to scale quickly.

With Royal Caribbean as a partner, Sandals can effectively compete and still reign over its territory. This coalition allows it to hold its ground and roar at lions looking to take over the pride. 

Royal Caribbean has a market cap of US$70 billion. That’s a hell of a big brother to have in your corner.

Riu’s total worth is around 11 billion euros, and last year it reported revenues of 4.2 billion euros. Riu was founded in 1953 by the Riu family in Mallorca, Spain. Last year Iberostar’s hotel division generated 2.37 billion euro in managed revenue.

Sandals has twenty hotels across ten Caribbean islands. It welcomes around a million guests per year.  It is a quintessential Caribbean brand, one of the most recognised Caribbean brands in the world. Data-driven business directory Growjo estimates that its revenues come in at around US$2.5 billion a year. 

Former director of Royal Caribbean Cruises Tom Pritzker has for many years cast covetous eyes over Sandals. He has a stellar reputation as a tourism asset operator and was the former Executive Chairman and CEO of the Pritzker Organisation. He was also the former Executive Chairman of the Hyatt Group. 

Since Butch Stewart passed in 2021, there has been some contention among family members over his estate. This potential deal may very well settle all that once and for all. Adam Stewart is the Executive Chairman of Sandals Resorts, succeeding his father. In the last five years, he has opened three new resorts. He has presided over Sandals 2.0, the next iteration of the hotel brand his father built.

This move takes the family into new territory and an alignment with the second-biggest cruise vacation operator in the world, with 27 per cent of total cruise ship passenger volume, second only to Carnival. 

If this transaction were to go through, it would be Royal Caribbean’s largest acquisition and give it considerably more heft as a Caribbean vacation operator-big on the seas and big on land. But that proposition did not excite the stock market, with Royal Caribbean shares falling 5 per cent following this major news.