Using visitor and establishment surveys, this study intends to estimate the economic impacts of all-inclusives in the Balearic Islands. Specifically the study estimates the contribution of the AI tourists to the destination economy; identifies factors motivating guests to choose AIs and measures the contribution of all-inclusive hotel sector to the economy. The study found that more than half of the all-inclusive respondents would still have come even if there were no all- inclusive holidays at the destination, which means, the effect of the AI presence on the visits is minor, although very significant on the expenditure at destination. However, to many sun and sand destinations like the Balearics, tourism is a lifeline. Therefore, critical policies to match industry preferences with that of the local economy through feasible tourism modals which include local linkages are indispensable. Moreover, tourism motivation studies should foster the best possible approaches that can meet the tourist demands without jeopardizing the local needs.

All-inclusive package tours, tourism expenditure, all-inclusive motivation, local linkages