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Report: Leisure shift drives wellness real estate during the pandemic
By Megan Whitby 24 Sep 2021
Hotels with major wellness offerings were better positioned to drive revenue by attracting local guests – who couldn't travel – to use their spa, leisure and fitness facilities Credit: Shutterstock/NDAB Creativity
Hotels with wellness revenues exceeding US$1m (€852,700, £731,700) generated nearly 75 per cent more in total revenue per available room (TRevPAR) in 2020, compared to locations with wellness revenues of less than US$1m.

The figure was revealed in the latest Wellness Real Estate Report from Resources for Leisure Assets Global (RLA Global) – an international consultancy specialising in leisure and wellbeing in real estate.

Findings showed hotels with significant wellness offerings were able to harness pent-up leisure demand to drive both revenues and 65 per cent higher average daily rate (ADR), despite restrictions to travel.

The pandemic cut revenues and profits in 2020 due to lockdowns and restricted air travel, but also led to an increased demand for wellbeing and wellness offerings as guests focused more on health.

Roger Allen, group CEO of RLA Global, said: “Uncertainty and restrictions have meant that tourism now has a domestic leaning, with money being saved on flights and transfers, and reallocated to local hotel, leisure and wellness experiences.

“This meant hotels with major wellness offerings were better positioned, allowing them to drive revenue by attracting local guests to use their spa, F&B, leisure and sport facilities, pools and beaches.”

Demand for wellness is on the rise
“One positive outcome we’ve seen from the pandemic has been an increase in demand for hotels with major wellness offerings,” Allen told Spa Business.

“Those assets in the position to meet this demand, have seen 17 per cent or US$88.70 (€75.6, £64.7) more revenue per occupied room than those with minor wellness propositions.

“It’s a trend we expect to see continue for the foreseeable future as guests who’ve been forced to stay at home are looking to treat themselves with transformational holidays.”

RLA Global cautioned that more extensive wellness offerings typically had higher operating costs because of increased energy, maintenance, utility and payroll expenses – operating costs which meant that close attention must be paid to ensure profitability.

Allen said: “Those considering investing in wellness must take a long-term approach to understand if the wellness offering will provide a competitive advantage and whether the revenue generated will provide a reasonable rate of return.”

The latest trends in wellness
The pandemic has accelerated a number of trends in the wellness and wellbeing space, among them demand for secluded privacy, with guests seeking villa-style resorts and hotels that offer a design with a clear Covid-safe environment and larger common areas.

The report indicated that branded residences met the demand for stays in less crowded, non-urban environments, with the additional ability to work away from the office attracting potential owners as well as hospitality companies looking to add an additional string to their bows.

Riyan Itani, MRICS director of international development consultancy at Savills, said: “The concept of branded residences, from its inception, has been based on the provision of services and facilities that one would typically find in a hotel.

“Wellness and wellbeing amenities have therefore been a prerequisite of any competitive branded project. As the global markets mature, the provision of a pool, a gym and concierge services in a building is no longer seen as competitively differentiated.

“We’re now seeing more experiential aspects being added as standard. A number of operators are exploring more medicalised and diagnostic services and facilities either on-site or in partnership with nearby medical centres.”

Medical wellness also saw a boost from the pandemic, with centres combining best practices from eastern and western medical disciplines.

While the hybrid medical wellness traveller typically stayed longer and spent more than the average wellness-only tourist, the costs involved in the facility set-up were generally higher as well.

A further trend that was accelerated by the pandemic and has implications across all hotel operations, not solely wellness, was the use of technology.

Consumers have become adept at using wellness apps to maintain physical and mental health in their own homes and this, alongside the expansion of wellness and fitness apps, will present hotel operators with the dilemma of how to integrate and personalise suitable technology with the bricks and mortar of the hotel wellness experience.

To access the Wellness Real Estate Report in full, head to this link.

About the report
Conducted by RLA Global, The Wellness Real Estate Report uses market data from P&L benchmarking company, HotStats, on the financial performance of 3,200 international hotels of all classes.

The publication is designed to provide insights on how wellbeing and wellness may contribute to the existing business or planned projects of investors and developers on the revenue and profit levels.


News
1 to 12 of 7944 news stories
16 Oct 2021
Today (17 October) marks the first day of the annual World Spa and Wellness conference, hosted at London’s ExCeL exhibition centre. The two-day in-person event is curated for international spa and hotel directors to network ... More
14 Oct 2021
Minor Hotels is realising its first location in collaboration with established India-based beauty and wellness brand VLCC, two years after the partnership was announced in 2019. Founded in India in 1989, VLCC manages a chain ... More
14 Oct 2021
The Global Wellness Summit (GWS) has today announced its first round of speakers for the 2021 Summit. The 15th annual conference will take place in person in Boston, Massachusetts, and virtually all over the world, ... More
13 Oct 2021
Mindbody has announced it's buying ClassPass, the consumer wellness subscription service that enables people to use a range of gyms, studios and wellness facilities for one monthly subscription. The deal will bring two of the ... More
13 Oct 2021
Medical spa brand Lanserhof will open its first coastal resort on the island of Sylt in northern Germany, in Spring 2022. A €120m (US$138.7m, £101.9m) project over five years in the making, Lanserhof Sylt will ... More
13 Oct 2021
Singapore Airlines (SIA) has announced a new partnership with established US Californian health, wellness and destination spa resort Golden Door – the facility founded in 1958 by industry veteran Deborah Szekely. Golden Door experts – ... More
12 Oct 2021
Boutique hotel and spa The Grand Hotel Tremezzo on the South-West shores of Lake Como, Italy, has enhanced its wellness offering with the introduction of a new nature-orientated retreat. Set within 20,000sq m of parkland ... More
06 Oct 2021
Bathroom fixtures company Kohler has unveiled its redesigned and expanded Kohler Waters Spa in Burr Ridge, Chicago. The hydrotherapy spa now encompasses 14,000sq ft (1,300 sq m), 21 treatment rooms, a Mediterranean-style café and the ... More
08 Oct 2021
Following the official relaunch of the Gleneagles Spa in September, the team behind the Scottish country estate and hotel has announced an exclusive partnership with renowned naturopath, functional medicine specialist and Harley Street nutritionist, Rosemary ... More
07 Oct 2021
Modern US wellness brand The Well is set to open its first international holistic wellbeing retreat outside of the US at the Hacienda AltaGracia, Auberge Resorts Collection, located in the foothills of Costa Rica’s Talamanca ... More
07 Oct 2021
The Wellness Tourism Association (WTA) have unveiled the 2021 installation of its Wellness Travel Consumer Survey to help the hospitality and leisure industry gain a clearer understanding of wellness-minded consumers’ priorities as they plan their ... More
06 Oct 2021
New Zealand is set to welcome a brand new sustainable wellness tourism project on 23 October. The location will draw on the healing properties of hydrotherapy and communal bathing. Called Ōpuke Thermal Pools and Spa, ... More
     
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Oakworks Inc
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NEWS
Report: Leisure shift drives wellness real estate during the pandemic
POSTED 24 Sep 2021 . BY Megan Whitby
Hotels with major wellness offerings were better positioned to drive revenue by attracting local guests – who couldn't travel – to use their spa, leisure and fitness facilities Credit: Shutterstock/NDAB Creativity
We’ve seen an increase in demand for hotels with major wellness offerings
– Roger Allen
Hotels with wellness revenues exceeding US$1m (€852,700, £731,700) generated nearly 75 per cent more in total revenue per available room (TRevPAR) in 2020, compared to locations with wellness revenues of less than US$1m.

The figure was revealed in the latest Wellness Real Estate Report from Resources for Leisure Assets Global (RLA Global) – an international consultancy specialising in leisure and wellbeing in real estate.

Findings showed hotels with significant wellness offerings were able to harness pent-up leisure demand to drive both revenues and 65 per cent higher average daily rate (ADR), despite restrictions to travel.

The pandemic cut revenues and profits in 2020 due to lockdowns and restricted air travel, but also led to an increased demand for wellbeing and wellness offerings as guests focused more on health.

Roger Allen, group CEO of RLA Global, said: “Uncertainty and restrictions have meant that tourism now has a domestic leaning, with money being saved on flights and transfers, and reallocated to local hotel, leisure and wellness experiences.

“This meant hotels with major wellness offerings were better positioned, allowing them to drive revenue by attracting local guests to use their spa, F&B, leisure and sport facilities, pools and beaches.”

Demand for wellness is on the rise
“One positive outcome we’ve seen from the pandemic has been an increase in demand for hotels with major wellness offerings,” Allen told Spa Business.

“Those assets in the position to meet this demand, have seen 17 per cent or US$88.70 (€75.6, £64.7) more revenue per occupied room than those with minor wellness propositions.

“It’s a trend we expect to see continue for the foreseeable future as guests who’ve been forced to stay at home are looking to treat themselves with transformational holidays.”

RLA Global cautioned that more extensive wellness offerings typically had higher operating costs because of increased energy, maintenance, utility and payroll expenses – operating costs which meant that close attention must be paid to ensure profitability.

Allen said: “Those considering investing in wellness must take a long-term approach to understand if the wellness offering will provide a competitive advantage and whether the revenue generated will provide a reasonable rate of return.”

The latest trends in wellness
The pandemic has accelerated a number of trends in the wellness and wellbeing space, among them demand for secluded privacy, with guests seeking villa-style resorts and hotels that offer a design with a clear Covid-safe environment and larger common areas.

The report indicated that branded residences met the demand for stays in less crowded, non-urban environments, with the additional ability to work away from the office attracting potential owners as well as hospitality companies looking to add an additional string to their bows.

Riyan Itani, MRICS director of international development consultancy at Savills, said: “The concept of branded residences, from its inception, has been based on the provision of services and facilities that one would typically find in a hotel.

“Wellness and wellbeing amenities have therefore been a prerequisite of any competitive branded project. As the global markets mature, the provision of a pool, a gym and concierge services in a building is no longer seen as competitively differentiated.

“We’re now seeing more experiential aspects being added as standard. A number of operators are exploring more medicalised and diagnostic services and facilities either on-site or in partnership with nearby medical centres.”

Medical wellness also saw a boost from the pandemic, with centres combining best practices from eastern and western medical disciplines.

While the hybrid medical wellness traveller typically stayed longer and spent more than the average wellness-only tourist, the costs involved in the facility set-up were generally higher as well.

A further trend that was accelerated by the pandemic and has implications across all hotel operations, not solely wellness, was the use of technology.

Consumers have become adept at using wellness apps to maintain physical and mental health in their own homes and this, alongside the expansion of wellness and fitness apps, will present hotel operators with the dilemma of how to integrate and personalise suitable technology with the bricks and mortar of the hotel wellness experience.

To access the Wellness Real Estate Report in full, head to this link.

About the report
Conducted by RLA Global, The Wellness Real Estate Report uses market data from P&L benchmarking company, HotStats, on the financial performance of 3,200 international hotels of all classes.

The publication is designed to provide insights on how wellbeing and wellness may contribute to the existing business or planned projects of investors and developers on the revenue and profit levels.
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Minor Hotels is realising its first location in collaboration with established India-based beauty and wellness brand VLCC, two years after the partnership was announced in 2019.
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The Global Wellness Summit (GWS) has today announced its first round of speakers for the 2021 Summit.
Mindbody buys ClassPass
Mindbody has announced it's buying ClassPass, the consumer wellness subscription service which enables people to use a range of gyms, studios and wellness facilities for one monthly subscription.
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Medical spa brand Lanserhof will open its first coastal resort on the island of Sylt in northern Germany, in Spring 2022.
Healthy travel: Singapore Airlines and Golden Door team up to curate inflight wellness programme
Singapore Airlines (SIA) has announced a new partnership with established US Californian health, wellness and destination spa resort Golden Door – the facility founded in 1958 by industry veteran Deborah Szekely.
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