Spa Business Handbook 2020-2021

Page 166

RESEARCH GLOBAL

The wellness effect on real estate The Wellness Real Estate Report, recently published by Resources for Leisure Assets, explores how spa, wellness and wellbeing activities impact hotel revenues and profits. Roger A Allen shares the key findings

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valuating the tangible effects of spa, wellness and wellbeing offerings on the financial performance of hotels and resorts has never been more important, as investors and developers are exploring ways to satisfy new customer expectations and boost operational efficiency in a post-COVID era. Industry stakeholders often face challenges in assessing the intrinsic value of these features, as benchmarking the competitive set of hotels and resorts with a wellness proposition is an increasingly complex process because of the broadening landscape of activities and experiences, including spa, sport, fitness, healthcare, leisure and recreation. The Wellness Real Estate Report aims to support investors and developers in determining how wellness and wellbeing services and features impact the bottom line of their existing asset or planned project. It uses market data from P&L benchmarking firm, HotStats, on the performance of 3,200 hotels of all classes globally to provide insights into how such activities contribute to revenue and profit. 166 spa business HANDBOOK 2020 – 2021

Shifts in Demand Real estate markets were greatly affected by new customer expectations and socio-economic factors in recent years, including increasing health-consciousness, which led to

TABLE 1: Impact of wellness on hotel revenue generation Daily total revenue per available room (TRevPAR) in 2019 $310.79

$189.78

Hotels with major wellness*

Hotels with minor wellness**

$201.15

Hotels with no wellness

* Wellness revenue exceeding $1mn and 10% of total property revenues ** Wellness revenue less than $1mn and 10% of total property revenues

more spa visits and higher spend at wellness facilities, and the emergence of new customer groups, such as Gen Zers, who have a heightened focus on self-care and a willingness to pay premium for wellness products. These trends have been best indicated by key adjustments in the hotel industry. Spas have become essential components in most hotels; thermal and mineral springs grew in popularity due to the rising demand for authentic and natural spa experiences, and wellbeing offerings often became integrated through the entire property rather than focusing only on the spa area.

Focus on health Widespread concerns related to the COVID-19 pandemic have further strengthened customer focus on health, which translated into an increased demand for wellbeing services. Digital wellness products and remote healthcare solutions became highly popular, which may affect how real estate space can be used efficiently for wellness activities after COVID-19 is subdued. www.spahandbook.com