Industry Report from Horwath HTL Health & Wellness, issued in May 2021 – Part One.
The second part of the report will be shared in the next issue
In 2017, the global wellness economy was identified as a USD 4.5 trillion industry by the Global Wellness Institute, with hopeful predictions of strong growth and higher revenues in the years to come. As tourism continued to grow worldwide, the years that followed saw a boom in wellness, with the industry, which includes wellness tourism, traditional and complementary medicine, nutrition, physical activity, mental wellness, wellness real estate, personal care and beauty, workplace wellness, spa economy, and thermal mineral bathing, growing at almost twice the rate of global economic growth between 2017 and 2019.
Yet by 2020, the world was plunged into a pandemic unlike any seen in over a century, hitting health, education and income in such a way that human development declined for the first time since 19901. Affecting every aspect of life worldwide, countries have faced ongoing waves of viral transmissions that have continued to be both chaotic and predictable. Last year saw the highest excess death rates in some Western countries since World War Two2, and never before in recent memory has the health and wellbeing of so many people declined so rapidly and simultaneously.
And although the world has yet to see the end of the coronavirus pandemic – with some predicting we never will fully eradicate it – this decline in physical and mental health has given rise to an acute awareness about the importance of maintaining good health and wellbeing. Current market sentiment and surveys from across all markets suggest that the wellness industry will likely see another surge in the late- to post-pandemic eras as people become increasingly conscious and proactive in maintaining their overall health in more effective and long-lasting ways.
At the time of publication, vaccination programs are rolling out across all continents, resulting in the lifting of various lockdown regulations, with governments hoping to return to some form of normalcy by the end of 2021. For many countries whose borders have been closed for the duration, the light at the end of the tunnel is finally coming into view, and in response, the hospitality industry is cautiously gearing up for an influx of international visitors eager to travel, driven by significant pent-up demand and a need to escape the tribulations of pandemic life, even if only momentarily.
This paper (Part One of which is published here) sets out to identify how the emergence of late- and post-coronavirus era travel, and the understanding around health and wellbeing are changing and becoming more significant than ever, as well as to explore how the hospitality industry can leverage this growing interest to sustain and advance service offerings in resilient and effective ways over the next decade.
The fallout of a pandemic
The world saw a record-breaking 1.5 billion international tourists annually in pre-pandemic times, and 2019 was the tenth consecutive year of sustained tourism growth worldwide. Tourism accounted for USD 1.7 trillion in expenditures and sat firmly as the third-largest export category, and much like the wellness industry, was also growing faster than the world economy3.
In 2020, the coronavirus pandemic struck, creating a year marked by business closures – many of which have yet to reopen. On 30 January 2020, the World Health Organisation (WHO) declared the coronavirus outbreak a global health emergency, and on 11 March 2020, the outbreak was marked as a pandemic.
By 20 April 2020, every single country had introduced significant travel restrictions, and as of late 2020, 27% of all destinations had maintained these restrictions by keeping their borders completely closed to international tourism4.
As a comparison, the 2009 Global Economic Crisis saw a 4% decline in international tourism arrivals. In 2020, the coronavirus pandemic was singlehandedly responsible for a decline in international tourism to the tune of 74%, with an estimated number of international tourist arrivals plummeting from 1.5 billion in 2019 to just under 400 million.
To put this impact into perspective, the tourism industry is now at levels seen 30 years ago, causing a loss of over USD 2 trillion in global GDP and putting 100-120 million direct tourism jobs at risk5.
Pandemic wellness tourism trends
Domestic vs. International
As international travel has significantly slowed and the global tourism industry is left reeling in the wake of the pandemic, a shift towards domestic and regional travel can be clearly seen. Partly due to various travel restrictions, whatever international travel is still available more expensive, less accessible and procedure-heavy. As a consequence, and partly due to a shift in travel preference and demand, travellers are increasingly seeking wellness tourism escapes that are close to home, within their own country or even within their own city.
A focus on the mind
There is no question that the pandemic has increased overall levels of stress and fear, leaving people with greater anxiety and compromised psychological wellbeing. As a result, the demand for mental wellness services is expected to surge in the post-pandemic era, as well as a general desire for people to get out and seek escape from confined spaces and discover new ways to proactively maintain health and wellbeing, instead of simply treating disease and problems when they arise.
Health is wealth
A world driven by capitalist ideals and unrealistic profit-seeking demands is falling out of favour, and the people who were once accepting of almost machine-level demands are now shifting the paradigm and forcing the narrative on building a better work-life balance. With a heightened awareness surrounding the importance of living a healthier life to reduce the risk of illness in people worldwide, wellness is anticipated to enter the zeitgeist in an even more significant way than any pre-pandemic pundit could have predicted.
A defining characteristic of COVID as a disease, is that it can divide, by health and not by wealth, meaning that those ‘richer’ in existing good health are better positioned, in most cases, to be able to overcome the effects of this disease. A drive to improve personal health will be a higher priority for many than perhaps it was before the onset of the crisis.
The democratisation of wellness
Before the coronavirus pandemic, the wellness economy was predicted to grow at a strong pace for the foreseeable future, with wellness tourism seeing a projected annual growth rate between 2017-2022 of 7.5%. Yet despite the positive outlook, some concerns were already being raised that the wellness industry was still focused primarily on wealthy customers while global wealth inequality increased and the world’s poorest – who are most likely to suffer from sickness, depression and premature death – were unable to access the benefits.
For many, the importance of balancing health with financial subsistence will become an increasingly mainstream topic of discussion, leading to new expectations and lifestyle changes that will likely have a dramatic effect on daily life in the near future. The wellness tourism industry, as well as other key areas of the wider wellness industry must acknowledge this new narrative and address a growing number of guests with more moderate budgets.
This may lead to a diversification within the wellness industry and a natural shift towards greater democratization, manifesting itself in more provision of, and increased accessibility to, mid-range wellness offerings. No longer is wellness a luxury experience only for those who can afford to be pampered – wellness is now increasingly diverse, opening the doors to a range of guests who are specifically looking to travel to improve health, focusing strongly on personal wellbeing and stress-free living.
A rise in primary wellness travelers
The growth of global wellness tourism in 2021 will still be largely driven by secondary wellness travelers who seek to maintain their health and wellbeing while enjoying the experiences and offerings of any type of regular trip or destination getaway. In 2018, secondary wellness travelers accounted for 89% of all wellness trips worldwide, growing by 10% annually between 2015 and 20176.
However, a rise in primary wellness travelers is also expected to emerge as more people look to travel with the sole purpose of seeking and experiencing genuine wellness at a destination that is designed and positioned to provide this.
Travelling for wellness
International wellness tourism trips grew 12% annually between 2015 and 2017, significantly faster than domestic tourism trips. And despite domestic wellness travel dwarfing international wellness travel over the same period, international wellness trips represented a proportionally larger share of expenditures because the average level of spending for an international trip is much higher7. Growth rates will undoubtedly be reduced over the next few years, but a similar or larger growth rate is expected to return, notably at a faster rate than the wider hospitality industry as a whole.
This data helps support the claim that wellness has never been more important than in current times. A truly multi-faceted concept, it focuses on the pursuit of activities, choices and lifestyles that can lead to a state of good health and a sense of positive holistic wellbeing. Encompassing physical, mental, emotional, social, environmental and spiritual dimensions, wellness tourism aims to provide solutions to improving all of these foundations collectively.
Wellness as a business driver
As people begin to seek more experiential travel opportunities and wellness-centric experiences, the hospitality industry has a unique and much-needed opportunity to leverage wellness as a key service proposition. This can lead to the creation of better brand positioning, increased revenue generation and a more sustainable model that has the ability to better react to future crises. This change will engage and more effectively service the needs of both health-enlightened and uninitiated guests alike. The Global Wellness Institute estimates that international wellness travelers spend at a 53% premium over the average international tourist, while domestic wellness travelers spend at a 178% premium over their standard domestic counterparts8.
In addition, overall rising consumer interest in extending wellness experience beyond the hotel and vacation setting into the home and everyday life will continue to create opportunities for the industry, manifesting itself in a surge in wellness real estate investments and workplace wellness initiatives.
The benefits of a healthy workforce
The economic burden of an unwell workforce is estimated to be at 10-15% of global economic output, factoring in medical costs, productivity losses caused by chronic disease, work-related stress, injuries, illness and disengagement. However, worldwide, less than 10% of workplace benefits include workplace wellness initiatives, with the majority of workers more concerned about their employers meeting the most basic needs9. Now, primary concern has understandably shifted towards job stability and workplace safety. Soon, concern will shift again to address the post-pandemic need for a maintained state of health and wellbeing, with greater demand for more comprehensive healthcare benefits and dedicated workplace wellness solutions. Needless to say, as people’s expectations rise, the term “health and wellness” and the practices surrounding it will become more and more commonplace across all facets of life, and therefore, so must the offering and evolution of wellness in the hospitality sector.
1 UNDP Human Development Report Office (2020) http://hdr.undp.org/en/hdp-covid
2 UK Office of National Statistics and Istituto Nazionale di Statisica
3-5 United Nations World Tourism Organization (UNWTO) – Covid-19 and Tourism 2020: A year in review (2021) 6-9 Global Wellness Institute – Global Wellness Economy Monitor (2018)