Category: Cover Story

By an External Consultant for EHL Advisory Services and MD at
HWS Health & Wellness Solutions Advisory Agency

The “Health & Wellness” sector could well be the answer to post-COVID redevelopment needs, and looks set to be one of the new vectors of growth and profits for hospitality destinations.

To adjust to post-COVID life, we believe it is of the utmost importance for hotels to position themselves in the segment of “Health & Wellness Optimization” with a credible program as part of a new dedicated strategy. 

Health Spa: The spread of health and wellness

Since the 1900s, the hospitality niche of health and wellness has been developing around the world. France, for example, with its thermal and thalassotherapy destinations, has enabled thousands of customers to benefit from hotels associated with seawater or water-based thermal treatments, with the recent addition of dietary and stress management programs, therapeutic massages and fitness techniques.

The model has grown over time with a new approach offering customers a high-quality hotel welcome alongside specific infrastructure and programs to optimize health, well-being and beauty. Often employing the best experts in the field, the health and wellness model offers a variety of stays dedicated to special treatments and cures.

Asia was a forerunner of the development of new health destinations with Chiva-Som, Kamalaya and other centers attracting a niche clientele who came especially for a healthy vacation. India, already known as the home of Ayurvedic ancestral natural medicine, followed suit by creating high-end resorts for stays based on this alternative medical approach.

For its part, the United States has offered ultra-specialized health & wellness centers such as the Golden Door, the Miraval and Canyon Ranch, while in Europe and particularly in Switzerland, centers more focused on exclusive anti-ageing care such as Clinique La Prairie have become popular.

At the same time, some centers in this new health destination market have distinguished themselves with an offer of services at the cutting edge of technology and medical research such as the Sha Wellness Clinic in Spain or the Espace Henri Chenot in Italy.

Faced with all these varied proposals ranging from simple spa/fitness center to specialized clinical wellness, can high-end hotels benefit from this growing demand for health optimization on the part of their customers and combine it with an offer?

The answer is clearly, yes. EHL Advisory Services and HWS have predefined a few directives of which the most important would be that it is neither desirable nor feasible for hotels to compete with specialized health centers.

One can order health care types in 3 categories: Medical, Preventive and Optimizing (or recovery post medical treatment). The latter being “non-intrusive” is suitable for a large clientele segment of the “healthy” individuals, increasingly open to the theme of lifestyle optimization.

For example, online “client profiling” and pre-check-in allow venues to establish a health and well-being profile for each client, offering a unique program on arrival. These individual programs could be built upon a mix of essential pillars:

Diet detox: A common request for clients wishing to lose superfluous weight. The diet acts to gently detoxify their body based on advice from a specialist according to the guest’s expectations. In addition, the hotel offers specific cuisine menus linked to the recommendations for each individual program.

Stress and emotional management: A hotel stay provides an ideal opportunity to take a break and learn the most innovative relaxation, meditation and stress management techniques, all scientifically validated.

Integrative and personalized fitness: Upon arrival, a tailor-made fitness program with specified exercises under a strict timetable supervised by a team of fitness experts is made available to customers.

Sleep and recovery: Too often neglected, a good night’s sleep is an essential key to daily health recovery, vitality and well-being. Where else better than a hotel to find the right surroundings for such healing?

Post-COVID anxiety recovery: A major consequence of the pandemic is the long and volatile recovery process creating inevitable anxiety based on a concern about whether life will ever be the same again. For this, we have established “body detox” programs which stimulate the immune system, reduce stress, and improve oxygenation, resistance and endurance.

Such combined programs, based on stays varying from 3 to 12 days depending on the desired objectives, will be supplemented by beauty treatments, face and body massages, and other specific approaches usually offered by hotels and their branding partners. The efficiency of our programs will be measured for each customer by relevant check-out tests.

A smartly built “Health & Wellness” proposal will allow hoteliers to distinguish themselves with an impactful USP leading to an immediate improvement of the traditional KPIs, (i.e. yield, stay duration, cross sell and retention rate).

Building a new clientele

With the reintroduction of strict border controls and the disappearance of most business and leisure travel, hotels have lost most of their international clientele as well as revenues from conferences and seminars.

As a consequence, local customers have become the new focus for hotels. Historically, local customers brought only around 15% of revenues. However, in pursuit of new health & wellness sensations and following the environmental trend of lowering the carbon footprint, local customers will be increasingly receptive to local hotel’s unique offerings.

Another meaningful niche market will come from local companies looking to take care of their staff by offering preventive and lifestyle optimization measures. Many of these corporations are already offering such programs and rely on third party service providers including relevant hotels.

Hotels offer qualitative accommodation, services and structures necessary to address these clients with tailor-made programs likely to attract and retain them for the long term. Since individuals are less receptive to the prescription of invasive medical and blood tests, hotels are offering alternative proposals which are lighter, based on profiling, fitness check-ups and possibly non-invasive biological saliva tests.

EHL Advisory Services

A Swiss company with a 129-year history and 500 clients across more than 60 countries, provides uniquely tailored services for hospitality, education and business development, and to harness the knowledge of the world’s leading hospitality management university to support the business for future growth.

The IHIF Luxury panel: Ömer Isvan K., Servotel; Jaidev Menezes,
Marriott International; Ingo Schweder, GOCO Hospitality; Willemijn Geels,
IHG Hotels & Resorts; and Daniel Wakeling, Hilton.
(Simon Callaghan Photography)

If you want to know what our industry will look like in the future, look no further than at what hotel developers are talking about now, for they take into consideration the anticipated trends in consumer behavior, design and sustainability, and incorporate all that and more into their blueprints. At the International Hospitality Investment Forum (IHIF) in Berlin in May, investors and developers met to forge new relationships and make deals for future hospitality projects. One panel at the conference, hosted by Questex, caught our eye, “The Evolution of Luxury, from Hotel to Residential.” The panel comprised executives from several major hotel companies. It was adeptly moderated by Ömer Isvan K., president of Servotel, a consultancy in global hospitality and real estate development, based in London and Istanbul, servicing Western and Eastern Europe, the Americas, Africa, the Middle East and Asia.

Panelists included Willemijn Geels, VP of development for Europe for IHG Hotels & Resorts; Daniel Wakeling, VP development of luxury & residential, Europe and Africa, Hilton; Jaidev Menezes, VP, mixed-use development (EMEA), Marriott International and Ingo Schweder, CEO of GOCO Hospitality and managing director of Horwath HTL Health and Wellness.

We’ve put together an abbreviated version of the lively discussion to provide you with this most international view of what’s to come on the luxury landscape.

Ömer Isvan K., president, Servotel: Luxury, in its own, is a very elusive word. Perhaps in our industry, it’s one of the most overused — rightly or wrongly — but I can bet you if we had a competition to define luxury with 10 people, we would definitely have 10 definitions, and they will not be very similar.

So, one of the goals here is to define what luxury actually means so that it is in context. Otherwise, luxury is quite meaningless on its own.

My name is Ömer, I’m the founder and president of Servotel. We advise investors around the world, particularly in the development of hotels, resorts and residential.

Willemijn, we’ll start with you to start the introductions.

Willemijn Geels, IHG Hotels & Resorts: I’m VP for Development for Europe for IHG Hotels and Resorts. We’re one of the global leading hotel operators, mainly in the business of franchising and managing hotels on behalf of our owners.

Our portfolio currently spans 17 brands, ranging from the essentials category with Holiday Inn, Holiday Inn Express through premium, Crowne Plaza, all the way into luxury and lifestyle portfolio. It’s the luxury and lifestyle brands in the last couple of years where we’ve really rounded out our portfolio. 

The most familiar is the InterContinental brand, but in the past few years, we have added to that through either acquisition or brand launches. We’ve added Kimpton; that originated from the U.S. and we’re now developing that globally. We’ve added Regent and Six Senses on the uber-luxury level. We’ve recently launched a more entry-level luxury brand called Vignette Collection; that is more of a soft brand for conversion of existing properties that seek affiliation. So, with all that, we’re really keen to grow in the luxury and lifestyle segment.

Daniel Wakeling, Hilton: My role is focused on growth of our luxury brands, which include Waldorf Astoria, created after the original in New York, which is currently undergoing a pretty major refurbishment, and will open in a couple of years; Conrad, a more contemporary version of a luxury brand and the newly created LXR, a soft brand targeting hotels that have their own brand equity and unique story behind them, that want to join our system to leverage the power of the booking engine.

We’re a big company with 18 brands and over 6,000 hotels globally. But in the luxury space, we’ve started to try to create a little bit more of specialization.

When my role was created six years ago, it was really out of necessity. We’ve got developers right across EMEA, but luxury deals tend to take a lot longer. They’re a lot more complex. There’s a lot less franchising [in Europe], so we separated the two from a development function. Then, that also follows throughout the business with sales and marketing, and the engine that supports all of our brands. On top of that, we have what we call the “luxury advantage,” which is that all the people focused on the commercial part of our business just do luxury.

The other thing that I do are projects that have a branded residential component, whether that’s one of those three luxury brands, or any of the other brands, which we have with Hilton. We’ve even done some Double Tree residences.

I lead those deals, and work with our developers to help them navigate those types of contracts, which are a really growing part of our industry and our business. We’ll talk about that, I’m sure. But, you know, the fact that Jaidev is here, and he’s focused on mixed-use projects I think tells you that residential and branded residential is becoming a bigger part of the hospitality space.

Ömer Isvan K: Indeed. Jaidev?

Jaidev Menezes, Marriott International: I look after mixed-use development for Marriott for Europe, Middle East and Africa. Essentially, looking at growing our branded residential business—a super exciting part of the business—and effectively looking after any projects that have a mixed-use component, whether residential pieces co-located with the hotel, as well as standalone branded residences.

Of Marriott’s 30 brands, we use residential for our luxury brands and our premium brands. We have more than 200 projects in the portfolio at the moment, about 110 open and about 90 in the pipeline. About three-quarters of those, as you would expect, are in the luxury space. So [that includes] Ritz-Carlton, St. Regis, JW Marriott and Edition. The remaining one-quarter are premium: Westin, Marriott, Sheraton, Le Meridien, etc.

Ingo Schweder, GOCO Hospitality: I’m the founder and managing director of Horwath Health & Wellness. Horwath is one of the largest and oldest consulting companies in the world. We started seven years ago, a dedicated subcompany, which only deals with health and wellness-related facilities. We are very active in the market of destination wellness resorts, entire wellness communities. Right now, our strongest market is the Middle East, where there is a huge amount of extremely large, complex and diverse destination wellness resorts under planning and development, as well as in China and in Indonesia.

We also own a company called GOCO Hospitality, which is the owner and manager of America’s largest hot spring resort (Glen Ivy Hot Springs in Southern California). We have projects in development in China, Thailand, Indonesia, and most probably—and hopefully next week—in southern Germany.

Ömer Isvan K: Let’s kick off with the word “luxury.” It is an elusive and overused terminology. One of the classic understandings of luxury in our industry was related to hardware, in terms of the space, and the marble, and the glitz, and the gold, and the velvet, and the silk, and the intensity of service, the amount of staff to guest ratio, or the array of services, and the number of facilities you can tick off. Does it have a swimming pool? Does it have this? Does it have that? So, that was a comfortable definition to position a property or brand.

Nowadays, we’re seeing more of an esoteric definition of luxury that is more personal. It is more to do with the final experience, and the satisfaction of personal desires, a reduction of effort.

Ingo, what does it mean, when somebody just simply says, “I have a luxury resort or luxury destination spot”?

Ingo Schweder, GOCO: Today, the key is bespoke and authentic services. Nobody wants to travel anymore to a destination that looks the same as other destinations. I was recently at a conference in a city in India. I looked around, and I could have been in Minneapolis—and that was at a high-end luxury hotel. I was very disappointed when I looked around. So, I believe luxury is being true, offering bespoke services—that are tailormade to my needs.

Ömer Isvan K: True to what?

Ingo Schweder, GOCO: True to the location, true to my individual needs, and true to my desire to feel authentic in that location. In India, I want to feel like I’m in India, and I don’t want to feel like I’m in Minneapolis or in Berlin. I want to be authentic there. I want to touch the cuisine. I want to have authentic wellness services. I want to have an interior that reflects the true elegance and culture that I’m in. I think that’s very important.

Ömer Isvan K: Willemijn, if the demand is shifting and the perception of luxury is shifting to such bespoke, almost curated individuality, how does that clash or correspond with the need of scalability in the sense of international brands or megabrands?

Willemijn Geels, IHG: You said something really interesting. It’s going away from the hardware, and I really agree with that. It’s going to something much more esoteric, or much softer than purely the hardware. It may sound a bit cheesy, but as I was thinking about this, I came up with three Ps.

Basically, it’s personal. These are personal experiences that people want to create, and they don’t want to live the same experience as another customer.

The next one is private. I think they may choose to be really private, secluded, and have the opportunity to go out and do something more outgoing, but in a luxury place. You would like to have something really private, a private villa or even an island, or it is a private boat. It’s this whole idea of being with the people you want to be with, but in a private surrounding and not necessarily having lots of other customers around.

The last one, which I think is actually really important, is purpose. What we see a lot of in our customer base is that people are starting to travel much more with a purpose, and thinking about what does travel do to the environment. It is about the planet. Luxury travel is now down to “what is the impact that I, as a luxury traveler, will have on the planet?” People are much more mindful around these things.

That’s what we try to bring into our hotels as well because, surely, we are a big company. We have lots of brands, but each of the brands is different. By no means is it a cookie-cutter, here’s-your-standards book where you roll it out in each hotel in the same way across the world. We’re much more into developing something that is fit for the location and offers what our customers are looking for.

Ömer Isvan K: Jaidev, how does the word “luxury” translate into residences?

Jaidev Menezes, Marriott: On the residential side, we start looking at it from the developer’s perspective first. So, there are three stakeholders that we look at. There’s the developer on a residential deal who’s looking to build, develop, market, sell, exit. You’ve got a buyer who’s in it for the long-term, who’s acquiring the unit, who’s going to either live in it or potentially rent it out and is concerned about resale. And you have the operator to make sure that it stays within the brand guidelines.

So, on the residential side, we start with a blank canvas. Each location is unique. Each market is unique. Each developer is unique. So, it’s easier for us to start with a blank canvas and look at designing the product to suit that market from a residential perspective. So looking at things like unit mix, unit sizes, we, as the brand, should not dictate what the unit mix and size is for that project.

For example, in our luxury brands, we prefer to do no studios. We’ve got minimums so that a one-bedroom should be X square meters. But if that market demands more one-bedrooms or two-bedrooms versus three-bedrooms, we allow the developer to do that. Because if you don’t, the product won’t sell.

It’s in the common areas where we bring in the design elements for the brand, whether it’s Ritz-Carlton, St. Regis or W.

Ömer Isvan K: Dan, in terms of the individuality that people are looking for versus scalability, do you see any conflict between the two? How do you actually address the conflict?

Daniel Wakeling, Hilton: In the luxury segment, you have to be reflective of the area you’re in. That’s how you ensure you’ve got authenticity. The expectation from luxury travelers now is that they want something different. They don’t want to spend the amount of money they’re going to have to spend to travel halfway around the world and not feel the location that they’re in. That’s why they’re traveling.

There is still a place for the cookie-cutter hotel model. Otherwise, we wouldn’t be sitting up there, the three of us, with the amount of hotels we have. But when you are buying luxury, your expectation is that it’s going to be authentic, it’s going to be reflective of the place I’m in, and the product is going to be of a certain level of quality.

Ömer Isvan K: The title of this session is “Evolution of Luxury.” Everybody here is identifying pretty strong trends that, all of a sudden, emerged during the pandemic, got amplified during the pandemic. Which of these have staying power and how much of it will fizzle away?

Daniel Wakeling, Hilton: Like everybody’s going to be on Zoom, right? No one’s ever going to have an in-person meeting again, yet there are two-and-a-half thousand people here [at IHIF] right now.

Ingo Schweder, GOCO: A trend I can see is that the wellness industry is a $4.7 trillion industry. Right now, every hospitality company that is not already in it is trying to move in there. But we can also see that there is a real issue of “well-washing,” where companies like to jump on it, but their model is really a small pampering facility. That is not really meaningful and not profitable and it’s managed in that manner. You can see this in those brands that have their wellness facility managed by somebody who reports to the front office manager, but they’re billing it as a $10 million wellness center, and they don’t know how to really profit from it.

Then you can see other companies that buy others and want to quickly jump on the wellness bandwagon, but they do it half-heartedly. So I think one needs to be careful of “well-washing” because wellness is such a strong influencer, and it will influence more and more urban centers as well as destination resorts.

Ömer Isvan K: Dan, what strong trend do you see in the next 10 years?

Dan Wakeling, Hilton: I think in the luxury space, it’s certainly privacy, particularly for resorts. Having your own sense of place where you can have your family, you can have your own pool. The sense of space while being in a location, where if you want to you can go to the restaurant and interact with people, you can go to the beach, but you can also retreat to your space. That’s one of the trends in resort design that we’re seeing.

Ömer Isvan K: Tracking the luxury market as we do around the world…we saw the [private accommodations with access to hotel amenities] formula go through the roof in terms of occupancy, ADR and for average length of stay.

Willemijn Geels, IHG: I fully agree. I think there is definitely staying power in that. I do think, we will see an increase in demand, not only relating to the pandemic. There is still a large number of people who actually have the money to spend, and they will want to spend it.

If you look at booking patterns and search engine research, “luxury travel” is one of the most searched for keywords, which is quite impressive.

The other point I wanted to pick up on is the length of stay. I do think that [will be extended] to a certain extent, because people may go further for travel. We’ve been kind of confined to Europe for a bit, and it was nice to do the city trips and see the English countryside and all of that. But, at some point, people will want to go further, and they will want to stay longer as well. Which is, then again, linked with the residential piece because you want to have that mix of units for your different types of clients. 

The other big trend we see is that luxury customers are getting younger and younger, and people have the money to spend, and they want to stay in luxury hotels. They really want to have that curated experience.

Ömer Isvan K: It once was, in the luxury consumer market, when it came to hotels, there was more price sensitivity for luxury travel than with luxury goods. But I’m feeling the recent trend is that there’s now less price sensitivity for hotels. Are you seeing that?

Willemijn Geels, IHG: That is true only for upper luxury. In my portfolio, that is true for Six Senses and Regent. It’s not necessarily true for InterContinental. And there is much more price sensitivity at entry level.

Daniel Wakeling, Hilton: You see that when a new hotel opens in a market where it transcends the experience and the product of what was currently available. Then, your feasibility team will look at the existing best hotel in the market, maybe it’s charging $500 a night. If this new hotel is going to be better than that one, what is the [nightly rate]? It could be $550, it could be $1,000. You don’t know until you test it. That’s down to how aggressive your salespeople are, and how much people really want to come and stay with you. I think, through the pandemic, we saw that because there was only a certain number of these types of [luxury] products. There’s only so many hotels in the Maldives where you can escape the world. They all did very well. So there’s supply and demand.

Ömer Isvan K: I’d like to look into the audience to see if we can answer any questions.

Audience Member: How are the brands thinking about the luxury all-inclusive space?

Willemijn Geels, IHG: We’re not yet very present in the all-inclusive space. It is a segment we’re keenly looking at and exploring. I want to tie it back to one of our brands. What we’ve found out with Regent is actually if you pay that level of price, you kind of expect a lot to be included. So, with Regent, we stopped charging for all the extras people don’t want to pay for because they’re paying 2,500-3,000 euros a night. So, I do believe that on the luxury, there is really something around all-inclusive. Having said that, for IHG as a company, we’re not yet very present [in that market].

Ömer Isvan K: A lot of companies now are actually moving into it. Only today, Accor announced a whole new division, basically looking at luxury all-inclusives.

Jaidev Menezes, Marriott: We’ve made a few recent acquisitions in the Caribbean/Latin America region in the all-inclusive space. We’re also looking at additional platforms. We’re looking at selective markets in EMEA. So, it’s definitely an area that we’re looking to grow.

Ömer Isvan K: There’s a redefinition of all-inclusive, let’s not forget, because all-inclusive had a connotation that it was associated with mass tourism to operate a type of packaging.

Whereas if you go to the Maldives to a private island resort, I mean, yes, it is all-inclusive, whether you’re signing a separate check each time you drink a coffee or not. It’s just an academic exercise.

Ultimately, the day you check out, you’re going to pay a price. Whether somebody charges that price to you at once or by collecting signatures from you is basically academic.

As dedicated wellness-hospitality properties continue to develop,
destination spas are taking wellness to the next level with their unique offerings

As the concept of wellness becomes more and more widely recognized and accepted, the offerings of standard fitness centers and general hotel spas are often not attractive enough in meet the needs and expectations of increasingly wellness-savvy guests. Hoteliers worldwide are finding different ways to engage this trend and are attempting to capitalize on this ever-growing element of the economy, both at the property level and through corporate-level branding strategies.

Environmental & social factors driving the rise of wellness

Over the past few decades, environmental and social factors, such as modernized living and a increase in chronic diseases, stress, depression, and anxiety, have been driving the growth of the wellness industry. Coupled with a growing awareness of sustainability, people are becoming more conscious about their health and state of well-being physically, mentally, and emotionally. At the highest end, there is an aspiration to temporarily escape our mortality by living a longer and more fulfilled life. Since 2020, the unprecedented coronavirus (COVID-19) pandemic has further stimulated the global wellness movement and made the world rethink the way we live, consume, work, and travel. Interest in health and wellness is now at an all-time high.

More brands and properties create versatile workout options

Besides offering healthy and organic food and beverage (F&B) options, jogging concierge services, and cooking classes, more hotel brands and properties are making workout alternatives more accessible to travelers who wish to maintain their training routines while on the road.

As a pioneer fitness-and-wellness-focused brand, offering workout gear rentals along with its Heavenly fittings, Westin teamed up with the fitness equipment and media company Peloton in 2017 to put its cardio bicycles in the fitness centers and select guestrooms of Westin hotels in the U.S. That same year, Hilton also launched its “Five Feet to Fitness” guestroom concept with the installation of over eleven different pieces of workout equipment and accessory options, as well as 25 in-room fitness tutorials. This program is only available in select Hilton locations and a small percentage of its guestrooms, but these features increase the ADR for these rooms by approximately US$45 nightly.

Aside from following brand standards, some properties are taking the initiative into their own hands by seizing the latest trends and technology to further differentiate themselves. In January 2020, the Four Seasons Hotel Silicon Valley partnered with the gym technology company Tonal to offer select fitness-oriented guestrooms that feature an intelligent fitness system and personal trainer, integrating expert coaching and innovative equipment for various guided workouts, including yoga, cardio, and strength training. Other hotels and operators are reimagining their various fitness programs to include a more flexible and technological approach to standard offerings.

Operators are expanding their portfolios with wellness-centric hotel brands

To fully take on the wellness trend, the large hotel companies have continued adding wellness-oriented brands into their portfolio over the past decade. In 2012, InterContinental Hotels Group (IHG) launched the EVEN Hotels brand with wellness as its core and further reinforced the strategy in 2019 with the acquisition of Six Senses (a brand renowned for its focus on wellness and sustainability). IHG now has 15 EVEN Hotel properties in operation with 28 more in development globally. The brand made its debut in Asia with a new location in Nanjing, China, in June 2020. Additionally, the hotel group plans to expand the Six Senses brand to 60 properties from the existing 18 over the next ten years.

In 2017, Hyatt Hotels Corporation acquired two wellness brands—Miraval Group and Exhale—with plans to incorporate their offerings into the Hyatt guest experience. Miraval Group is a New York-based wellness resort and spa operator best known for its flagship wellness destination property in Tucson, Arizona. Miraval has recently expanded its portfolio in the U.S. to include new locations in Austin, Texas, and Lenox, Massachusetts. Exhale is a chain of lifestyle fitness centers that provides boutique fitness classes and spa services. Another world-class destination wellness pioneer is Canyon Ranch. Canyon Ranch also has a flagship property in Tucson, Arizona, and recently expanded in the U.S. by adding a new location in Woodside, California.

Destination spas take wellness to the next level

For many hotel companies, an interest to differentiate their hotel product offerings with wellness-oriented facilities and amenities, or by incorporating new wellness-focused brands into their portfolio, is on the rise. However, some experts from established destination spas (also referred to as wellness resorts or wellness retreats) may be somewhat skeptical that these traditional hotel management companies have the knowledge or expertise to pull it off. Creating bespoke wellness journeys with carefully curated programs for health and wellness is fundamentally different than what traditional hotels may offer, as it requires a comprehensive understanding of the operational nuances of the spa-and-wellness market. Furthermore, these destination spa facilities must have a strategic growth path different from conventional hotel and resort models.

As defined by the GWI, there are two major segments in wellness tourism: primary and secondary wellness travelers. The former refers to those whose trip or destination choice is primarily motivated by the wellness offering provided, while the latter refers to travelers who seek to maintain their own wellness routine or participate in wellness experiences while taking any type of trip for leisure and business. In the current climate of travel and tourism, well-being propositions are at the forefront. With transient leisure and recreational components being primary focal points, this further drives demand and interest in the primary wellness category.

In the pursuit of health and wellness, destination spas are developed to cater to primary wellness travelers, providing an immersive experience with the sole purpose of helping them to develop or maintain their own long-term healthy lifestyles. The International Spa Association (ISPA) also defines a destination spa as “a facility with the primary purpose of guiding individual spa-goers to develop healthy habits.” Needless to say, not every guest fully transcends to a healthy lifestyle after a visit, but the exposure to these services often reveals significant wellness benefits and helps develop new lifelong habits and program engagement.

Global market dynamics

There are core differences in the global market of spa-and-wellness properties and programs. Many Asian and European countries have deep historical traditions and longstanding cultural values related to the importance of well-being and spa experiences. The depth and duration of these ideals often foster more inclusive guest experiences, facility use, and engagement. Many regions around the world have long embraced the health benefits of nature, hydrothermal experiences, and bio-dynamic prevention and therapeutics. Yet, there are also global spa-and-wellness segments that have primarily developed sectors focused on luxury and manual aesthetic services. The differences among these markets can be traced back to their adoption of modern-day ideals; whereas, some parts of the world have added spa services to complement a preexisting cultural foundation of well-being, others have created programs targeting well-being atop aesthetic and beauty services to satisfy emerging new demand.

Today, new global wellness-hospitality market opportunities exist nearly everywhere. There are various approaches to this, and the markers of well-crafted wellness facilities require a specific set of expertise and foresight. The widespread benefits of well-being are natural and can provide meaningful remedies for self-care, especially in times of deep reflection and turmoil.

The existing global supply of destination wellness spas includes a selection of integrative health and wellness offerings, medical services, and lifestyle components. These facilities typically include a broad range of concepts, cultural themes, and treatment and service specializations. In addition to global spa-and-wellness development, wellness real estate development is showing up across all sectors, from hotels and resorts to mixed-use and residential.

Global wellness real estate development

There is a higher concentration of comprehensive destination spas in Europe, especially in Austria, Germany and Italy. Over 60% of the 50 properties observed are holistic wellness destination spas, while almost 40% are medical spas with a strong science-backed and evidence-based medicinal focus; additionally, the European market has the biggest share of listed medical spas. Yet, some of the long-established and leading destination spas around the world include a diverse range of properties with varying levels of targeted well-being, such as JOALI BEING, Rancho La Puerta, Canyon Ranch, Miraval, Lanserhof, SHA, Ananda, Chiva-Som, and Kamalaya.

As dedicated wellness-hospitality properties continue to develop, destination spas are taking wellness to the next level with their unique offerings. We discuss this further below to help in the understanding of what exactly distinguishes a destination spa from a traditional hotel or resort and what are the critical success factors for these types of developments.

Characteristics of wellness destination spas

Traditional resorts rely heavily on exceptional accessibility and proximity to tourist attractions to draw leisure travelers as well as demand associated with meetings, incentive trips, conferences, and exhibitions (MICE). Destination spas, on the other hand, tend to be situated in remote locations far from sources of air and noise pollution, such as busy roads, transportation hubs, and factories, while possessing rich natural or cultural resources to create a sanctuary experience for ultimate relaxation and mind and body connection for in-house guests.

Striving to provide full wellness immersion for all in-house guests, policies pertaining to restrictions concerning digital devices, under-aged children, smoking, and alcohol consumption are common. Meanwhile, even though remote locations play a significant role in market positioning, challenges related to COVID-19 and tourism restrictions have highlighted a general need to diversify central operating models at remote properties; important considerations, such as regional accessibility, flexibility, and social topography, are emerging new factors.

Given the fundamental differences in market-segment profiles, occupancy levels of destination spas are different from traditional hotel spas. The majority of primary wellness tourists tend to be between the ages of 35 and 70, are higher educated, have disposable incomes, and enjoy more flexible travel schedules. The guest demographics in search of wellness experiences are likely to be travelers seeking ways to improve their health/lifestyle or explore a broader understanding of nature and well-being. These types of travel experiences appeal to solo travelers, couples, and small groups (e.g., family reunions, girlfriend getaways, retreat participants, etc.).

Distinctive operating model

To provide an immersive wellness experience for their guests, integrated destination spas typically bundle various components, such as guestroom, F&B, various assessments & consultations, treatments and activities, through guided and curated or individually customized multi-day programs instead of just selling rooms. Guests can either select a pre-designed package based on their needs (e.g., detox, weight loss, digital detox, stress relief, anti-aging, etc.) and enjoy an all-inclusive package price, or they can opt for a tailor-made program based on their assessment results and other specific needs with a partly inclusive rate plus add-on items.

This business model boosts revenues by selling multiple-day wellness packages per person instead of just room nights; therefore, double occupancy means almost double the revenue, even if guests share a room. This per-person model does not typically include spa treatments or select wellness services, which are considered add-on items often motivated by the allocation of guest spa credits.

Longer average length of stay

For guests to achieve transformational results, the minimum program duration is typically three nights at most destination spas; however, it can extend up to three weeks (21 nights), depending on the goals and desired outcomes by adjusting the intensity of the program. Based on HVS’s research, wellness properties in the U.S., India, Thailand, and Europe register average lengths of stay ranging from seven to ten nights.

High-yield revenue streams

In addition to staying longer, wellness-program consumers tend to remain largely inhouse because of their relatively busy daily schedules, participating in one to three treatments or activities per day, which may include health assessments/consultations and various daily recreational or spiritual activities. This provides a greater opportunity to maximize revenues by capturing incremental and ancillary spend on retail and other paid activities, including spa services or personalized services. According to the data estimated by the GWI in 2017, on average, wellness tourists spend 53% more than the typical tourists on international trips and 178% more on domestic trips.

Wellness components take center stage

Wellness programming and offerings are the core of a destination spa’s business and the main draw for wellness tourists. With wellness components taking center stage, and guests spending between two to five hours per day participating in assessment, consultation, or treatment sessions, as well as wellness-related activities at authentic destination spas, it is common to observe around 30% to 40% of the operating revenues coming from the spa and wellness center, much higher than traditional luxury hotels and resorts. This percentage can go up to as high as 50% if most of the programs offered are results-driven, highly specialized, and customized.

Based on the 2019 HVS Annual Spa Department Performance Report, luxury hotel spas generate approximately 7.4% of total revenue on average across the U.S. As luxury hotels are met with an evolving upper-upscale, wellness-minded hotel market, program optimization is a consistent need across all developing property types, including destination wellness locations, as well as traditional hotels and resorts.

Higher guest retention and direct bookings

Wellness is rarely ever a one-off quick fix but rather a long-term lifestyle. This concept is also embedded in the mission and philosophy of all destination spas, as well as with wellness enthusiasts. If guests find the programs effective and the stay enjoyable, they are likely to return year-over-year, potentially returning multiple times per year.

For some highly specialized and results-driven medicinal programs, such as the Revitalization program for cell regeneration created by the medical spa Clinique La Prairie, it is recommended that guests return once every two years to maintain the optimal health and longevity benefits. Others, like Canyon Ranch, offer personal health programs that examine and track integrative health and biometrics with the option for annual follow-ups. Such programs support annualized value and diverse health-minded guest retention.

Furthermore, many destination and wellness-focused spas have established long-term partnerships with some well-known wellness experts around the globe. These people may be regularly invited as visiting practitioners or to host multi-day workshops or retreats. This collaboration not only serves as a marketing tool to attract people to specialized features, but also appeals to interested guests who follow a variety of artists, speakers, and teachers.

Therefore, it is not surprising to find some of the well-established and successful destination spas achieving much higher repeat business, ranging between 45% and 60%, compared to traditional hotel and resort properties. Because of the loyal following that they have built up, about 70% to 80% of bookings are made through direct channels either onsite at the property upon checkout or via official websites, emails, or phone calls. As a result, expenses related to travel agency booking commissions and marketing are low, as less marketing effort is needed.

Key success factors and challenges of destination spa development

To develop a competitive wellness destination, it is crucial to create its own distinct concept and philosophy at the early stage, appealing to the targeted audience, especially to uphold core beliefs and principles. Some existing destination spas set out to introduce a new wellness protocol to the market and are successful in developing their own following, largely attributable to the success of its program development, service selections, management, and quality of care.

Unlike traditional chain-affiliated hotels with specific brand standards that are easier to copy and paste to another location, there is no “one size fits all” shortcut to destination spa development. Some may focus on one single specialized remedy, while others may offer multifaceted modalities. This emphasizes the need for spa-and-wellness hospitality expertise for important phases, from establishing feasibility to curating schematic design, which are essential processes in the success of the overall property and development.

For instance, Ananda in the Himalayas adopts the holistic approach to wellness and blends the ancient processes of Ayurveda, Vedanta, and yoga with the contemporary international practices. Conversely, SHA Wellness Clinic takes the medical-oriented approach and combines modern Japanese macrobiotics and advanced Western medicine. The philosophy then serves as the foundation of their programming and offerings, from holistic and experience-driven to specialized and results-driven.

It is common for hotel and destination spas to integrate management with ownership. Spa and wellness programs are unique property features that have a direct impact on guest value and quality of experience. Having an owner with different objectives from management could potentially be counterproductive to internal progress. Meanwhile, an operator with core value differences can also lead to failed efforts to create and convey an exceptional guest journey.

Synergies & Authenticity

The entire establishment must be carefully planned and designed with the deep understanding of the concept and philosophy. The central values of the business should be collectively shared goals to deliver a truly integrated and authentic wellness destination. This protects the quality and integrity of the overall experience, as well as maximizing operational efficiency and staffing retention for the long term.

The goal is to promote interactions among all departments, facilities, and services and to provide a tranquil environment with ample indoor and outdoor public space for complete relaxation and private reflection, including in-room experiences, F&B programs, and green-space integrations, such as nature, walkways, and overall site planning. Based on seasonality and geography, the layout and planning of these facilities should accommodate fluent operations with indoor and outdoor diversity year-round.

Training & Talent retention

Education and training always play significant roles in the traditional hotel industry, whereas the booking process and scheduling systems pertaining to wellness hospitality commonly require in-depth and cross-department training to effectively meet guest needs. Employees who are assisting guests with booking accommodations and services must have a comprehensive understanding and clear knowledge of relevant spa and wellness offerings. This is a fundamental training requirement to successfully assist guests with related issues and know exactly how to manage program know-how when needed.

Focusing on improving employee satisfaction and loyalty to increase productivity and employee retention is also a critical and beneficial strategy for long-term operation. With the goal to limit employee turnover, this supports the continuity of services and level of quality, increasing return guest participation. Integrating training programs designed for specific onsite geographic manual services can add value and create economic benefit to the local community, whereas native language and hard skills can often be combined to enhance the overall experience and range of intrinsic benefits.

Sales & Marketing

During the first few years after opening, a meaningful investment on marketing is required for the property and programs to spread its messaging. This can be effectively done through traditional and digital marketing strategies, including but not limited to travel agencies, brand ambassadors, social media influencers, online presence, and brand campaigns. These efforts can also be supported with events in feeder markets, strategic partnerships, local concierges, and tour guides. Once a loyal following and client base is built up, less marketing expense and effort is generally needed.

It is highly important for the wellness program and spa to have its own centralized and dedicated sales team, set up with regional and global partnerships. SHA Wellness Clinic, as an example, invested heavily on direct sales and marketing with six global satellite sales offices, establishing a loyal following from over 60 countries including Russia, Mexico, and Saudi Arabia.

Investor’s passion and dedication

Throughout the industry of well-established and successful destination spas, a common thread is that the owners or founders themselves have a firm belief and great passion towards health and wellness, with the vision and aim to share it to the world. Some may have experienced health problems and recovered through a certain regimen, whereas some have strong background and experience in certain medicines, such as evidence-based Western medicine or alternative medicine. Having a personal investment in well-being can accelerate the commitment to embark on these highly specific and wide-ranging program types.

Due to the increasing demand of the wellness product and program versatility, the period to stabilization of a destination wellness spa, as well as some traditional hotel and resort spas, can be three to five years. The selection of services, program types, and amenities can highly influence and drive performance dynamics. Therefore, investors and developers need to be informed and aware of various program options and business models at the onset of investment and development as a part of the overall strategy. This will protect long-range investments and support stronger, more successful outcomes.

Outlook for wellness in hospitality

While interest in investing in authentic and place-based destination spas is still growing, it is also evident that wellness tourism is evolving and shifting to outlaying urban settings. More wellness brands, which have traditionally operated as destination spa properties, are also tapping into second- and third-tier market cities, while entirely new ones are beginning to develop as well.

With superior education, healthcare, and job/career prospects, primary cities will have a long attraction “pull” for a large amount of the population. While COVID-19 presents challenges for the time being, the networking activities that characterize the lifestyle habits of the cultural and economic elites in society may find it more difficult to move from cities. There is also a drive to create urban wellness centers that currently cater to the high-end market but are increasingly becoming more accessible, reaching a broader consumer base. In terms of long-range planning, urban livability will continue to expand, bringing more people to activated areas featuring a lower carbon footprint, while low-density, rural leisure and living for the masses will not be feasible in many parts of the world, including Asia and Latin America.

With a broadening audience and heighted search for well-being, this will spur new and distinct demand in the coming years. New spa-and-wellness businesses and innovative performance models will be required to reposition services and meet these changing needs. Creating successful spa-and-wellness propositions and new business models requires a delicate balance of understanding the spa-and-wellness market and the social and economic ecosystems in which it lives.

In addition to increasing wellness-hospitality development, a change of mindset from the “me” perspective to the larger “we” perspective is becoming more prevalent around the world. With this, elevated environmental concerns have been increasing over the last decade, renewing the focus on sustainable building practices and architecture and being mindful of developing with a lighter touch on nature.

It is important to note that wellness-hospitality growth is not limited to destination spas or traditional hotels and resorts. There are significant developments evolving in standalone facilities, mixed-use, and residential real estate sectors of this market. These bigger strides in spa-and-wellness development further support the trajectory of new demand. It is an auspicious time to consider other factors, such as property repositioning and renovations, as a route to engage these thriving program types.