Driven by the interests of an increasingly older and unhealthy population, healthcare has been at the center of political debates in the United States for over a decade and as the current conventional healthcare model is broadly recognized as failing, it is compelling people to take on responsibility for their wellbeing through alternative solutions.
Wellness tourism is gaining acceptance as an innovative way to practice, maintain, or enhance good health. The GWI (Global Wellness Institute) projects that wellness tourism will grow at an average annual rate of 7.5% through 2022, considerably faster than the 6.4% annual growth forecasted for overall global tourism. So how might the lodging sector creatively and effectively integrate with the wellness movement?
The Rise of Wellness as an Industry
Wellness comprises the notion of preventive health and is often cited in contrast to today's healthcare sector, which is most often described as reactive and focused on cures. Wellness is multidimensional— spanning the physical, mental, social, emotional, spiritual, and environmental spheres.
The concept of wellness is not new and can be traced to ancient civilizations in Asia, Greece, and Rome. Throughout Asia, there is a long tradition of wellness-focused and holistic theories that are closely integrated into each country’s culture. Traveling practitioners have helped popularize ayurvedic treatments1, TCM (traditional Chinese medicine), chi gong, yoga and meditation, and other forms of wellness practices. From Europe, we have adopted the term “spa,” which traditionally refers to the concept of “health in water.”
The continent’s strong bathing culture linked to thermal and mineral springs has inspired modern wellness therapies centered on the principles of balneotherapy2, thalassotherapy3, mud, salts, algae, etc. Also, in the 19th century, new intellectual movements, spiritual philosophies, and medical practices proliferated in the United States and Europe. These include alternative healthcare methods that focus on self-healing, holistic approaches, and preventive care, including homeopathy, osteopathy, chiropractic, and naturopathy, which have, over time, gained widespread acceptance.
Wellness as an industry (rather than a concept) was popularized at the beginning of the century supported by a series of publications. Economist and entrepreneur Paul Zan Pilzer through his book “The Wellness Revolution” (2002), helped define the industry’s characteristics. In 2007 the Global Wellness Institute (GWI) was created to support the research of wellness markets, and in 2013, released for the first time, a report on the Global Wellness Tourism Economy that was evaluated at $439 billion. In 2017, the wellness tourism industry was estimated at $639.4 billion. The ability to measure the global size and economic impact of the wellness tourism market brought significant attention to the sector and sparked the interests of many entrepreneurs who continue to develop and innovate in this market.
Integrating Wellness in Hospitality
In the hotel industry, the development of “spas” as a component of luxury hotel/resorts may be regarded as a first step for integrating modern wellness into the industry. Over time, the term “spa” has evolved to define places of “renewal for body, mind, spirit” and hotel spas have become the most common type of wellness property. Hotel spas are defined as hospitality properties with a strong spa component and cater to travelers whose wellness activities are generally not the primary motivation to visit (although it may be an important component of the trip). The GWI defines this market as “secondary wellness travelers,” which accounts for nearly 89% of total wellness tourism trips.
One reason hotel spas have proliferated is that the activity is complementary to the traditional hotel product. Similar to restaurants, they are considered an additional revenue department, and their operation can be integrated to the hotel management team or be franchised. While spa performance is evaluated with industry-specific KPIs such as TRU (treatment room utilization) and RevPATR (revenue per available treatment room), overall, spas do not impact the way hotels are assessed or developed.
Hotel Occupancy, ADR (average daily rate), and RevPar (room revenue per available room) are still measured and benchmarked by service level to evaluate a property’s performance and potential returns. Spa revenue is tied into a traditional hotel pro-forma through estimated guest capture rates and SRevPOR (spa revenue per occupied room), which may be benchmarked.
Chablé Resort & Spa, Yucatan Mexico
Treatment Room Overlooking a Cenote4
As wellness products continue to permeate our daily activities, hotels have also progressed to integrate wellness-oriented products throughout various component of the guest stay -- from food and beverage menus to guestrooms amenities. A few properties specifically target wellness consumers such as Westin by Marriott and EVEN® hotels by IHG. Westin has partnered with Peloton bikes to offer in-room cycling options, and EVEN® hotels include yoga mats and fitness equipment in every room. While these brands are positioning themselves as wellness-centric, the integrating of wellness products are once again, not expected to alter the way we evaluate hotel performance.
A New Business Model for Hospitality Wellness
The rise of wellness has also led to the development of a distinctive type of resort catering to what the GWI defines as “primary wellness tourists.” For these travelers, maintaining or enhancing personal wellness is the main motivation for the trip. While the GWI estimates that primary wellness tourism represented just 11% of the total wellness tourism market in 2017, its growth was estimated at a rate of 8% annually, from 2015 to 2017.
Resorts targeting primary wellness tourists usually offer immersive wellness experiences in two formats. Destination Spas such as Canyon Ranch Resort and Spa and Miraval Resort offer Individual Wellness Immersions which are based on personalized routines, including suggested exercise, expert medical evaluations, spiritual education, diet or cleanses, and daily spa treatments. Retreat Centers offer group experiences usually led by globally celebrated health specialists and emphasize learning through shared experiences. While the property types will have different management practices, in both models, the wellness component takes center stage. Wellness transformation is the goal, which is primarily achieved through guided programming and activities.
This change in the property’s role has revealed two key challenges in developing immersive wellness resorts. The first, as may be expected, is in the business model. For guests to achieve transformational results, participants must be guided through a specific program. To increase adoption and success rates, a resort should bundle components of the stay. In all-inclusive or partly-inclusive hotel models, activities are often unlikely to stand alone as an operating department. Instead, the model encourages individual guest occupancy levels, and resorts are designed to share costs across operating units to support the various services offered.
Much like the all-inclusive leisure resort model, performance is measured through per person occupancies and package revenue or total revenue per guest. The distinctive operating model and the absence of benchmarking tools in the all-inclusive sector in general, has been a challenge for traditional U.S hospitality operators and may also explain, why they have taken so long to enter this space in active leisure markets.
The second challenge in developing immersive wellness resorts is in the programming itself. The wellness industry has not yet gone through a standardization process, and wellness enterprises are often developed through individual entrepreneurs or grassroots movements. This is also true in the hospitality space where wellness resort concepts and programming are often based on the developer’s or owner’s exposure to, or experience with, a particular practice or wellness philosophy. Globalization and increased social connection have led to greater exposure to different healthcare approaches and cross-pollination of wellness practices, all while highlighting that there is no single approach to wellness.
Spiritual Sanctuary at Canyon Ranch, Tucson, Arizona
Similarly, there is no exact formula when developing a wellness resort, and successful properties may service a spectrum of niche travelers. Nevertheless, a couple of critical factors entrepreneurs should consider, include:
- The type of wellness tourist they are targeting and the intended guest experience.
- How the site characteristics and local market dynamics support the proposed development.
- How the wellness component integrates the lodging framework and what are the implications for resort design, the sales model, and tracking performance.
Finally, we predict that as the definition and understanding of the wellness industry gain acceptance, successful lodging properties will increasingly integrate the basic concepts of tourism and develop truly authentic and place-based products inspired by local wellness heritage.
- Ayurveda is the traditional Hindu system of medicine, which is based on the idea of balance in bodily systems and uses of diet, herbal treatment, and yogic breathing.
- The treatment of disease by bathing in mineral springs
- The use of seawate rin cosmetic and health treatment.
- A cenote is a natural pit, or sinkhole, resulting from the collapse of limestone bedrock that exposes groundwater underneath. Especially associated with the Yucatán Peninsula of Mexico, cenotes were sometimes used by the ancient Maya for sacrificial offerings.
Agnès Pierre-Louis is Senior Consultant in the Miami office of global hospitality advisory firm Horwath HTL. With extensive experience in international hotel operations, real estate and hospitality strategy, she focuses on market studies and predevelopment consulting for hotels, residential real estate and master-planned communities in the United States, Latin America, and the Caribbean.
Reputed for strong analytical skills and a thorough understanding of the industry, Agnès develops successful strategies that maximize value for all project stakeholders. Recent assignments include programming of a luxury resort development in Mexico, brand selection for an all-inclusive property in Jamaica, concept refinement and feasibility of a lifestyle resort in Costa Rica’s rainforest and assessing growth strategy for a wellness resort brand in the United States.
Agnès holds a bachelor’s degree in Hotel and Tourism Management from Ecole Hôtelière de Lausanne, a Certificate in Hotel Real Estate Investment and Asset Management from Cornell University, and an MBA from Kellogg School of Management. She is fluent in English, French, Spanish and Creole. Agnes can be contacted at firstname.lastname@example.org
Horwath HTL, Miami serves the sunbelt region of the United States, Central America, Mexico, and the Caribbean Basin, assisting hotel investors and developers from around the globe with strategic planning and advisory. Specialty areas include eco-friendly hotels, health and wellness practices for hotels, spas and resorts, sustainability and connection with the community, trophy resorts properties, and destination hotels, among others. Horwath HTL Miami has consulted for leading branded management companies such as Canyon Ranch, Six Senses, Montage, Solage, and Bulgari. http://horwathhtl.com/office/miami-fl