Abstract: Glamping is becoming increasingly popular and may yield better financial returns than traditional hotel developments in some situations, especially in unspoiled locations which are inaccessible for traditional hotel/resort construction because it disturbs the site too much.
This paper presents a detailed financial model for analysing the performance of glamping properties to inform decision-making about investing in them.
It focuses particularly on properties that are “off the beaten track” for singles, couples, small families, and others who want to “unwind” and “commune with nature” in relatively isolated off-grid locations, such as nature reserves, vineyard/wineries, golf resorts or wellness and spa hideaways.
In the authors’ view, glamping is particularly well suited to this kind of hotel. In the normal way, the financial model summarizes the development of these properties in detail and itemizes the specific capital investments needed to establish an off-grid glamping property, in contrast to a similar traditional grid-connected hotel.
It then models the detailed operating costs and income streams for a proposed glamping project to determine its potential profitability and rate of return under different operating scenarios.
Generally, from the financial model, we conclude that glamping can be a very good alternative investment to traditional hotel development in many off-grid situations. Relatively, the capital investment is substantially lower for a glamping property while simultaneously demonstrating the potential to generate similar revenues to traditionally constructed mid-tier to upper-scale hotels but with lower operating costs.
Moreover, there are fewer fixed overheads in the initial investment so that the property can be developed incrementally to cost effectively grow capacity along with demand thus making more efficient use of the available funds.
Incremental development also facilitates “tuning” the site mix in the property over time to better match evolving customer preferences and thus maximize the return on investment.
This report is now available for download from the Global Journal of Management and Business Research: A - Administration and Management.
- Paul Dean is Principal of Dean & Associates.
- Richard Whitfield is President of the East-West Institute for Advanced Studies.
- Leon Juffermans is Owner and Founder of GlamXperience Australia.
- Gert Noordzy is Managing Director of Northside Consulting and Adjunct Assistant Professor, School of Hotel and Tourism Management, Chinese University of Hong Kong.
