Fifth annual Wellness Real Estate Report – top takeaways

RLA Global has released the fifth annual Wellness Real Estate Report, which analyses hotel performances in 2023 across different wellness categories.

The report is based on data from more than 11,000 properties worldwide. For the first time this year, it also compares results in selected hotel asset classes. It is published in partnership with P&L benchmarking firm HotStats.

The Wellness Real Estate Report illustrates how wellness contributes to hotel revenue flows and operating costs, and what effects it has on margins and overall profits.

European Spa caught up with group CEO of RLA Global, which produces the report, to gather some insider analysis.

Roger Allen’s top takeaways

Hotels with major wellness offerings were able to drive significantly higher total revenue per available room (TRevPAR), up to 128% higher than just room revenue (RevPAR). This highlights that there are significant revenue upsides from having robust wellness operations.

‘Upper upscale’ properties outperformed luxury and upscale in driving TRevPAR growth across all wellness categories. This demonstrates ‘upper upscale’s’ sweet spot in optimising wellness offerings.

Hotels with wellness offerings saw significant global performance gains, with all markets displaying double-digit TRevPAR growth year-on-year, ranging from 13% in the Americas to a remarkable 48% increase in APAC.

Top takeaways for spa operators

• Operators should leverage wellness offerings to drive total hotel performance, focusing on TRevPAR rather than just RevPAR.
• The data indicates that even minor wellness properties can achieve significant revenue boosts, suggesting that targeted wellness investments can yield substantial returns.
• Managing operating costs is crucial. Both major and minor wellness properties have departmental expenses at 36%. Implementing cost-control measures without compromising service quality is a good way to enhance profitability.

“Understanding the direct internal rate of return on investments related to wellness is fundamental when looking at such hotel investments,” said Allen.

Adapting to regional market trends

The report shows that operators should tailor their strategies based on regional performance trends.

Understanding and adapting to these regional dynamics can help operators maximise their market potential.

“Wellness is certainly a guest expectation across the board, and guests are willing to spend more money where they can in areas such as wellness,” said Allen.

“Investors need to be able to get the right approach for the right market with the right asset.”

Leveraging Artificial Intelligence

Integrating AI can significantly enhance guest experiences by offering personalised wellness services.

AI-driven guest profiling and data analytics can help operators understand guest preferences and tailor offerings accordingly. This can lead to improved guest satisfaction and operational efficiency.

As well as hyper-personalised wellness experiences AI can streamline operations such as scheduling and resource allocation to boost efficiency. Virtual assistants can guide guests on available wellness activities during their stay.

But Allen cautioned that it’s vital to strike the right balance between AI-enablement and the high-touch, humanistic aspects that wellness demands. To circumnavigate pitfalls, wellness hotels should provide transparent data policies and get explicit consent from guests.

Aim to deploy AI as an enabler working alongside human expertise, not replacing it entirely and regularly audit AI systems for any ethical issues or biases.

Click here to download the full report.

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