How to achieve ROI for wellness in your hotel

Hotels and resorts can capture their guest's desire for wellbeing while also seeing a return on their investment (ROI), panelists agreed at a recent webinar hosted by the International Luxury Hotel Association (ILHA).

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International Luxury Hotel Association

Oct 19, 2020, 15:00 ET

PALM BEACH, Fla., Oct. 19, 2020 /PRNewswire/ -- Interest in wellness is greater than ever as people are re-evaluating their priorities and try to focus more on their health in a period of much uncertainty, a distressed economy and a public health crisis due to the Covid-19 pandemic, participants heard at ILHA's webinar on 14 October, which was moderated by Roger A. Allen, group CEO at Resources for Leisure Assets.

"We're very bullish on wellness," said Susie Ellis, chairman and CEO of the Global Wellness Institute, one of the panelists at the webinar. She said increased demand has significant implications for all players in the $4.5 trillion wellness economy, including luxury hotels, which she believes have many opportunities to improve ROI in this segment.

Explore growth areas in wellness

There are ongoing shifts in the wellness industry, which were accelerated by Covid-19, according to Ellis. Some areas are shrinking, while some other fields, such as wellness real estate, are seeing growth. She said people are increasingly seeking to live in a healthy environment, which puts hotels and resorts with residences in an advantageous situation. The growing number of digital nomads or those working part-time to stay longer also provide opportunities to hotels, Ellis added.

Mental wellness is another area foreseen to increase in importance. Ella Kent, Director of Rooms at the Sea Island Resort on the southeastern coast of Georgia, said a survey of spa-goers during the lockdown showed that people were paying as much attention to their mental health as they were to their physical condition. "We've not seen that before," she said.

Andrew Gibson, chairman of the Wellness Tourism Association, has underlined that top spenders in hotels are those guests who use wellness facilities. He said they normally spend double on food and beverage, stay 1.5 days longer in average and are 33% more likely to take suites at the hotel.

Operators should also note that luxury wellness hotels are experiencing a shift in guest demographics. Kent at Sea Island said they previously marketed mostly to visitors aged over 60 and wellness was passive in the spa. Today they have more guests from the 45-60 age group, who are seeking things to do outside the spa and activities that speak to nature, such as rock climbing and fishing. Many of them travel with children and want to get involved in outdoor activities instead of sitting by the pool.

Be innovative to beat challenges

Despite the fairly rosy outlook on overall demand for wellness, hotels and resorts are facing several challenges, mostly as they cannot plan ahead for the longer term. The booking window at Sea Island, for example, has shrunk to five days from three months and adding new infrastructure is now off the table, Kent said. She expects 2021 to be a transitional year for most hotels.

The chances of survival and future recovery largely depends on location for most properties. Kent said Sea Island is "blessed to be" located on the seaside, and is "very, very busy, unexpectedly so". But its spa and fitness centers are not operating at full capacity, in part because of social distancing, but mostly due to the lack of spa therapists, especially massage therapists, who are very weary of working in the current environment.

Managers have to "think a little bit outside the box" to adopt new operational strategies, according to Thomas Klein, owner and consultant at Tak Hospitality. He said city hotels, for example, may convert meeting space into wellness space and operators may also think of adding low-touch services - such as halo, infra or sound therapy - that can provide healing on many levels. He also believes that educating personnel in hotel sales, marketing and operations is critically important.

Reach for the low-hanging fruit

Hotels and resorts with wellness offerings should find ways to maximize the value of their existing assets and also aim for easy goals that can drive revenues and be executed quickly with relatively little cost and effort, Ellis of Sea Island Resort said. She listed several opportunities:

Improve communication: "get your fitness and spa people speak" to break down silos and allow your facility to become a wellbeing or lifestyle enhancement center instead of just being a spa and a fitness unit. A spa therapist receiving a golfer with a frozen-up shoulder should work together with the trainer who has been working with the guest at the golf performance center. "They know exactly what's going on with the guest's body, but if they are not talking, it doesn't make a difference".

Explore partnerships: Most hotels are not willing to bring on more employees now, but could work together with wellness experts based on contracts, who might be currently struggling. Possible partners may include nutritionists, private fitness instructors or even medical spas. Demand is up, for example, for infusion therapies, not just for Botox or collagen treatments, but also for B12, bodymind, and hangover or immunity fluids - medical spas could help cater to these needs.

Increase retail revenues: Digital sales exploded in the past six months, but only 10% of luxury hotels sell in the digital space. Spas have two distinct advantages compared to other retailers: they are familiar with a vast range of products and carry brands that most stores or even Amazon doesn't. As they have a direct relationship with customers, they can properly instruct them how to use the products they purchase. Web marketing and social marketing is very important and there is plenty of room to grow in the retail area.

In addition to sales, nearly all other aspects of hospitality are also permeated by technology, Gibson at the Wellness Tourism Association added. Technology solutions has a major role in in-room wellness features, which often bring healthy premiums in room rates. One particular technology Gibson expects to have a tremendous effect on wellness is virtual reality (VR), which he said may work well in mental wellness or relaxation offerings.

What gets measured gets done

Operators and investors need to understand how wellness affects the bottom line of their hotels and how it is integrated and measured in the profit and loss (P&L) sheet. Assessing wellness ROI is very difficult, partially as it prompts the questions on how various wellness activities, technology solutions, the overall design of the wellness hotel contribute to ROI.

The quantification of the wellness proposition is increasingly complicated in the traditional hotel P&L as the lines where wellness is offered in the hotel will be increasingly blurring in the future. But Klein suggested the simplest thing to do at this stage is to have a separate P&L section dedicated to the spa or wellness area, helping department heads better understand where revenue is coming from and what are the expenses associated with that revenue.

"What gets measured gets done," Gibson said, summing up why tracking performance data matters. He said operators can also measure extra revenues coming from spa visitors by looking at their marketing data and guest profiles, but very few hotels do that. "If you want to look at the complete package" - including wellness components -, "you need to look at total revenue per available room (TRevPAR), not just rooms revenue," he added.

Allen at Resources for Leisure Assets said the company recently published Wellness Real Estate Report to assist industry stakeholders in evaluating the tangible impacts of wellbeing and wellness on the performance of real estate and to assess how these offerings may boost the bottom line of spa hotels and wellness resorts.

He also shared some of the company's experiences on investment opportunities in the wellness hotel segment. Currently, retreat products with increased focus on program offerings provide the most attractive model, where investors may be looking at guest spending in excess of $1,000 a day over a prolonged period, depending on location. As we see more of these products come to market, the investment community is also gaining more confidence in this type of products, Allen said.

SOURCE International Luxury Hotel Association