Hotels with wellness amenities experienced notable revenue growth in 2023, with upper-upscale properties emerging as top performers, according to the latest Wellness Real Estate Report by RLA Global, published in collaboration with P & L benchmarking firm HotStats.
Among the key findings were:
Revenue Performance: Luxury hotels with comprehensive wellness offerings reported the highest Total Revenue Per Available Room (TRevPAR), achieving three times the TRevPAR of upper upscale hotels in 2023. However, upper upscale properties led in terms of both Average Daily Rate (ADR) and TRevPAR growth across all wellness categories.
Operational Insights: Minor Wellness properties, those earning less than $1 million or 10% of total revenue from wellness activities, showed a 26% average increase in TRevPAR from 2022, demonstrating flexibility in optimizing operating expenses.
Market Trends: The report reveals a complex wellness hotel market, highlighting the need for investors to consider market-specific strategies for maximizing returns.
Roger A. Allen, Group CEO of RLA Global, emphasized the importance of wellness in the hospitality industry: “There was a positive growth trend at hotels with wellness offerings in conjunction with all main year-on-year KPIs, including ADR, RevPAR, TRevPAR and occupancy. Minor Wellness properties demonstrated great flexibility in optimizing operating expenses, contributing to their bottom line. But performances also indicated a fragmented hotel wellness market that investors should pay close attention to.”
Michael Grove, CEO of HotStats, added, “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. […] Investors need to be able to get the right approach for the right market with the right asset.”
The report compares the performance of luxury, upper upscale, and upscale hotels with varying levels of wellness amenities. While luxury properties with major wellness offerings led in revenue, upscale properties demonstrated positive year-on-year TRevPAR growth and a slight decline in ADR.
Other highlights in the report include revenue and profitability trends:
F&B Revenue: The report noted Food and Beverage (F&B) Revenue Per Occupied Room rose slightly, driven primarily by restaurant sales. However, beverage and room service revenues declined at major and minor wellness hotels, reflecting changing customer preferences towards health-conscious choices and the rising popularity of food delivery apps.
Operating Metrics: The annual report, supplemented by mid-year updates, evaluates performance metrics such as ADR, occupancy rates, TRevPAR, GOPPAR, and GOP across over 11,000 hotels worldwide. These metrics provide insights into how wellness amenities influence revenue streams, operating costs, and profit margins.
Industry Outlook: The Wellness Real Estate Report 2024 identifies enduring industry trends, including the integration of longevity needs into lifestyle choices, the increasing impact of wellness on branded residences, and the transformative role of artificial intelligence in hospitality operations.
The article RLA Global report: Wellness hotels surge in global market, upper upscale properties lead first appeared in TravelDailyNews International.