Latest data on best performers

As traveller expectations change, hotels are increasingly looking to invest in wellness, but what trends are growing and, all things considered, which offerings are the most profitable?

According to RLA Global’s Wellness Real Estate Report 2024, with statistical support from HotStats, hotels offering wellness services will experience healthy growth in 2023. Skift has an exclusive first look at the rare report quantifying wellness in hotels.

For background, Skift also reviewed a report released Wednesday by Gregory Miller, a vice president at Truist Securities and a leading investment banking analyst who specializes in the intersection of wellness and hotels.

We also spoke with some of the co-founders of Equinox, a fitness brand that combines gyms and hotels, about the opportunity for hotels.

Latest Wellness and Hotel Data

Key takeaways from RLA’s 2024 Wellness Real Estate Report include: The report defines wellness as not just hotel gyms and resort spas, but also meditation, yoga classes, adventure activities, healthy food offerings, beauty and medical treatments.

The most profitable hotels last year were those with smaller wellness initiatives, generating less than $1 million in revenue, or less than 10% of revenue, from wellness. These hotels saw impressive growth, with average total revenue per room (TRevPAR) increasing 26%, driven by higher prices and a 10 percentage point increase in occupancy.

Luxury hotels shine

For the first time, the report compares asset classes and finds that “upper upscale” hotels performed best in wellness last year compared to the luxury and upscale segments.

Although luxury hotels offering key wellness services may have driven three times the TRevPAR overall, it was the luxury hotel category that performed best in terms of average daily rate and TRevPAR increase across all wellness designations.

“To generate profits, most reports [investors] “It’s better to have a luxury hotel with wellness amenities rather than going all-up luxury,” said Rachel Rothman, head of hotel research at CBRE.

Bigger is not necessarily better: the average room rate of the top 5 best-performing hotels with smaller wellness facilities is higher (almost three times higher) than the top 5 best-performing hotels in major wellness resorts.

They also outperformed leading wellness resorts in terms of profit conversion (by more than 6 percentage points).

Food & Beverage Trends

The report also uncovered some interesting trends regarding guest behavior: Last year, F&B industry revenue increased slightly overall, driven primarily by spending in restaurants.

However, the hotels surveyed saw a decline in beverage sales and room service revenue, which could reflect a shift towards healthier habits and the rise of food delivery apps.

Hotel Spa Performance

Here are some notable takeaways from the Truist report.

• According to an analysis of HotStats data for April, spa treatment revenue per occupied room increased in the mid- to high-30s compared to 2019 levels.

• “Health club/spa revenues at ultra-luxury hotels, on a per-room basis, accounted for 24.6% of gross operating profit, down from 26.8% last year, even as total revenues increased by approximately 5%,” Miller wrote.

• Spa retail revenue growth was slightly above 2019 levels, although there are signs that hotel spa revenues may not be able to keep up with rising product costs due to inflation.

• Miller pointed to health trends emerging across the U.S., including IV therapy, cryotherapy and medical-themed services.

Equinox co-founder’s perspective

David Gutstadt and Amanda Potter know more about wellness than anyone: They were the driving force behind the creation of wellness brands Equinox and Fitler Clubs, and now their company, Good City Studio, is about to launch its latest branded wellness concept.

Skift asked Gutstadt and Potter for their thoughts on the opportunity in hotels and wellness. Here are their key takeaways:

• “A social sport like pickleball has a concentrated land demand,” Gutstadt says, “and it’s operationally efficient; it can accommodate many more people per square foot than a tennis or squash court.”

• They said their experience at Equinox taught them the value of integrating elements like health, wellness, private clubs and workspaces into a unified concept — something many resorts fail to achieve.

• “A lot of these wellness concepts lack individuality,” Potter says. “A lot of them take a new space with a nice trellis, fireproof the steel on top and paint it black, and put in better lighting and better music, and it’s all pretty similar.”

New Brand: Ballers

• Gutstadt and Potter told Skift exclusively that they will soon open Bowlers, a first-of-its-kind social sports club located in the historic Turbine Hall at the Battery Project in Philadelphia’s Fishtown neighborhood.

• Ballers is a sociable sports club with a hospitality focus. The 45,000-square-foot, $10 million flagship project will open this winter and feature Philadelphia’s first indoor padel court, as well as popular pickleball and squash courts, a multi-purpose turf field and an indoor golf center.

• “The impetus for the brand was to take a preppy country club, complete with full-service amenities, and make it dirty,” Potter said. “Tennis, squash and golf are infused with trendy new sports like pickleball and paddle boarding, layered in unexpected urban industrial locations like the Battery and other distinctive venues.”

• The company, which is backed by famous athletes Andre Agassi, Tyrese Maxey and Kim Clijsters, is in talks for prime locations in New York, Boston, Washington, D.C. and San Francisco, and aims to open 60 properties over the next five years. Several hotel operators are in talks with the company about spinoff brands for smaller spaces.

Accommodation Sector Index Year-to-Date Performance

What am I looking at? The performance of stocks in the hotel and short-term rental sector within the ST200. The index includes companies listed on global markets, including international and regional hotel brands, hotel REITs, hotel management companies, alternative accommodation and timeshares.

Skift Travel 200 (ST200) A single number summarises the financial performance of nearly 200 travel companies worth over $1 trillion. See more hotel and short-term rental financial performance.

Read the full methodology behind the Skift Travel 200.

Photo credit: Pool at Melia Koh Samui Resort. Credit: Melia.