Hotel Wellness Investments Surge: Latest Data on Best Performers

12.06.2024 - 17:59 / skift.com / Sean Oneill

Hotels increasingly consider wellness investments as travelers’ expectations evolve, but what trends are rising, and which services are the most profitable after accounting for everything?

Hotels with wellness offerings saw healthy growth in 2023, according to the Wellness Real Estate Report 2024 by RLA Global, with statistical support from HotStats. Skift got an exclusive first look at the report, which provides a rare quantification of hotel wellness.

For context, Skift also reviewed a Wednesday report by Gregory Miller, a vice president at Truist Securities, and the leading investment banking analyst covering the intersection of wellness and hotels.

We also spoke to some co-founders of Equinox, the fitness brand with gyms and hotels, about what they see as opportunities for hotels

Here are key takeaways from RLA’s Wellness Real Estate Report 2024, which defines wellness as encompassing hotel gyms and resort spas as well as meditation, yoga classes, adventure activities, healthful food offerings, and cosmetic or medical care.

The biggest gainers last year were hotels with minor wellness plays, generating less than $1 million or 10% of revenue from wellness. These stood out with an impressive 26% increase in average total revenue per available room, or TRevPAR. That performance was partly driven by higher prices and partly by a 10 percentage point jump in occupancy.

For the first time, the report did an asset class comparison. It found that “upper upscale” hotels performed best in wellness last year, compared with luxury and upscale segments

While luxury hotels with major wellness offerings may have brought in three times more TRevPAR overall, it was the upper upscale category that delivered the best performance in terms of the average daily rate and TRevPAR growth across all wellness designations.

“If it’s to generate a return, the report clearly highlights that most [investors] would be better off having an upper upscale property with some wellness amenities rather than going completely to the high-end of the spectrum,” said Rachael Rothman, head of hotels research at CBRE.

Bigger wasn’t necessarily better. The top five best-performing hotels with minor wellness offerings had higher average daily rates (nearly triple) the top five best-performing major wellness resorts.

They also had better profit conversion (more than 6 percentage points) than major wellness resorts.

The report also uncovers some intriguing trends in guest behavior. Food and beverage revenues saw a slight uptick across the board last year, driven mainly by restaurant spend.

However, hotels surveyed experienced a decline in beverage sales and room service revenue — possibly reflecting a shift towards healthier habits and the