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PRODUCT NEWS
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| Robust revenue growth at hotels with wellness offerings worldwide during 2022, finds RLA Global |
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| 24 May 2023 . BY Megan Whitby |
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| Hotels with wellness offerings were in general supported by the overall recovery of the global hotel market in 2022 / Viceroy Los Cabos |
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Investors need to give serious consideration to the overall wellness concept of the development at the planning stage
– Roger Allen |
Revenues at wellness hotels rose sharply in 2022 as demand rebounded, despite economic and geopolitical difficulties.
Hotels with wellness offerings also experienced strong TRevPAR (total revenue per available room) growth in 2022 as markets benefited from a recovery in demand.
These were the standout findings from RLA Global’s annual Wellness Real Estate Report.
The report – now in its fourth year – evaluates average hotel performance based on data from P&L benchmarking firm HotStats covering about 2,600 major-, minor- and non-wellness hotels of all classes worldwide.
Processing property-level KPI results, such as average daily rate (ADR), occupancy rates, TRevPAR, gross operating profit per available room (GOPPAR) and gross operating profit (GOP), the report presents how wellness contributes to hotel revenue flows and operating costs, and what effects it has on margins and overall profits.
TrevPAR bounces back
The 2023 report reveals that average TRevPAR rose by over 53 per cent on the year in 2022 at hotels with ‘minor wellness’ offerings – those generating less than US$1m (€928,500, £807,500) or 10 per cent of total revenue from wellness and leisure.
Meanwhile, TRevPAR climbed by nearly 47 per cent at ‘major wellness’ properties, where wellness and leisure account for over US$1m (€928,500, £807,500) or 10 per cent of total revenue.
The Americas took the lead in global TRevPAR performance.
Average spend on the rise
Guest spending in 2022 was the highest at hotels with major wellness, which outperformed minor wellness properties in absolute TRevPAR and occupancy. But, major wellness hotels often face higher costs, which RLA Global says explains why properties with minor wellness had a five per cent higher GOP-to-revenue ratio, and an eight per cent stronger total operating performance last year.
“Although the category of major wellness hotels takes all the plaudits for property-level top-line performance, it does come with higher operating costs, which results in lower GOP-to-revenue ratio and operating profit performance to total revenue,” explained Roger A Allen, group CEO of RLA Global.
“This is precisely where the minor wellness category indicates potentially better cash returns, and this is also why investors need to give serious consideration to the overall wellness concept of the development at the planning stage.”
Michael Grove, CEO of HotStats, added: “Key hotel expense lines saw growth above and beyond inflation in most regions, making it vitally important that hoteliers were able to drive top line performance to offset.
“Energy costs, operational labour costs and guest supplies in particular challenged hoteliers to focus on efficiency and while this meant resorts and wellness offerings became a lot more challenging to manage, experiential demand drove guest spend, resulting in what was an excellent year from a profitability point of view.”
Hotels with wellness offerings were in general supported by the overall recovery of the global hotel market in 2022, despite increased inflation and difficulties caused by the war in Ukraine and the pandemic.
Although hospitality was still in recovery mode, RLA Global says the wellness industry was going from strength to strength, which may support a fairly positive market outlook.
Find out more
The Wellness Real Estate Report 2023 also discusses how the standout trends of branded residences, technology innovations and community-based wellness, as well as adventure activities, will continue impacting wellness real estate and provide development and operational teams with experiences that can broaden the service offering, strengthen guest engagement and improve hotel performance.
Download the full report here.
About RLA Global
RLA Global (Resources for Leisure Assets Global) is an international consultancy specialising in leisure and wellbeing in real estate.
About Hot Stats
HotStats provide monthly P&L benchmarking for the hotel industry, collecting detailed financial data from over 6,000 hotels in total worldwide from over 100 brands and independent hotels, and provides over 550 different KPIs covering all operating revenues, payroll, expenses, cost of sales and ultimately departmental and total hotel profitability.
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