Hotels with wellness offerings had strong TRevPAR growth in 2022 as markets benefited from a recovery in demand, hospitality advisor RLA Global said in its Wellness Real Estate Report 2023, released during this year’s International Hospitality Investment Forum (IHIF) in Berlin.
Average TRevPAR rose by over 53% on the year in 2022 at hotels with ‘minor wellness’ offerings – that is, those generating less than $1mn or 10% of total revenue from wellness and leisure. TRevPAR climbed by nearly 47%, at ‘major wellness’ properties, where wellness and leisure account for over $1mn or 10% of total revenue. The Americas took the lead in global TRevPAR performance.
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 explains why properties with minor wellness had a 5 percentage point higher GOP-to-revenue ratio, and a 9 percentage point 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. This is precisely where the minor wellness category indicates potentially better cash returns, [and this is also why] investors need to give a serious consideration to the overall wellness concept of the development at the planning stage,” Roger A. Allen, Group CEO of RLA Global said.
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