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RLA Global: Wellness hotels experience positive growth trend globally in 2023

RLA Global has published the fifth version of its annual wellness real estate report
The 2024 report indicates wellness hotels showed a positive growth trend globally in 2023
Luxury hotels with major wellness offerings led in terms of Total Revenue per Available Room (TRevPAR)
Upper-upscale properties were the best performers in terms of ADR and TRevPAR growth in all three categories of wellness properties; major, minor and non-wellness
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There was a positive growth trend at hotels with wellness offerings in conjunction with all main year-on-year KPIs
Credit: RLA Global

Hotels incorporating wellness amenities experienced a significant boost in Total Revenue per Available Room (TRevPAR) in 2023, according to the latest Wellness Real Estate Report by RLA Global, produced in partnership with P&L benchmarking firm HotStats.

Minor wellness properties – those generating less than US$1 million (€932,700, £785,200) or 10 per cent of total revenue from wellness and leisure – stood out with a 26 per cent average increase in TRevPAR from 2022.

“There was a positive growth trend at hotels with wellness offerings in conjunction with all main year-on-year KPIs, including ADR (average daily rate), RevPAR (revenue per available room), TRevPAR and occupancy,” said Roger Allen, group CEO of RLA Global.

“Minor wellness properties demonstrated great flexibility in optimising operating expenses, contributing to their bottom line. However, performances also indicated a fragmented hotel wellness market that investors should pay close attention to.”

The recent report assesses average hotel performance using data from HotStats about 11,000 hotels worldwide, spanning major, minor and non-wellness categories (see end of story for definitions*).

RLA Global has analysed property-level KPI results, including ADR, occupancy rates, TRevPAR, GOPPAR (gross operating profit per available room) and GOP (gross operating profit), to present how wellness contributes to hotel revenue flows, operating costs, margins and overall profits.

Asset class comparison

Marking RLA Global's fifth annual report, the 2024 publication compares results across luxury, upper-upscale and upscale hotel classes for the first time.

Findings showed luxury properties with major wellness offerings generated three times more TRevPAR compared to upper-upscale hotels but experienced a 4 per cent decline in ADR.

Upper-upscale properties achieved the best ADR and TRevPAR growth in the major, minor and no wellness categories.

“People build and own hotels for very different reasons,” said Rachael Rothman, head of hotels research and data analytics at CBRE. “If it’s to generate a return, the report clearly emphasises 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.”

Changing guest habitsThe report also highlighted trends in departmental revenue generation and profitability. For example, average F&B Revenue Per Occupied Room rose slightly in all three categories last year, driven primarily by restaurant spend.

However, beverage sales declined at major and minor wellness hotels, which also saw room service revenue drop by 13 per cent and 12 per cent respectively.

“The declining bar and room service revenues in city centre hotels reflect trends of guests becoming more health-conscious and drinking less alcohol, while food delivery apps provide guests with more compelling and cheaper options,” said Alex Santamaria, founder of Aware Hospitality.

For more data on hotel performances and in-depth analysis, download the full report here.

*Major, minor and no wellness categories

• Hotels with major wellness – Wellness and leisure revenue annually exceeding US$1 million (€932,700, £785,200) or more than 10 per cent of revenues• Hotels with minor wellness – wellness and leisure revenue annually achieving less than US$1 million (€932,700, £785,200) or less than 10 per cent of total hotel revenues

• Hotels with no wellness - no wellness-related income.

About RLA GlobalRLA Global (Resources for Leisure Assets Global) is an international consultancy specialising in leisure and wellbeing in real estate.

About Hot Stats

HotStats provides monthly P&L benchmarking for the hotel industry, collecting detailed financial data from more than 11,000 hotels worldwide to provide owners, operators and investors with valuable insights into the financial performance of their properties against their competitors.

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