As wellness becomes more relevant in the post-COVID landscape, the hospitality industry needs to think and act, in order to prepare for a ‘new normal’ in wellness. Ingo Schweder, Founder and CEO of GOCO Hospitality, Managing Director of Horwath HTL Health & Wellness and owner of America’s oldest and largest hot springs resort, Glen Ivy Hot Springs, California, shares his insight into how he sees the future of wellness hospitality evolve.
Q: What do you think will drive the expansion of wellness hospitality post-COVID?
Schweder: The COVID-19 crisis has left people on high alert in regards to their personal health and wellbeing, especially when it comes to maintaining a robust immune system. As the news is dominated by extensive research and theories of how people can avoid and stay safe from the virus, a shift towards data-driven, scientific health information is becoming the new norm.
In addition, while stuck at home, many people have turned to personal wellness in many new and exciting forms, from virtual yoga to online workouts and self-reflection practice. As precautionary social distancing rules relax and people return to 'normal' life, these experiences will continue to form a more significant part of their daily life.
As of 2017, the global wellness real estate industry was worth $134.3bn (only construction costs, excluding fit out costs and subsequent revenues), and has grown at a CAGR of 6.4% between 2015 and 2017. Today, those numbers are still increasing, current crisis aside.
We’ve learned that a large number of guests are eager to return to wellness, pent up demand due to the lockdown will see a boost in regional travel, new experiences and the knowledge that health is the new wealth. This will cultivate more enhanced wellness services and greater wellness consumption. In the US, ISPA research indicates that there is significant pent-up demand for wellness services. They predict that at least 20% of the US population are expected to return to wellness hospitality as soon as they can, with many others following soon after.
With a focus on the health and wellness sectors worldwide, governments and investors are looking to increase spending on active living and wellness hospitality communities. At GOCO Hospitality and Horwath HTL Health & Wellness, we have received a substantial number of enquiries from ultra-high-net-worth-individuals and sovereign funds who are seeing advice on how to enter the wellness market for the first time, as well as large developers, hospitality groups and landowners who have made the decision to make wellness a larger, more dynamic focus of their future expansions.
All the evidence I have encountered points towards a continued wellness industry growth in the not-to-distant future. I believe the evolution of the wellness hospitality industry will be as significant as it is dramatic.
As the wellness industry adapts to new trends and demands, what challenges do you expect will be the most significant?
Schweder: As it currently stands, the world of hospitality is dominated by hoteliers, investors, developer and financiers who are, on the whole, not yet familiar with the intricate differences that wellness hospitality developments require.
When one considers the critical role real estate plays in providing a foundation that enables individuals and communities to live healthier and longer lives, understanding wellness becomes integral to its future success.
Before the COVID-19 crisis, hospitality markets were beginning to incorporate wellness more prominently. Spas were no longer seen as a "nice-to-have", complementary facility but were established as a core element of the guest experience that not only drove demand but could be matured into an untapped profit source at the same time.
Many hospitality brands and destinations have ended up "well-washing" their properties instead, failing to provide the physical spaces and employ wellness-centric educated team members that could meaningfully enhance the health and wellbeing of their guests in any significant way.
Therefore, I think one of the biggest challenges we will face going forward is ensuring that wellness is correctly defined, and that the benefits to both guest and investor is communicated clearly to the industry leaders and financial investors who are ready to develop a significantly new generation of hospitality.
Whether a spa or wellness offering is a cost or a revenue centre for the hospitality sector depends largely on how it is integrated and whether it is actively managed to drive profitable performance. Our recent white paper on spa profitability explores effective strategies for achieving a stronger bottom-line performance for spas. This can only be achieved through a deeper understanding of the benefits and revenue drivers that the wellness industry brings to hospitality.
As people become more aware and more interested in the scientific benefits of wellness treatments and experiences, I believe the time has come to bring wellness education to the forefront of our industry's development.
How do you see wellness education being incorporated into the next generation?
Schweder: Wellness industry leaders see this moment as an opportunity to reach hospitality developers by increasing the supply of valuable wellness information to educational institutions such as hospitality schools, management training programs and architecture schools.
Through integrated wellness education, many will gain a deeper understanding of the varied benefits of wellness concepts for hotels and wellness real estate communities.
At GOCO Hospitality, hospitality design firms are our biggest collaborators. They seek our support on projects because of our team of wellness strategy and design specialists who are at the forefront in co-creating master-planned wellness community environments, such as one of our current projects where we are incorporating a 11,500 sq.m. wellness centre into a mixed used high-rise with 1,000 residential units in Florida, USA.
How does wellness real estate differ from regular real estate development?
Schweder: Wellness real estate consists of various components, of which the primary ones are wellness lifestyle estate and wellness communities. Wellness lifestyle estate is defined as homes that are proactively designed around wellness principles, whereas wellness communities are groups of people sharing wellness experiences such as in hotels and retreats. Overall, the industry is a $134.3bn market as of 2017, led by North America ($54.8bn) and Asia Pacific ($46.8bn).
In addition to the health and lifestyle benefits brought to the end-users, wellness real estate also benefits buyers, developers and operators. From a buyer's point of view, wellness lifestyle real estate typically achieves faster value appreciation than traditional real estate and thus is considered as a more attractive investment. Developers, on the other hand, benefit from higher returns as a result of the price premiums achieved from the sale of wellness lifestyle real estate units.
Driven by increased consciousness of the impact of physical spaces on our health and wellbeing due to the COVID-19 crisis, people will be looking to the real estate industry to progressively redefine the standards of the places where we live, work and play.
I believe that wellness standards will become the norm, not just in hospitality developments, but entire towns and cities too. Such transformations would not only increasingly benefit populations, their overall health and the environment they live in, but it would also result in a growth of profitability and returns for all of the development players involved.
GOCO Hospitality's sister company, Horwath HLT Health & Wellness, published a white paper that explains the wellness real estate development process in more detail.
On a more personal level, what is the most significant change you expect to experience in the post-COVID world?
Schweder: Personally, I feel that the entire way the health and wellness industry will operate will be changed forever – and changed for the better. From the way our businesses operate to the amount of significance we put on health enhancing, wellbeing regimes, I see more people focusing on inner wellbeing than ever before.
I expect to see daily wellness practice become far more common, and I am already seeing the integration of digital wellness offerings becoming the norm. How people interact with traditional wellness will forever change the way GOCO Hospitality conceptualises and designs spas and wellness resorts, whether it's through data-driven service platforms or hands-on technological integration into spa experiences.
Crises offer both challenges and opportunities in equal measure. For the wellness industry as a whole, this is a perfect time to listen to changes, set our prejudices aside and decide what does the world we want to come back to look like? Whatever happens in the post-COVID world, our globally enhanced awareness of healthy practices will lead the charge.