Investing in wellness (spa)
hotels – top tips from an expert
The wellness and spa industry is in great shape. It’s all thanks to the rapid adoption of alternative medicine and healthy lifestyles. The rest of the world is catching on to what people in Germanic countries have been practicing for decades and it’s pushing the industry from the fringes to mainstream worldwide. And the result? Investing in wellness hotels and spas is a desirable part of a hotel property investment portfolio.
The keyword here is opportunity – it’s a great time to invest in this global and return-oriented industry. But it’s also essential to make the right choices, based on good advice. In this short article, we cover some of the things to look out for.
Active management or outsourced?
Some investors focus solely on the return, without wanting to get involved in the day to day running of the business. Others take a different view and are keen to roll their sleeves up and get involved, either through their own activities or through affiliation with a services group. For this group of investors, additional value creation is achieved from the return on the services provided, on top of the profits from the standard hotel business.
What should the hotel offer its guests?
When assessing the various criteria for hotels with their own wellness area, you need to start by carefully scrutinising the compatibility of the wellness offering with the hotel’s size, location, and price class. You need to go into the details, including looking at the nutritional offering, and asking if this compatible with the wellness concept. At the very least, for every meal of the day, a wellness hotel should have at least one dish on the menu that offers wholesome nutrition, as well as vegetarian options. The same prerequisites also apply to future-oriented wellness hotel projects in the planning stage, with a specified level of return.
Key basic amenities of a wellness area
The basic elements of a wellness area are a sauna, steam bath, rest area, solarium, whirlpool/hot tub, and massage offering. At the top end of the scale, a wellness area will have a swimming pool with massage loungers, and ideally also a fitness area with gym equipment. Given sufficient space, such facilities can also extend into the outdoors – perhaps with a swimming pond rather than a conventional pool.
Recommended criteria from the expert
Various guidelines should be observed when it comes to the specifications of the wellness area: The indoor pool, for example, should be at least 40-60 m², depending on the hotel’s star category. The sauna facilities should encompass between one and three indoor sauna rooms. Additional elements include cosmetic treatments and relaxation massages, as well as body treatments such as mineral baths or hydrotherapeutic treatments. Depending on the hotel category, the fitness area of a wellness hotel should be between 20 and 50 m² in size.
An important feature is the hotel’s clear focus on the wellness guest. This encompasses aspects such as vitality cuisine, alongside fitness, relaxation and beauty areas. A tranquil and/or idyllic setting is an important factor when it comes to occupancy rates and increasing the ROI. The wellness facilities of a hotel should be state-of-the-art and operating to at least 70% capacity on a regular basis. Where possible, enhanced wellness offerings should also offer guests access to a medically or therapeutically trained specialist.
If a hotel’s wellness/spa features are sufficiently well advertised (internet, website, brochures, travel agents, etc.), high occupancy rates and the corresponding high return can be achieved, so make sure you check this side of things too. In short, an investment in a hotel with income from upscale gastronomy and wellness facilities is particularly profitable.
Six rules of thumb for investing in a wellness/spa hotel
- Go for core-plus properties as far as possible; any renovation should be no more than 10 years old
- Make sure the facilities are state-of-the-art, as well as compliant with therapeutic regulations
- Check to make sure there’s a high occupancy rate and sufficient prestige, as well as growth potential (organizational and locally)
- Find out if the hotel has access to global reservation/booking systems
- Scrutinize the crisis profile, and check if there’s stable cash flow, appropriate return and modern financing
- Insist on regular reviews of services and specifications (risk minimization)
If you’ve found this advice helpful but would like more support with your wellness hotel investment project, talk to one of our estate brokers today so we can help you make the right connections.
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