Measuring the Value of Wellness to a Hotel Brand
If a focus on wellness doesn’t make money for a hotel brand, is it worth investing in? This was one of the provocative topics under discussion at the Global Wellness Summit, held earlier this month in Cesena, Italy.
During the meeting, a group of high-ranking hotel executives came together for a panel called “Shaping the Future Business of Wellness and Well-being in Hospitality.”
Mia Kyricos, senior vice president and global head of well-being Hyatt Hotels, asked whether large hotel brands do customer-facing wellness well.
Exhale’s enterprises president Annbeth Eschbach—whose company Hyatt recently bought—said, “We are at a tipping point, and we can take this to the next step. It’s starting to shift as people from our space [the wellness community] work in big hotel companies and contribute to ideation and execution. There’s a real opportunity for hotels to become real lifestyle brands through wellness.”
However, her rosy outlook was not the majority viewpoint. Co-founder of the Wellness Tourism Association Andrew Gibson, who until recently was AccorHotels’ vice president of well-being for luxury hotels noted, “Hotel brands are fairly good at generating ideas. The implementation, though, is where it falls apart.” He said unless the leader of the brand is fully committed to wellness, “it doesn’t happen.”
Thomas Klein, president and chief operating officer at Canyon Ranch, said it simply comes down to a matter of dollars and sense. Klein, who spent years working with Fairmont Raffles Hotels International, suggested that unless a brand has wellness at its core (like Canyon Ranch or Six Senses), it’s a big ask to expect hotel companies to spend on wellness unless they see a direct return on investment.”
But how can hotels quantify wellness financially? “Our biggest challenge,” said Lindsay Madden-Nadeau, AccorHotels global director well-being, “is defining what is ROI [return on investment] on wellness. When wellness is embedded in your product, it’s hard to measure that.” Gibson noted that the main problem is “how we measure ROI when it comes to wellness in hotels is flawed.” As an example, he mentioned that “hotels give away 2000 square feet for free in the fitness centers. Wellness is also in the design of the rooms, in the food.”
But as things currently stand, there is no way for hotels to measure the monetary value of such components. That’s why, Gibson said, hotels should calculate ROI to include other factors, including rent and foot traffic. Otherwise “if you measure ROI strictly through average daily rate and nothing else, then wellness is going to have a hard time” proving its worth. Right now “the most effective measure of ‘return on wellness’ (ROW) is TripAdvisor”…hardly a gold standard in terms of economic analysis.
Brian Povinelli, senior vice president, global brand leader for Marriott International, said that if you can’t tie return on wellness directly to return on investment, ROW in and of itself can’t work. He suggested that in order to measure ROW, hotel companies need to “conduct a third-party brand health study to understand the perception of wellness attributes” among guests. These guest sentiments could then be correlated to a RevPAR (revenue per available room) index. Madden-Nadeau suggested two possible means of measurement for ROW could be guest surveys and examining improvement in loyalty.
Guest sentiment correlations and TripAdvisor reviews are quite nebulous, however, and likely not sources that many chief financial officers would take seriously. Yet, finding accurate ways to prove the financial worth of wellness may prove to be the holy grail for big brands. As Jeremy McCarthy, group director, spa and wellness for Mandarin Oriental Hotel Group, noted, said, “If it’s not quantifiable, then it’s hard to sell to an investor.”
But should wellness be all about money? McCarthy said that hotel companies have to decide, “Is wellness simply something you monetize, or is it about making customers’ lives better?” To which one of the participants replied, “Are you a hotel, or a church?”