Going Long for Hotel Longevity Part I: The Year Ahead
As asset management consultants, most of our work is typically operations-oriented with financial time horizons at, or under 12 months. Though short-term performance is critical, we must keep a vigilant eye on trends that will impact demand, room rates, and commensurate asset values over the long run: the next five years to as much as two decades. Hence, the impetus for this ongoing column is to explain how the concept of ‘longevity’ will come to progressively impact hotels and importantly, what you can do to grow revenues now.
Before looking at the year ahead, as per the title, definitions and caveats are in order. By longevity, we are referring to the notion of human beings living much longer than current actuarial mortality tables. This is particularly poignant for those of high net worth – your customers! – as they chose healthier eating habits, proper forms of exercise and that all-important good night’s sleep. Further fueling this long life is the widespread access to and knowledge of supplements, means to effectively quit smoking, the value of meditation and yoga, plus breathing techniques and many other now-scientifically-proven, life-extending habits. All this is in concert with advanced medicines, prescription drugs as well as medical treatments.
This is not just about lifespan extension but ‘healthspan’ – lengthening the youthful, cognizant and fully mobile years that one has on this planet. Crucially, longevity, antiaging or biohacking encompasses far more than the current industry designation of wellness or a spa program. In hospitality parlance, these latter terms often connote a siloed operation within a larger organization whose main aim is secondary revenue capture or a resort brand targeting a sliver of the total travel market.
Over the course of this column, we will argue that the concept of longevity pervades all hotel operations and has a far-reaching customer base ready to pay premium prices. In direct rebuttal to Queen’s bittersweet power ballad for the Highlander soundtrack, who wouldn’t want to live forever, or at least a decade longer without any joint issues, sagging skin, chronic heartburn, or memory impairment?
Trends in 2022
So, you now know that antiaging programs will be the hot ticket for hotel experiences come 2040. Great, but it’s 2022 and your bondholders likely aren’t inclined to extend interest payment forbearance until that time. What can you do today to build revenues?
The actions you take over the next year should reflect some of the more profound macroeconomic shifts that have resulted, and continue to play out, from the pandemic. Here are three trends:
- The wealthy are wealthier. All that money printing has eroded the future value of cash, compelling investors to move deposits into assets and making asset owners proportionally richer. Those of means now have way more money to spend on luxury goods, including lavish hotel stays and services that will allow them to fully experience life. In a society where cash is cheap, time becomes the most precious commodity.
- Expect early COVID-19 retirements. The evidence has exceedingly shown that age, roughly 60 and over, is a critical comorbidity factor for turning a flu-like infection into an intensive care stay. Why risk going back into the office? Many veteran executives, already laden with a stockpile of cash from years in a cushy salaried position, have consequently moved up their retirement timetables. This has produced a glut of wealthy, older individuals with nothing but time on their hands and chomping at the bit for ‘safe’ travel opportunities.
- Lockdown introspections. No doubt this one hit home in a very personal yet universal way. Sheltering in place led many to reflect on life and how to derive meaning from the daily slog of a pre-pandemic work commute. People learned to cook and eat healthier or started working out from home. Others preoccupied their minds with books and new skills. Taken together, there’s been a grand awakening of sorts as the lockdowns have forced us to reconsider what’s truly of value and how to achieve a work-life balance where ‘life’ is the heavier weight on that scale.
A common thread in these is a budding appreciation for the concept of time as the limiting factor to human life as well as a newfound appetite to maximize one’s time. Marketers know all too well that consumers only buy what they remember, and so this uptick in longevity awareness increases both the total addressable market as well as the relative price inelasticity for wellness or antiaging products.
Where to Start
The obvious applicability is for the luxury segment where discretionary income abounds by building programs for the spa, guestrooms and activities that incorporate longevity goods and services. But the trends indicate that this is much more omnipresent despite its skewed accessibility for those of means.
An immediate action that any hotel brand can take is to designate an officer or a committee to develop plans for a continuous rollout of new SOPs and upgrades that will progressively enrich the guest experience towards this long-term goal.
For instance, you can begin in the rooms by setting a topline objective of establishing a sleep program, periodizing from cheapest to most expensive a sleep-inducing herbal tea program, more breathable linens, a pillow concierge, nighttime noise reduction, lavender-scented air filtration units, IoT thermostats that slightly lower post-midnight room temperatures and smart lighting that shifts from blue to amber in the evening hours.
A similar exercise might be undertaken for your spa where you look at your budgets to see what ‘low hanging fruit’ you can take right away versus those projects that require future capex. And, of course, a huge part of antiaging is diet, for which a few menu items properly advertised as promoting healthspan can act as the opening salvo for a holistic F&B rethink.
This barely scratches the surface for what’s possible and what’s still to come within the realm of longevity for hotels. Set a personal goal of deepening your knowledge in this subject matter over the course of 2022 because whatever you learn will be relevant to the long-term health of your brand.
