Going Long for Hotel Longevity Part XII: Demographics Alone Will Make Wellness Worth Trillions
The problem with slow burn trends like the current aging out of the baby boomers is not so much that we fail to predict them but that we often cannot account for them in a readily quantifiable and obviously actionable manner on a quarterly or annual financial statement to thereby jumpstart the necessary adjustments to adapt a business.
This failure to pivot is what caused Blockbuster and Kodak to file for protection – two examples of Adam Smith’s silent hand of pervasive, irreversible, indirect and often unpredictable market evolutions. In hindsight, we ask ourselves, How could they not have seen it?
But this thinking is a bit naïve as it doesn’t account for entrenched culture and the need to protect the cash cow.
Wellness in 2023 has blossomed to the forefront of cultural and hotel industry awareness, and yet the two of us believe that we are all still greatly underestimating just how big the total addressable market for this space is. Per the title, we put in the trillions, far above its current global footprint.
However lofty we estimate this TAM, though, properties and brands the world over remain entrenched in a straight ‘heads in beds’ mentality that could one-day mark spell doom to their business viability. Our hope is that you start planning now while we’re still at the ‘elbow of the curve’ with this growing trend so that you aren’t pushed out like some bygone company.
Wellness Population Dynamics
Silent-hand economic changes are just that – hidden from plain view. So, let’s spell this baby boomer situation out in a sequence of events for you to understand how to make money from it all. As a note, we are speaking in general about the globe’s advanced economies, although each country offers its own nuances within a broader trend.
- Boomers are currently retiring and exiting the working-age population (WAP), and they will continue to do so over the next decade.
- Because boomers started having fewer children on average than previous generations, there are fewer replacement workers and consumers amongst Gen X+Y+Z to maintain the WAP’s ratio within the total population.
- A shrinking WAP means overall labor supply shortages, thereby increasing the price that labor can command (albeit this says nothing about the influences of technological unemployment, global supply chains, immigration or industry-specific demand changes).
- As boomers get older, they will incur more age-related diseases, increasing the demand for healthcare services and workers in this sector.
- With a shrinking WAP and more elderly demanding healthcare services, this leads to inflation of those services as supply can never keep up with demand, with this reflected in greater direct-to-consumer costs, more expensive insurance, an inability to find labor in this sector, high costs of labor, increased wait times at the hospital or a greater levy on taxpayers to maintain standards.
- As they are also currently the wealthiest generation, many boomers can tolerate this ‘healthcare crunch’ scenario by being able to afford the ever-higher prices, and yet paying these premiums often only adds more fuel to the fire of inflation.
- While some may be able to stomach this medical system inflation, others, whether boomers or part of another cohort will be incentivized to seek out alternative methods, practices and products to support their healthcare and well-being needs.
From these seven steps, we paint a picture of why the economics of baby boomers getting older will in its own right compel people to start incorporating wellness into their lives as a means of precluding themselves from needing ever-more-expensive healthcare services.
Then there are concurrent trends converging to further propel consumers to buy wellness products:
- Far greater awareness and access to healthier eating, exercise and supplementation options
- Mainstream acceptance of wellness practices like yoga, meditation and contrast therapy
- Scientific research that is proving various wellness, fitness and nutrition practices as beneficial to one’s lifespan and healthspan (that is, the good years you get on this green earth)
- Economies of scale of functional genomics to advance our medical understanding of human longevity and then apply this knowledge in the real world
How Wellness Protects Your Business
Great, we’ve driven the point that the future belongs to wellness. But within there, it’s worth describing the ways that wellness programming can protect your hotel’s room rates versus competitors, add new revenue streams and help to reduce overall labor costs.
What we stress, though, is that as the demand and cultural appreciation for wellness inevitably grow over the next two decades, this programming only becomes all the more crucial.
- Wellness amenities are a means to differentiate hotel brands on a feature-comparison basis, first preventing rate commoditization and then helping to command higher rates relative to the market
- New wellness programming can work to refresh the marketing presentation and inventory distribution in order to diversify the target audience and customer segmentation
- Wellness amenities and services can be packaged or cross-sold to boost TRevPAR (total revenue per guest) as well as to increase LOS
- Devoting more resources to employee wellbeing will help to buffer inflationary wages, increase team retention and stave off productivity losses from sick days, absenteeism or presenteeism
To close, all this is coming at it from a thousand yards away. We all know wellness is coming and it’s going to be big, but to meet it head-on will require a lot of work right now to set your hotel organization up for more success in the coming years. It takes a shock to the system to change an entrenched culture, but that’s exactly what’s required.
