Value Proposition for Marketing and Sales of Wellness in The Lodging Industry
How to Turn Retreat Into Recovery...
Since 2020, consumers around the world have been engaged in the battle against COVID-19. The pandemic has arguably caused significant damage to the hospitality industry as consumers sheltered at home – hoping to wait out the threat to their health and safety.
The retreat from the social and recreational activities has taken a toll on hotel guests eager to regain what was once taken for granted.
Wellness Economy
In 2020, the wellness economy accounted for over $4.4 trillion dollars of the global wellness economy. The wellness economy includes eleven sectors:
- Personal Care & Beauty ($955 billion)
- Healthy Eating, Nutrition, & Weight Loss ($946 billion)
- Physical Activity ($738 billion)
- Wellness Tourism ($436 billion)
- Traditional & Complementary Medicine ($413 billion)
- Public Health, Prevention, & Personalized Medicine ($375 billion)
- Wellness Real Estate ($275 billion)
- Mental Wellness ($131 billion)
- Spas ($68 billion)
- Workplace Wellness ($49 billion)
- Thermal/Mineral Springs ($39 billion)
The wellness economy represented 5.1% of global economic output in 2020 and is projected to achieve 9.9% average annual growth, with the wellness economy expected to reach nearly $7.0 trillion in 2025 (Global Wellness Economy, 2020).
The hospitality and tourism sector of the global wellness economy accounts for $639 billion of spending globally. Hospitality and tourism wellness programs contribute greatly to the wellness economy and global tourism. Wellness minded travelers have significant discretionary income and are willing to pay a premium for perceived physical and mental benefits. Wellness tourists in the US spend nearly 180% more than non-wellness travelers (Global Wellness Economy (2020).
Despite the willingness of wellness minded consumer and travelers to spend on their health, or perhaps because of their health-centric focus, the wellness economy was not immune from the financial impact of the COVID-19 pandemic. In 2019 the global wellness economy was valued $4.9 trillion. Following the arrival of the COVID-19 pandemic in 2020, the global wellness economy declined by just over 10% to $4.4 trillion.
Marketing Wellness Programs to Enhance Branding, Guest Well-Being and Experiences
Hotels and spas were arguably among those businesses most severely impacted by the COVID-19 pandemic, and had to adapt to the new financial landscape. Since 2021, hotels and spas have implemented measures that positively impact well-being and demonstrate a deep commitment to the health of guests and employees alike.
As the world adapts to the COVID-19 pandemic and tourism rebounds, hotel wellness programs and spas are now deemed a growing post-COVID lodging industry niche (De Vilmorin, 2022). As such, vigorously built "Health and Wellness" programs can be an effective differentiation strategy which allow hoteliers to distinguish themselves from competitors. This can directly or indirectly result in improvement of key performance measures (i.e., yield, stay duration, cross sell and retention rate). Hotels which develop programs with a full commitment to wellness appeal to a broader range of guests while enhancing their brand.
In addition to benefiting from the overall return of guests as pandemic concerns subside, wellness- oriented hotels are now seeing premium pricing opportunities. At the peak of the COVID-19 pandemic, many hotels were offering deep discounts to remain in business. Now many examples of hotels offering wellness packages ranging in price from $200 to over $9,000 can be found. Several high-end hotels now offer all-inclusive packages ranging from $3,700 to $9,100 per week which include fitness, nutrition, medical, and behavioral health components along with luxury 5-Star accommodations. These examples illustrate how hotels have adapted and developed programs to generate revenue, increase occupancy rates and, most importantly, make hotel guests feel safer.
In the US, luxury spa hotels with wellness programs are on the rise (De Souza, 2020). Many hotels now offer newly created wellness packages with prices tailored to guest needs. One 5-star luxury hotel markets a Luxury Wellness package featuring an extensive selection of massage and restorative therapies, water therapy and outdoor treatment terraces for $4,545.00. It's now common for Boutique hotels to advertise new/revamped wellness facilities and wellness programs which include detox wraps, salt stone massages, Thai massages, yoga and organic facials in the $300.00 price range. Typical services and products included by US hotels are:
- Massage and restorative therapies: Promoted to enhance energy through massage and meditation-based techniques. Meditation classes are also promoted for those wishing to learn basic breathing and visualization techniques.
- Water therapy: Typically consisting of saunas, steam-rooms and plunge pools.
- Curated experiences: Advertised as focusing on health, well-being and personal discovery.
- Spiritual wellness: Described as a process to seek meaning and purpose in life – often through prayer, meditation, yoga, as well as a careful assessment of morals, values, and beliefs.
- Lifestyle reset: Intended to help with setting goals to achieve healthy living.
- Nutrition guidance: Tips for preparing and eating healthy foods and natural alternatives to commercial sleep medications.
- Club activities: Fitness centers, resort pools, spa treatments and beach services.
- Outdoor activities: Guided hiking and biking; high-end hotels/resorts may include an "adventure concierge" as well as a wide selection of fitness classes.
- Spa packages: Traditional spa services, as well as Couples Getaway, Girlfriends Getaway, and specialized Restore and Restart sessions.
- Hotel signature wellness programs: Designed to promote location specific features such as ocean front mediation, sea salt scrub and honey body wrap, and local practices and traditions.
Wellness packages are also now attracting tourists in other parts of the world as well. According to the Ecole Hotelière de Lausanne (EHL) Insights, guests can enjoy the following:
- Diet detox: A common request for clients wishing to lose weight, diets based on advice from specialists are suggested to meet guest expectations and goals. In addition, many hotels offer specific cuisine menus linked individual diets and programs.
- Stress and emotional management: Hotels promote stays as an ideal opportunity to take a break and learn the most innovative relaxation, meditation and stress management techniques which are often described as scientifically validated.
- Integrative and personalized fitness: Tailor-made fitness programs designed with specific exercises supervised by a team of fitness experts to help customers meet their fitness goals.
- Sleep and recovery: Sleep has been shown to be an essential key to good health and well-being. Some hotels market their properties as providing the ideal surroundings to achieve the daily health recovery, vitality and well-being benefits they can expect as guests.
- Post-COVID anxiety recovery: Marketed by some hotels as a means to overcome the mental and physical effects associated with pandemic life, "body detox" are promoted with claims they stimulate the immune system, reduce stress, improve oxygenation, and increase endurance.
Even before COVID-19, hoteliers sought to improve their lodging products and services to increase occupancy rates and gain market share – often by adding technologies to increase guest satisfaction by providing faster service, lower costs, and/or by offering new/improved products/experiences. Health oriented wellness programs and spas were among the innovations that arose from this market competition.
However, as COVID-19 had an ever-increasing impact on occupancy rates, the significance of wellness programs shifted from "amenities" to "necessary" health and safety services. Marketing and sales teams, recognizing these programs affected more than just "niche" customers, adapted by promoting these services as health and safety programs. These programs ultimately transformed from marketing challenges to marketing advantages for those hotels able to recognize the opportunity and adapt quickly to gain the competitive advantage.
Value Proposition for The Marketing and Sales of Hotel Wellness Programs
To be effective, hotel sales and marketing teams must promote wellness programs to the correct target audience. However, in order to communicate to the target audience, hotel sales and marketing professionals must be aware of guest needs and the hotel's ability to meet those needs. Matching team awareness with evolving market demands and a hotel's ability to meet those needs can deliver a competitive advantage when executed properly. Conversely, a mismatch can result in wasted investment in outdated equipment or services, lost revenue due to customers choosing the competition, or worse – damaged brand name due to perceived obsolesce or disregard for customer satisfaction or safety.
Identifying the needs and wants of wellness travelers (the target markets) must always be considered not only during the initialize health and wellness program design phase, but must be considered during the maintenance phase as well. Value proposition can be a critical tool to accomplish these objectives.
A value proposition is a simple statement that summarizes why a wellness traveler or hotel customer would choose a hotel, wellness program, or service. It clearly communicates the benefit wellness travelers receive by giving a hotel or spa their business. Every value proposition should recognize the wellness traveler's challenges and make the case for the hotel's products or wellness programs as the solution. A great value proposition should not only highlight what distinguishes a hotel from its competitors, but should also focus on how the wellness traveler perceives the value of the hotel's wellness programs and products.
The Five Phases of Hotel Wellness Program Value Proposition Development
The following is a comprehensive description of the five phases that comprise the value proposition development procedure established by Payne and colleagues (2022). These steps can be used by hotel marketing and sales professionals to design a value proposition for their hotel's health and wellness program(s):
Phase 1: Value Design and Assessment
- Assess available resources, customer and competitor research of wellness hotel business models.
- Identify/review key market segments for existing wellness hotels and programs.
- Decision on granularity of hotel wellness value proposition and segment focus.
- Determine value proposition emphasis: benefits, favorable differences, or resonating focus for wellness hotels.
- Design proposition with customer involvement in conjunction with review of competitive value propositions, including assessment of relevant health and wellness value dimension mix, e.g., functional value, economic value, emotional value, and social value.
- Test and assess initial value proposition with selected customers.
- Following feedback from Phase 5, refine/redesign value propositions as necessary.
Phase 2: Value Quantification
- Quantify value proposition.
- Quantify competitor value proposition and compare with hotel wellness value proposition.
- Assess qualitative as well as quantitative health and wellness benefits.
- Select methods to communicate value quantification, e.g., wellness value calculators, value studies, simulations, templates, wellness program Return on Investment (ROI) studies.
- Customize value quantification methodologies to key customers, e.g., use customer cost allocation system, where appropriate.
Phase 3: Value Communication
- Ensure appropriate communication with wellness travelers, local customers and other key external actors throughout all phases.
- Integrate marketing communication with the following:
- Wellness programs/package sales force messages.
- Tailored hotel customer-specific Value Propositions and messaging.
- Advertising, promotion & media messaging.
- Communicate proposals/promises internally within the wellness hotel.
- Review competitive value-based promotion and sales messaging related to health and wellness programs.
Phase 4: Value Documentation
- Document internal wellness programs/package capabilities and tools.
- Define measures to track profit, cost savings or other value features derived from wellness programs/package.
- Use of formal templates for customer agreement and sign off respect to quantified wellness benefits delivered.
- Implement a review cycle at appropriate intervals (e.g., quarterly, annually) to ensure value documentation is current.
Phase 5: Value Verification Review
- Assess customer wellness program/package experience/perception.
- Authenticate wellness program/package value using independent external parties such as testing authorities, standard-setting organizations, and related organizations.
- Institute customer feedback mechanisms for value verification.
- Incorporate Lessons Learned (i.e., use customer feedback to fine-tune accomplishments and resolve problems).
Conclusion
Following the retreat of consumers from the hospitality and tourism economy due to the COVID-19 pandemic, consumers - weary from protracted periods of isolation - are ready to unleash pent-up demand and go on the offensive. Ironically, a large part of the offensive can be described with the word retreat - only this time the word is defined in a hospitality context, not in military terms.
A retreat, in the hospitality context, is a place that provides comfort and relaxation. It is a place where hotel guests can revitalize and enjoy a variety of activities and experiences. Hotels, resorts, spas, restaurants and other hospitality and tourism businesses that provide the most value are most likely to experience the fastest post-COVID era recoveries. Those lodging industry combatants that can develop an effective wellness program strategy and mobilize it quickly can expect to turn COVID-19 pandemic era retreat into recovery.
References:
- De Souza, C. (2020). 13 Luxury Spa Hotels with Wellness Programs in the U.S. Retrieved 10 April 2022.
- De Vilmorin, L. (2022). Wellness Spa: a growing hospitality niche in a post-COVID landscape, EHL Insights.
- Payne, A., Frow, P., Steinhoff, L., & Eggert, A. (2020). Toward a comprehensive framework of value proposition development: From strategy to implementation. Industrial Marketing Management, 87, 244-255.
- The Global Wellness Institute (2021). The Global Wellness Economy: Looking Beyond COVID. Accessed on April 9, 2022.
Reprinted from the Hotel Business Review with permission from http://www.hotelexecutive.com/