By Adam and Larry Mogelonsky
The challenge with gradual trends, such as the ongoing aging of the baby boomer generation, lies not so much in predicting them, but rather in quantifying their minute-by-minute growth and translating all of the macroeconomic data into actionable adjustments on a short-term financial basis.
In the grand, grand scheme of things, an inability to pivot can lead to outcomes similar to Blockbuster and Kodak, where unforeseen market shifts caused irreparable damage. Hindsight questions like “Why didn’t we act sooner to capitalize on this clear opportunity?” overlook the influence of entrenched culture and the need to protect existing revenue streams.
To this end, we ask as it concerns deploying wellness programming at your hotel: “What are you waiting for?” Lots of stats are pointing to its growth across numerous segments, so maybe you’re first due for a short refresher.
In 2023, wellness has surged to the forefront of cultural and hospitality industry awareness. Nevertheless, we believe the total addressable market (TAM) for this sector is substantially underestimated, exceeding its present global footprint by multi-trillions. As lofty as this projection may be, hotel properties worldwide often remain fixated on a ‘heads in beds’ mindset. Adapting early to this growing trend is essential to avoid being sidelined like erstwhile companies.
Wellness Population Dynamics
Population shifts alone will help propel wellness. Consider the situation in advanced economies globally, where a chain reaction of events is unfolding before our eyes:
1. Baby boomers are retiring, reducing the working-age population (WAP)
2. Lower birth rates among boomers mean fewer replacement workers from Gen X, Y, and Z, affecting the WAP ratio within the total population (with the recent UPS union arbitrage deal as the latest news item to reveal the growing power of labor)
3. Diminishing WAP triggers labor shortages, raising labor costs despite the influence of technological changes, global supply chains, immigration and industry-specific fluctuations
4. Aging boomers lead to increased age-related ailments, driving demand for healthcare services and professionals
5. A shrinking WAP combined with heightened elderly healthcare needs causes service sector cost inflation, reflected in higher consumer prices, pricier insurance, labor shortages, extended hospital wait times and increased tax burdens
6. As the wealthiest generation, some boomers can withstand healthcare inflation, yet this will only further proper price inflation
7. Given this scenario, some individuals across multiple generations will be prompted to explore (and currently already are) alternative wellness solutions to mitigate soaring healthcare expenses and unacceptable hospital waiting times
A Multi-Faceted Wellness Landscape
Wellness is an ambiguous term, but that’s actually a good thing as it means there’s room for all to play. This slow burn demographic crunch is also converging with several other trends worth note that will serve to intensify consumer demand for wellness products:
• Growing awareness and access to healthier lifestyle options
• Mainstream acceptance of wellness practices
• Scientific research validating the benefits of wellness practices
• Advancements in functional genomics contributing to longevity research.
Amid this shift, wellness programming offers protection for your hotel’s topline through what’s known as TRevPAR. First, wellness helps distinguish your brand with amenities that mitigate commoditization and work to command higher rates. Next, new wellness programming diversifies marketing and opens your brand up to broader audiences. Wellness offerings can also be bundled or cross-sold to increase TRevPAR and LOS. Then for the BOH, investing in employee well-being curbs wage inflation, enhances retention and reduces productivity losses.
Looking Ahead, the wellness wave is inevitable, demanding proactive action to reshape entrenched organizational cultures that may not be predisposed to acting while we are still in the elbow of this exponential growth curve. While acknowledging its imminent significance is a start, substantial effort is required to position your hotel for long-term success in the face of this transformative trend.