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Making the Most of the New Wave of Leisure Growth

Making the Most of the New Wave of Leisure Growth

Whether it revolves around weekend family road trips or extravagant resort stays, the leisure experience is about creating an environment that transports guests outside of their everyday lives. It could mean creating an authentic connection with a destination or just a home away from home. And if a hotel can do this well, then it might see a whole lot of business coming its way this year.

According to a recent American Express report, travelers are setting aside more time for vacations in 2014, to the tune of 133 million Americans (up from 129 million last year) planning leisure trips. With more and more people feeling comfortable about their job prospects and finances, the leisure business is picking up, especially when you also factor in the growing demand from international tourism.

International tourism was up 5 percent globally in 2013 and will increase by another 4 to 4.5 percent this year, according to a United Nations World Tourism Organization report. Since 2012, the Chinese have been the biggest outbound market, with an estimated expenditure of $102 billion last year.

For hotels looking to capture a greater share of the current leisure boom that aren’t located in destinations favored by Chinese travelers, it helps to get a better handle on the things that leisure guests are looking for now. “Leisure travel used to just be about relaxing and sitting in the sun,” says Jamie Sabatier, president and COO of Destination Hotels and Resorts. “With today’s shorter attention spans, people are looking for more activities, more amenities, and more experiences. We’re seeing signs of people looking to get into the local culture, especially younger travelers.”

Bruce Baltin, senior vice president at PKF Consulting, Los Angeles, agrees. “Leisure travelers are much more purpose driven now,” he says. “They want to learn something new, share time with their extended family, and have enriching life experiences.” He adds that many travelers are looking to embed themselves in local culture or learn new skills such as paddle boarding and yoga.

“Those customers are looking for truly authentic and locally inspired experiences,” Sabatier says.

Currently the luxury end of leisure travel is getting a lot of attention from developers and investors because of the higher margins involved in upscale lodging. With so many guests willing to splurge on the best rooms in the house, hotels are expanding their high-end offerings.

A good example of this is the Hotel Hugo, a luxury boutique property that will soon open in Manhattan’s Hudson Square neighborhood. The property, which is being developed by Fortuna Realty and the Moinian Group, will feature 122 guestrooms, a rooftop cocktail lounge, and two top floor suites. With demand rising for the best room in the house, Hotel Hugo is staying up with the trend by offering more than one lavish suite.

“Leisure has boomed at the upscale and luxury level as people’s portfolios and property values have gone up over the past five years,” Sabatier says. More than half of all luxury spending—the Boston Consulting Group estimates about $1 trillion per year—goes toward dining and travel experiences. A report from the same group states this market is continuing to expand at 3.4 percent annually. While food always has been a huge part of luxury, wellness spas are now becoming a luxury travel must-have as well.

“Spas have replaced golf as a major draw for leisure travelers,” Baltin says. A wave of consumers now sees spas as a way to nourish their bodies rather than merely pamper them. This has translated into a global wellness tourism market of $438.6 billion, representing about 14 percent of all tourism expenditures, according to a report from SRI International in conjunction with the Global Spa and Wellness Summit. And this growth is projected to increase by more than 9 percent per year through 2017. This explains why the spa industry is in growth mode, with U.S. spa revenue reaching a record high of $14 billion in 2012.

According to Sabatier, though, the spas and high-thread-count sheets only go so far. “It’s less about pampering and more about creating an attentive, service-driven culture,” he says. This comes from a company with a portfolio of more than 40 mainly independent upscale and luxury hotels in all the major U.S. resort markets.

Still, he says, the focus of the operations at each property is on the personal aspects of leisure. “We installed a new cloud-based CRM system called Libra OnDemand at each property so we could map guest preferences according to purchasing patterns,” Sabatier says. “This software helps us customize a guest’s experience to their liking in advance of their stay or during it.” These kind of personal touches can pay off big in the leisure space.

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