Why wellness tourism is the next big thing?

Wellness tourism, the intersection of two multi-trillion-dollar industries – tourism and wellness – is defined by The Global Wellness Institute (GWI) as travel associated with the pursuit of maintaining or enhancing one’s personal wellbeing. For decades, travellers have enjoyed retreats in traditional spa facilities, but when the Covid-19 pandemic hit, wellness took on a new urgency and became a priority rather than a luxury.

In response to these supercharged demands, the wellness industry shifted its marketing buzzword from “pampering” to “preventive”, giving integrative and medical wellness a strong momentum across the globe. Both top-tier hotel operators and destinations are incorporating holistic and advanced wellness treatments, hoping to get a piece of the multi-trillion-dollar pie.

Business is booming

The wellness tourism industry has become a significant contender in the global tourism market, with a valuation of $815bn in 2022, making up 18 per cent of the total market. With holistic health and prevention being at the centre of consumer decision-making, the industry is projected to grow at yearly growth rate of more than 10 per cent globally, doubling the value to a staggering $1.97tn by 2031.

The revenues from wellness tourism in 2022 were expected to reach $18.7bn, representing a substantial growth rate of 75 per cent from 2015. Among the services offered, wellness activities and lodging account for 55 per cent of the total revenue, followed by transportation, food and beverage, retail and others. Luxury and high-end hotels and resorts have been a major contributing factor to its growth.

In the Middle East and North Africa (MENA) region, wellness tourism has witnessed remarkable growth, with an annual rate of 13.3 per cent, more than double the global average of 6.5 per cent; yet the region still accounts for only 1 per cent of total trips and 2 per cent of total revenue from global wellness tourism.

The ageing population, environmental crisis and lifestyle changes have led wellness to become the centre of consumer decision-making, propelling the industry into rapid expansion.

High-yield nature

Domestic travellers make up the majority (82 per cent) of wellness tourism trips, however they only account for 65 per cent overall expenditures because international wellness trips have a higher average spending level. Additionally, international wellness tourism trips have grown faster (12 per cent annually) than domestic trips (9 per cent annually). In the MENA region, international wellness travellers spend 44 per cent more than the average traveller, and domestic wellness travellers command a 65 per cent premium. With all the advantages of catering to wellness-centric guests, including a significantly higher revenue per available room (RevPAR) and profitability compared to the traditional luxury hotels/resorts, major hotel operators will continue to go after the wellness tourism market.

The global impact

The wellness industry and broader wellness movement have significant and far-reaching impacts on the development and growth of countries, regions, and communities worldwide. Wellness contributes to economic growth, improves public health, protects, and celebrates natural resources, supports workforce development, and enhances quality of life.

Untapped potential in the region

Most global spas and wellness facilities are traditional resort/hotel spas offering standard recreational/pampering treatments and services. In the Middle East, the traditional hotel/resort spa accounts for 39.7 per cent of the market revenue with $0.9bn in revenue as of 2018, and it is projected to grow at a compound annual growth rate (CAGR) of 11.5 per cent between 2018 and 2025. This segment generated only 20-30 per cent of total rooms revenue coming from holistic wellness packages, unlike integrative or medical wellness where the accommodation revenue is generated purely through the retreat packages as part of the facility rather than a principal service.

Ingo Schweder, CEO of GOCO Hospitality says: “The GCC has to date no dedicated medical wellness resort. Currently, clients from the region frequent the Far East or European wellness centres, representing 8-15 per cent of the total guest share. However, we are working on seven dedicated wellness projects in Saudi Arabia alone, i.e., Amaala, NEOM and Red Sea, and expect to expand our reach further. It is evident that the rising popularity of medical wellness resorts offers an untapped potential in the region, which presents a niche that investors should further evaluate.”

Qatar’s Zulal Wellness Resort by Chivasom, which opened in April 2022, is the MENA region’s first and only integrated wellness resort and the world’s first wellness destination to blend Traditional Arabic and Islamic Medicine (TAIM) with a holistic wellness approach. Until then, the Six Senses Zighy Bay in Oman, a destination spa resort, served as an example of a more rounded wellness programme.

Medical wellness is gaining momentum globally and is forecasted to grow at a CAGR of 15.1 per cent until 2025, 1.2 times faster than hotel spas and 1.3 times faster than day spas. Our recent research shows that besides the apparent differences in expertise and wellness programme offerings, the key differentiators between global integrative/medical wellness resorts and MENA traditional luxury resorts lie in the extensiveness of the property’s wellness infrastructure.

Integrative/medical wellness resorts have one treatment room for every three guest rooms whilst wellness facilities that are on average 2.5 times larger, compared to the MENA region’s traditional luxury resorts, have one treatment room for every 20 guests. These differences suggest that these luxury resorts focus on selling rooms and provide a recreational experience, rather than a wellness-centric journey.

Saudi Arabia is one of the key markets rapidly expanding its wellness tourism industry, as demonstrated by the announcement of the upcoming Integrated wellness resorts of Jayasom and Clinique La Prairie in February 2023.

The main wellness hubs of AlUla and Sindalah (NEOM) and Amaala are set to become the first locations in the kingdom to offer hotels with a complete range of health and wellness services. The Six Senses Southern Dunes and the Aman and Sharaan Resort AlUla are among the most highly anticipated openings by 2025.

With the highest volumes of tourism investment in the region, Saudi Arabia is poised to become a leader in luxury wellness resort development by 2030, attracting a great share of global tourism by catering to their diverse needs for sustainability, luxury experiences and unique destinations.

Christopher Ford, head of Asset Management at Red Sea Global Saudi Arabia, says: “Today, wellness is one of the fastest-growing segments of the luxury travel market, with our target audience research showing that 75 per cent of luxury travellers want vacations that cater for their overall wellbeing and provide activities at the same time.

“We are partnering with leading wellness hotel brands such as Clinique La Prairie and Jayasom to offer guests advanced longevity programmes and state-of-the-art health and wellness treatments.”

Both properties will be in Amaala, Saudi Arabia’s wellness-focused giga-project along the Red Sea. Amaala is powered by 100 per cent renewable energy and will have a zero-carbon footprint with zero waste to landfill once fully operational.

Integrative and medical wellness resorts are the fastest-growing trend in the wellness industry today and will continue to be in the next decade. Bearing in mind that being in the business requires careful planning to ensure a safe, operationally efficient, and results-driven environment, it is highly recommended that an experienced consultant be hired to guide the owners and operators into a successful venture.

Tatiana Veller is the managing director at Stirling Hospitality Advisors, a subsidiary of Ras Al Khaimah Hospitality Holding

Read: From ancient history to modern luxury, Saudi Arabia’s tourism offerings continue to expand