This newsletter is divided into two parts: (1) Macro outlook, outlining and assessing the impact of economic, geopolitical, societal, environmental and technological changes on the industry; (2) Micro insights supported by concrete examples of trends and changes occurring within the industry. We think that the combination of the two will allow you to transform risks into business and investible opportunities.[/vc_column_text][vc_column_text]The convergence of hospitality and wellbeing priorities is shaping disruption and innovation alike. The hospitality industry encompasses all businesses that provide specific and non-essential services to customers. It is broader than the travel and tourism industry stricto sensu and includes businesses such as restaurants, beauty clinics and theme parks, to name a few.


Our macro outlook analyses the leading global trends and their potential impact on the industry.


THE TRADE WAR BETWEEN THE US AND CHINA:will have a significant detrimental effect on the US wellness industry(while benefitting other national wellness companies as a result, particularly in Europe – an alternative destination). A back-of-the-envelope rough calculation demonstrates that for every 1 million Chinese tourists who disregard the US for another destination, the US economy loses $ 11 billion in revenues. (This is based on the following observation: in 2016, 3 million Chinese visited the US, spending an aggregate $ 33 billion). The US wellness industry would also forgo significant future revenues as 50 million new Chinese travellers are expected to go abroad over the next five years – a growing proportion of them being wealthy enough to consume wellness services. To put all this into perspective, consider the following: the US has a trade deficit vis-à-vis the rest of the world of about $ 500 billion (in 2016), but it registers a surplus in services, 33 per cent of which is represented by spending of foreign tourists in the US (travel and tourism accounts for 33 per cent of service exports and 11 per cent of all exports). The overall figure amounts to $ 293 billion, significantly higher than the sales of semiconductors ($ 44 billion) or aircrafts ($ 121 billion) that the current US administration is trying to boost through trade negotiations with China. The extent to which the tourism industry in general, and the wellness one in particular, are being overlooked from a policy point of view is striking.

THE US ECONOMY IS MORE FRAGILE THAN IT LOOKS. Several surveys - including one from the Fed - show that 40 per cent of Americans couldn’t cover a $400 emergency, while 43 per cent don’t earn enough to pay for food and rent (despite having a job). It’s hard to foresee robust personal consumption (70 per cent of US GDP)when existential anxietyafflicts so many. The anger and resentment of the “forgotten” class will shape the US economic and political outlook for years. Wellbeing and economic anxiety do not go together – they are in fact irreconcilable. Non only is the perspective of enjoying the benefits of a well-life beyond reach for the almost half of Americans who don’t earn enough to make a proper living, but existential anxiety often leads to un-wellness behavior such as smoking, drinkingand comfort eating high in fat etc.


ACCESS TO WELLBEING SERVICES REMAINS AN ELITIST OPTION: It might seem far-fetched to some, but the current explosion of wellness cannot be dissociated from the rise in inequalities. The reason is this: the aspiration for wellness and the consumption of its products remains a privilege. It has a particular appeal in the highest-income countries among white, wealthy women. And this for an obvious reason: to practice and savour wellness, one needs time and money, and the luxury to think long-term; put differently, it is not for those trying to make a living, or survive from one week or month to the next. Hence the current and rising perception that the raison d’être for much of the wellness industry is to serve the ‘well-off worried (relatively speaking) well’, and that it does little to alleviate the structural factors that contribute to un-wellness. The industry must pay attention to this or face a backlash. It could become a severe reputational issue. For wellness businesses, the best and easiest way to mitigate this risk is to place a higher priority on the democratisation of wellness: inclusivity, social safety nets, access to healthcare, etc., with a little less focus on evermore sophisticated and exclusive offerings in the realms of the gym, the spa and health-treatments. Or, at the very least, it should be doing both.

SOCIAL CONNECTIONS: A MISSING LINK IN RISING MENTAL HEALTH CONCERNS. The recent suicides of two celebrities – the fashion designer Kate Spade and the chef Anthony Bourdain – have drawn attention to new federal data showing a rise in the number of suicides across the United States. According to the CDC (the Centers for Disease Control and Prevention), suicide rates rose by 25 per cent between 1999 and 2016. In 2016, 45,000 Americans aged 10 or older committed suicide, making it the tenth leading cause of death in the country (and one of the three that is on the increase – alongside Alzheimer’s disease and drug overdose). What explains the apparent disconnect between this worrying / disturbing phenomenon and the concomitant increase in attention paid to wellness?  Social connections are the “missing” link. The authors of the CDC report said that one effective strategy critical to preventing suicide was to establish more “social connectedness”.  Wellbeing pundits say the same: the quality and richness of our social connections is one of the most critical determinants of wellbeing. When they are left wanting, they negatively impact our social and mental wellbeing, and in extreme cases pave the way for suicidal thoughts. While the critical nature of ‘social connectedness’ is now recognised, the suicide statistics suggest that society in general and the wellness industry in particular are not yet doing enough to rise to the huge societal challenge this represents.

KEEP IT REAL, MONEY MATTERS.Increasingly, corporate “happiness and wellness promises”(such as wellness monetary stipends, plans for “personal development”, office saunas, daily meditation, sleep room or confidential counselling life services) are becoming a cover for not increasing salaries. This amounts to wellness window-dressing! Wellness promises are not a substitute for a much needed wage increase … Holistic practices to motivate and retain employees are good, particularly when they exude a wellness flavour, but nothing beats real money. The two must go together.

EXTENDING OUR HEALTHSPAN AS WE AGE. All careers are elongating with ageing  - very soon a duration of 80 years+ will be the norm and for those born today, it could reach 100 years. How can we best prepare for a centennial career? With the 4thIndustrial Revolution continuing to engulf the world, skills will become more important than knowledge. Lifelong learning and the on-going acquisition of the ‘right’ skills are the only adequate response. New research identifies those skills that will matter the most in tomorrow’s world as: learning strategies, judgement and decision-making, critical thinking, social perceptiveness, fluency of ideas(all exclusively but not universally human). This will progressively change the way in which we look at investment opportunities: college degrees will become imperfect proxies for employability; attitudinal traits such as active listening will represent a growing asset. For many different reasons, this point is of fundamental importance for the wellness industry. To begin with, ageing and the subsequent elongation of our professional lives means that the demand for wellness services will increase: we’ll need to be in better physical and mental health to be able to sustain a working life at an old age and to perform at the requisite level. Healthy ageing (“healthspan”) will therefore become paramount: a quasi-obligation more than a personal choice. In addition, the skills that will matter the most in tomorrow’s increasingly automated world are those that are / should be at the forefront of the wellness profession: empathy, care and attention to others. New skills like social perceptiveness (being aware of others’ reactions and understanding why they react as they do) will also play an increasing role in tomorrow’s service economy. Is the wellness industry properly prepared?

HOW DO WE PROTECT NIGHT WORKERS? In our real-time economy where consumer businesses strive to meet 24-hour demand for their services and manufacturers, the number of people working night shifts is increasing and with thisso is the number of aggregate sleepless nights.Nowadays, almost 20 per cent of EU workers are working nights, compared to an average of about 10 per cent 10 or 15 years ago. The trend is similar around most of the world. In the UK, the number of night-shift workers has risen by more than 250,000 in the past five years. Working through the night poses a fundamental challenge to the human body, and therefore to the ability to live a “well-life”. It unsettles our biology, forcing us to be active when our brain is telling us to lie down, rest and dream. A growing body of research links a lack of sleep to increased morbidity: an average of less than six hours sleep per night in the long term puts anyone of us at a 13 per cent higher mortality risk than someone getting seven to nine hours. In addition, shift work puts us at a higher risk of chronic disease and mental illness.


THE DOMINO EFFECT OF WATER SCARCITY. Fresh water availability is changing fast, with water insecurity becoming an increasing economic and geopolitical concern. New research shows that Europe will not face significant water availability problems in the coming decades, contrary to some regions like the Middle East, northern India, north-east China or the Caspian Sea where the lack of water will become at best a source of acute economic stress and geopolitical tensions, at worst a question of survival. The issue of water scarcity has a direct bearing on the tourism and wellness industries. The water crisis that affected Cape Town a few months ago (now averted, but only just) should serve as a wake-up call. The example of Shimla (a picturesque Indian Himalayan town) crystallizes the issue of how water shortages will soon constrain – or even prevent – tourism in some regions of the world that heavily rely on tourists’ financial inflows. As they grapple with an acute drinking water crisis, residents have asked the millions of tourists that normally visit Shimla to simply stay away, forcing hotels to cancel advance bookings. Like in Cape Town, both nature and the municipal authorities are being blamed for the water crisis, but catching the culprit is irrelevant. The bottom line is this: as some regions and countries (like India) are gradually running dry, operating ‘thirsty’ wellness resorts in them will become increasingly expensive and regulated.

NEW RESEARCH CONDUCTED BY THE WHO: shows air pollution inequality is rising. Levels of contamination  (most notably PM10 and PM2.5 particulate matter) vary depending on governments’ financial resources and subsequent actions. Between 2010 and 2016, respectively 61 per cent and 57 per cent of European and American cities experienced a fall in levels of contamination; but the situation has worsened in other regions, particularly South and South-east Asia, where 70 per cent of cities suffered worsening air quality. Delhi has the worst air pollution in the world, followed by Cairo, Dhaka, Mumbai and Beijing. Worldwide, 7 million people die annually from airborne contaminants.

‘GLOBAL WEIRDING’ WEATHER WILL BECOME THE NORM. Over the past few weeks, all-time heat records have been set around the world. They are consistent with the idea of “global weirding” – extremes becoming the norm. All global issues and risks are intertwined, but in the medium and long-term, climate change is the one that matters more than anything else. Climate change has already ceased to be a distant threat to become an issue whose consequences demand immediate action. Over the coming years, it will command more financial resources and exert a greater influence on the global economy and geopolitics than most other issues that attract the world’s interest today. Consequences for the travel & tourism industry in general, and its wellness segment in particular, will be far-reaching and often dramatic. Rising seas, dying farmlands, and ever more powerful storms and floods will render some countries and regions uninhabitable. Scorching heat (like the world’s hottest low temperature recorded in Oman on June 28: 42.6 degrees Celsius or 109 degrees Fahrenheit) will prevent tourists to visit some countries during the hottest months. Investors and business executives will have to price in the risk of climate change: countries that are vulnerable to it will pay significantly more to borrow from the financial markets. There is already evidence where this is the case: according to new research, the most vulnerable developing countries have already paid more than $ 40 billion in additional interest payments on their governments’ debt because of their exposure to climate change risks. That will cost them a further $ 168 billion in the next decade. The most affected countries happen to be tourism and wellness destinations such Tanzania, Kenya, and Vietnam.


GROWTH IS ENTWINED WITH CAUTION AS HEALTH-TECHWEARABLES CONTINUE TO GROW HEALTHILY. At the end of last year, Fitbit reported more than 25 million active users (an increase of 9 per cent year on year), with a roughly similar increase for Apple Watches. As the market expands, providers of wearable fitness trackers are starting to target corporate clients, on the strength of new research showing that the more active employees are, the healthier and thus more productive they become (a study conducted by Rand Europe for Britain’s Healthiest Workplace shows that employees of all ages can reduce work impairment by 3.2 days a year if they go from no exercise to 150 minutes per week). According to a survey on global attitudes to workplace benefits done by Willis Towers Watson, a staggering 51 per cent of employees in developed economies and 71 per cent of employees in emerging economies use fitness trackers or smartphone apps to manage their health. This is fuelling concerns over data privacy and security, particularly when insurance companies, as noted in the bullet point above, offer their clients discounts when they upload information about their physical activity. In Europe, the implementation of GDPR (General Data Protection Regulation) that just came into effect will restrict the way in which businesses collect and store information. It is likely to make employers globally more cautious about wearables.

COMODITISATION OF WELLBEINGCONTINUES. Meditation is attempting to move towards medication, and generate more money in the process. Headspace, a well known American mindfulness app that reports user figures of 30 million, is considering setting up a subsidiary – Headspace Health – whose purpose would be to develop FDA-approved treatments for health issues. The idea is to prescribe products through an app that would include a specific dose and meditation technique for particular health conditions.

MOVES TO MITIGATE AGAINST EXCESSIVE TIME ON DEVICES. “Digital wellness”: A growing number of tech developers and behavioural scientists are developing apps that rein in incessant news alerts and requests of all sorts to put users back in control. They have just had some major success, with both Google and Apple announcing recently that they will incorporate some aspects of digital wellness apps into their upcoming operating systems. In particular, users will be able to track the amount of time they spend on their devices. The simple take-away from a wellbeing perspective: regaining control of our time, taking back possession of our attention (the scarcest commodity in today’s fast-paced world) equate to the best possible antidote to tech addiction.[/vc_column_text][vc_column_text el_class="barometer-title"]


Our micro lens focuses on how greater coalescence between hospitality and wellbeing is impacting the industry as a whole.


SUSTAINABLE TOURISM GROWTH FORMULAS: both Portugal and Japan are realising notable growth rates in international tourism. In 2017 Portugal welcomed 12.7 million foreign tourists – an increase of 24.5% since 2015 (10.2 million).This rise is being driven by a joint ten year public-private sustainable tourism strategy with the objective of encouraging foreign visitors, while simultaneously a) mitigating against over tourism, b) protecting social infrastructure and c) dispersing visitors away from the airport gateway hubs.In 2017 Japan’s international tourism figures reached 28.7 million – an increase of 46% since 2015 (19.7 million). This growth is largely due to a relaxation in visa requirements and a fall in value of the Yen (the Yen has been weak against the dollar since 2012 but is appreciating this year). Growth in Japan’s inward tourism has been so rapid that over tourism is already becoming an issue. The key cities of Tokyo, Osaka and Kyoto account for 48% of foreign tourist stays and 60% of expenditure (2016). The promotion of Japan as a nation is intent on including all regions of the country. The town of Beppu, the onsen (hot-spring) capital of Japan, is a good example of this collaboration.Intercontinental Hotels will be the town’s first global brand and will spearhead the international positioning conceived to attract foreign visitors. However the recent Airbnb cull is putting the brakes on some segments of tourism expansion. Airbnb too, are taking a longer-term view of how their business growth can be sustained and accepted.

RYOKANS WILL BECOME A MORE COMPETITIVE FORCE: There is a current focus in Japan on new build hotels to swell room supply and the growth of global brands in lesser-known tourist areas. However, there is underexploited potential waiting to be tapped by bringing the family run Japanese Inns (ryokan) into the realm of online booking.Ryokans are generally small, traditional, culturally authentic and usually attached to an onsen facility (natural hot spring bath). There are 58,000 of them throughout Japan, many only contactable via telephone or email. It is important to note that English is not widely spoken. Enablement of digital booking will offer a partial solution to Japan’s room supply issues and meet market demand through: 1) an authentic cultural experience; 2) the combination of nature, lifestyle and wellbeing in a joint online proposition.


THE BEGINNING OF A US HEALTHCARE REVOLUTION: the appointment of Dr Atul Gawande as CEO of the joint venture between Amazon, Berkshire Hathaway and JPMorgan Chase is a project to track. This JV is intended to create better, cheaper healthcare services for the companies’ one million employees.The lauded reputation of Dr Gawande is based not only on his impeccable credentials but more specifically on his social insight and informed critique of what is right and wrong with healthcare systems. Gawande has highlighted that the most expensive healthcare neither means the best results nor the best care. Equally, the less expensive care can yield good results and often favour a more basic, humanistic approach over leading technology and the ability of modern science. Amidst the global wave of commoditised wellbeing, the creation of healthcare models that offer higher quality care more affordably will redefine not only the medical system but will prompt focus on affordable access to wellbeing services,prevention and self-help health regime. But whether a private sector-driven momentum can help to transform the country that spends more on healthcare per capita than any other but has one of the most unhealthy populations, remains to be seen. The US is ranked at 37 out of 190 countries by the WHO for the best of the World’s Health Systems.


THE MERITS OF WELLNESS AS A SERIOUS SECTOR IN HOSPITALITY: why is wellness a missing agenda item at leading global hospitality and tourism events? It was conspicuous by its absence and near absence at the World Travel and Tourism Council Summit and the International Hotel Investment Forum respectively earlier this year. Is this a pushback by omission or is the wellness economy, valued by The Global Wellness Institute at $ 3.7 trillion, misunderstood and as a result under valued? There are two schools of thought here: 1) that wellbeing-related business has become so omnipresent and infused into everything, as proven by the substantial investments being made, alongside the value of the wellness economy or, 2) despite the feeling that ‘wellbeing is everywhere’ it is only just beginning to find its voice and an acceptable level of ROI from an investor perspective. The impact in business terms of wellness investment in hotels is still under scrutiny.This is likely to persist until performance models better prove the real economic value of wellbeing service delivery. The exception to the elusive ‘everywhere but nowhere’ label for wellbeing is in the immersive wellbeing experiences being provided by dedicated global retreats such as Kamlaya, Lanserhof and Rancho La Puerta. There is no straight answer to the question of whether the sector is taken seriously but it is likely that the increase in research and evidence will follow the sustainable tourism models discussed – that of collaboration, inclusivity and integration.

‘ALEXA FOR HOSPITALITY’ – A POTENTIAL GATEWAY …TO EVERYTHING: Amazon already has two thirds of the consumer smart speaker market and will now equip their digital assistant with an additional hospitality-focused suite of features in ten Marriott properties. The devices will feature as a non-exclusive launch of the upgraded model after prior customisation with Wynn Resorts for four thousand rooms at their Wynn Las Vegas resort. The device will doubtless yield efficiencies in the realms of in-room services: spa bookings and checkout etc. – but the implications of its on-going evolution are feared as well as anticipated. The related chat space reactions are a mix of delight and cynicism regarding the seemingly unstoppable march of AI but there is curiosity too. The collective potential of the Echo device and Whole Foods combined with the output of the JV healthcare model (previously discussed) and the ubiquitous reach of Amazon means revolutionary options may become availablethat not only drive efficiency but also the potential for health and wellbeing access and integration.

AIRBNB CULL AND REFINED PARTNERSHIP STRATEGY: in a newfound collaborative approach, Airbnb and Japan’s tourism agency had been working togetherto ensure the registration of Airbnb hosts and properties to safeguard their official licence number ahead of a June 15thdeadline. However, on June 1stan unexpected directive was published that meant any Airbnb hosts without a licence must cancel upcoming reservations ahead of June 15th. Property listings have plummeted from 62,000 to 13,800 since announcements of the official registration in early Spring. Of interest, is the change in approach of Airbnb who are taking a much longer term view of country-based relationships.Undoubtedly, the ambitious international visitor number goals of 40 million by 2020 and 60 million by 2030 are part of the longer term consideration, but so too is a desire not to repeat the past mistakes made in Barcelona, New York and Palma.


DIET IMPROVEMENT EQUALS $ BILLIONS SAVED IN HEALTH RELATED COSTS: new evidence from the Healthy Eating Index and the Mediterranean-style Diet illustrate the savings related to the lowering of costs via population adherence to healthier eating patterns. A 20 per cent increase in commitment to a higher quality of diet across the  whole US population could save $ 20 billion in direct and indirect costs. Healthcare in the US is all too often regarded as a business rather than than a care system. These findings will add grit to the mill of campaigns and policies to promote better eating habits in other obesity stricken countries such as the UK. Given the difference in healthcare system structures (public vs. private) and welcomed cost saving solutions, the research may prove even more helpful.

On 24thJune new measures aimed at halving the number of obese children by 2030 were announced in the UK. These measures call for action on three fronts: 1) calorie labelling in restaurants, cafes and takeaways and the ban of energy drink sales to children; 2) the reduction/removal of harmful marketing that promotes sugar, fat and salt laden foods to children; 3) primary school adoption of the ‘daily mile’ initiative. It is likely that these initial measures, once tried and proven, will pass into legislation. In turn, they will influence what is provided for children in leisure and hospitality settingsand drive a more focused culture of wellbeing. Such initiatives serve to add greater gravitas to the wellbeing industry.


SKINCARE OBSESSION ON THE RISE: a driving force in self-care is skincare. This is not a staggering fact given the global focus on health and skin being the largest organ of the body. However, the demand for results, ingredient transparency and Instagram-ability, is growing. The fourth most frequently used website in the US is Reddit. The site is enormously diverse and has a thriving beauty community within it. One of their micro communities, called Skincare Addiction, has 600k followers and has reached number 215 of the most popular communities out of a listed 1.2 billion total. The US skincare market grew by 9 per cent last year and is expected to account for 26.8 per cent of the beauty and personal care market by 2020. This obsession is combined with the pursuit of clean eating, exercise and good sleep to achieve flawless, make-up free skin.It is a valuable access point for spas, clinics and salons to connect with a largely millennial community on provision of skincare services. On a cautionary note, service directors should not be tempted tochange product ranges in an attempt to meet the latest product craze. Thesecommunities are not loyal but are consistent in demand for transparency and results. If you can tap into a local (and transient) guest following of this client profile forregular skincare, it is likely to prove fruitful.


In the coming weeks, ‘must-watch’ issues include:

  1. Whether Vitality’s new initiative will be emulated. The insurance and investment group (with 8.4 million clients in 18 countries) was one of the first to offer discounts on life and health insurance to policyholders who could prove they took regular exercise and agreed to share data in the process. Vitality has now decided to go one, big, step further. It is now offering a similar wellness incentive for investors: they’ll pay lower fees in its new pensions and savings products when they can demonstrate that they are living a healthier life.
  2. Babylon Health and its proliferation in the UK and beyond. The Babylon health AI doctor beat human general practitioners in a recent clinical exam. Babylon health scored 82% against a score of 72% for human GPs (an average over the past 5 years). Regulations limit it currently but it offers services to 26,000 citizens in London – allowed by the NHS to switch from GP services to the Babylon service. It currently offers medical advice only but its intention is to offer diagnosis more cheaply and more accurately over time.
  3. More focused attention on commercial spa and wellness models in hotels: will anchor in the optimisation of asset yield and a more targeted narrative. One may think this commonplace but that is the point. It isn’t. For too long (generally speaking) hoteliers have culturally dismissed the potential performance of their spa/wellbeing asset but this is changing.

For real-time/in depth analysis on any of these issues, please contact us: 

Anni Hood-

Thierry Malleret


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