Hotels Know Health is Wealth
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Hotels are not gyms. Some of the best hotels in the world still don't seem to get the traveler that maintains a workout routine, and insist a broom closet with a smelly yoga mat and one 15 lb. weight will be enough to stay in shape. There is, however, a small revolution going on among business traveler oriented hotels, some well-planned, some not so much. Starwood (NYSE: HOT), for one, offers both sides of the coin. Their recently announced joint venture with their Westin brand and New Balance might be considered the latter. For $5 per stay, Westin is offering the use of New Balance fitness gear. Yes, you can pay $5 to throw on the foul, sweaty, shirt and shoes that the weekend warriors before you used on their run. Perhaps Starwood just knows that there is inherent uncleanliness in staying at a hotel, and if you are willing to sleep in a dirty bed (as Blackstone's (NYSE: BX) Hampton Inn so publicly pointed out) then you might not mind wearing dirty clothes. The less distressing health improvements at Westin include free in-room video workouts and maps of runs around the city. These are obviously less capital intensive improvements than, say, expanding and improving the gym, but does anyone really want to wear another person's gym clothes?
To Starwood's credit, another of their brands, Sheraton, has nailed the fitness thing. As part of a $6 Billion redevelopment initiative, Sheraton has greatly improved their fitness offerings. Their partnership with Core Performance not only has far better gym facilities than any major hotel chain, it creates an all-encompassing experience that "will touch guests at nearly every point of their stay – in the fitness center, in guestrooms, online, and through menu offerings." Having stayed at two different Sheratons in the past six months, I can personally attest to this being more than high-minded brand talk. It actually works. Whether or not this will translate to increased occupancy and room rates is yet to be seen; currently the Average Daily Rate at Sheraton North America is (Q1 '12) $136.64 with an occupancy rate of 65.9%, putting the brand below Starwood's average of $160.74 and 67.9%. Q2 '12 will be released on July 26th and should give some more insight on Sheraton's improvements.
Another company jumping into the fitness game is Intercontinental Group's (NYSE: IHG) Even concept. Though not slated to open their first location until 2013, the brand will be heavily focused on the 17 million (by IHG calculation) healthy minded travelers looking to maintain their fitness routines. The $150 million investment over three years will add to IHG's portfolio of seven existing brands.
Why are these companies focusing on healthy travel in a nation with an "obesity epidemic"? For lack of a better phrase, health is wealth. Whether it is means or the end, higher income and education translates to greater health, and thus the ability to pay more for a hotel room. These companies are going after the money, and it will be interesting to see if it pays off.
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