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Meantime, please enjoy some recent articles covering the wider wellness tourism sector.

Testing the Medical Tourism Waters in Slovakia

Mud Pool at Irma Health Spa

European Health Tourism Brands Serves Up Double Dose of Hospitality

Buxton Crescent Hotel, England

Tourism Development in Bosnia-Herzegovina 

A View of Mostar
Courtesy State Department

Growing European Health Tourism Brand Serves Up a Double Dose of Hospitality

Ensana, a hospitality operator focusing on medical tourism, is aiming to nearly double in size over the next three years while increasing its service offerings.

The company began life in 2019, when Hungary's Danubius Hotels Group divided its city hotels and its medical spa facilities into two separate brands. Both are under the ownership umbrella of CP Holdings Ltd, a multinational investment company based in the UK.

Given the highly-fragmented nature of Europe’s medical spas, most of which are local and independently-owned and operated, the Ensana brand quickly became the largest medical spa operator on the continent. The company now manages 27 properties in the Czech Republic, Hungary, Romania, Slovakia and the United Kingdom, many of which are located in Europe’s most historic spa towns.

For those not familiar with the concept of medical spas, they combine hotels and health facilities. Unlike the wellness hotel concept, which focuses more on relaxation and lifestyle programming (fitness classes, massages, saunas, etc.), medical spas have doctors on staff who provide treatments at on-site clinics over periods of one to four weeks.

Thermia Palace Hotel Piešťany, Slovakia

Petra Lelovska, Ensana vice president, provides some context: “A medical spa blends hospitality and medical treatment together. Doctors provide services, while guests are treated to the hospitality services they would expect at a typical hotel. In other words, we are a hotel brand focused on health.”

Traditionally, medical spas existed to help clients suffering from specific health issues. For more than a century, ailing patients have flocked to the medical spas of Eastern and Central Europe, which harness the healing properties of natural elements to treat a range of health conditions relating to muscles, bones, organs, metabolism and skin. Still today, Frank Halmos, Ensana chief executive officer, explains, “Medical spa operators use a combination of natural resources like thermal waters and mineral-rich mud with expert medical knowledge to offer treatments supporting the health of guests.”

Ensana Gives Medical Tourism a Shot in the Arm

For decades, most guests to these hospitality/medical hybrids would book two to four-week annual stays at a facility located in-country. That way, the multi-week visit could be covered by state insurance. However, as state budgets have tightened, the insurance reimbursement process has become less reliable, and medical spas are increasingly focusing on self-paying guests to keep things going. In the past, the rate of insurance reimbursed clients (usually domestic) versus free-payers was 80-20; now that ratio has been reversed. As a result, notes Halmos, “It’s not a long-term business for Ensana to accept insurance. So, we are focusing on the free market, looking to grow international business as we acquire more upper and upper upscale properties.” 

Halmos says the strategy is adding properties in countries where Ensana already operates, and then expanding to nearby countries with strong medical healing traditions, such as Austria, Germany and The Balkans (Greece and Bulgaria are high on the list). The company is also eyeing locations in further-flung places like Georgia, Kazakhstan and Egypt.

In 2020, Ensana opened the Buxton Crescent Health Spa Hotel. The historic building had languished for decades and it took 17 years to transform it.

Buxton  Crescent Health Spa Hotel

Halmos says that by the second or third quarter of 2023, he expects at least two new Ensana-branded properties to be open. By 2025, he says, the brand could have up to 45 facilities. According to Lelovska, the growth will come “mainly through hotel management contracts. We want to operate and not to buy—to be asset light and work with a portfolio of investors.”

Challenges and Changes

Ensana is also looking to grow its programming. As state insurance coverage gets phased down, the medical tourism market is facing the challenge of finding new, and in many cases, younger clients, who currently are looking more at developing healthy lifestyle practices rather than curing a particular condition. Some of these potential clients, particularly those from the North American market, may not even understand the European concept of a medical spa. Therefore, says Halmos, “The challenge for growth is increasing consumer awareness of what we offer–the proven health benefits of combining natural resources with medical knowledge.”

Due to demographic changes and the increased demand for preventive health programs, Ensana is expanding its offerings. “New health enhancement options will include lifestyle programming around issues such as weight loss, healthy eating, and de-stressing," Lelovska says.

The additions will blur some of the lines between what in North America is considered holistic wellness tourism (a term not highly esteemed in the European health spa community) and pure medical tourism. “We are looking to add more programming that allows for shorter stays, which will appeal to clients seeking more of a leisure focus for enhancing their health,” says Lelovska. The new concept will be unveiled next year at the Ensana on Margaret Island in Budapest and the Thermia Palace Spa Hotel located in Piešťany, Slovakia. After that, the plan is to offer similar “health enhancement” options at Ensana locations in Marienbad, Czech Republic and Buxton, England.

This article originally appeared in the December 9 edition of Hospitality Insights.

Country Profile: Bosnia and Herzegovina Slowly Opens Up to Investors

 One of the things that is striking during a visit to Bosnia and Herzegovina (BiH) is the relative lack of international franchise companies doing business in the country. This is especially notable in the hospitality sector, where the vast majority of hotels are independent and locally-owned. Currently, Accor and Marriott are the only major international hotel companies operating in the country. But the picture may be different in five years’ time, thanks to a number of initiatives being put in place by international organizations.

Latin Bridge in Sarajevo, Bosnia and Herzegovina. (Leonid Andronov/Getty Images)

On October 12, the EU recommended Bosnia for candidate status, on the condition that a number of steps be taken dealing with several issues, including rule of law, judicial reform and corruption.This could seem like good news for international investors, according to Charlotte Ruhe, managing director for Central and South Eastern Europe at the European Bank for Reconstruction and Development (EBRD).

“When countries ascend into the EU, it’s like a Good Housekeeping seal of approval in terms of their rules of governance, which gives investors confidence,” she said.

However, Ruhe adds that given Bosnia’s current constitutional issues and complicated political structure, both relics of the  Dayton Peace Agreement, it might be quite some time before the country is able to make the qualifications for EU accession. And there are plenty of other matters as well.

Simply put: it’s complicated. The political structure divides the country’s governing bodies into two main entities: the Federation of Bosnia and Herzegovina, made up of a collection of somewhat autonomous cantons, and the Republika Srpska, where power is centralized at the top. There is a third administrative area, Brcko District which is a tiny section straddling a border between the other two. The three areas share a tripartite national presidency. As a result, says Almir Pestek, PhD, a professor teaching at the University of Sarajevo School of Economics and Business, “We are trapped into the post-Dayton structure, which is a big burden, since there are different economic and political systems and legislation is not harmonized.”

That means, he says, that “the overall business climate is pretty-bad compared to other countries in the region. You can see it from recent World Bank reports, the complex environment when it comes to government structure and legislation, plus high levels of corruption and slow administration, are main constraints. Based on that information, you can see why companies avoid us in terms of investments.”

The Slow Winds of Change

Yet, despite the aforementioned challenges, Pestek says he would still suggest investment here, particularly in the tourism sector. “In terms of tourism the positive things outweigh the negative. “Bosnia is far from its full potential,” he notes. Prior to the pandemic, Bosnia was growing at the third highest tourism rate in the world. While the pandemic put a huge dent in that progress, investment during that period by international organizations like USAID and the EBRD didn’t slow down.

EBRD is investing in the highway systems, improving connectivity between the country’s main cities and between BiH and neighbouring countries. Meanwhile, USAID’s Developing Sustainable Tourism in Bosnia and Herzegovina (Turizam) project is in the middle of a five-year (2020-2025), $20 million project aimed at improving the economic regulatory environment, enhancing the quality and diversity of products, professionalizing human and institutional capacity, and promoting Bosnia and Herzegovina to high-yield visitors.

Plus, there’s that EU invitation. Pestek believes working toward EU membership will give a boost to improvement efforts.

“So many international organizations tell us what should be done, but just a narrative and the situation hasn’t changed over the years,” says Pestek. “But maybe the idea of EU accession may finally be the incentive to help us resolve the issues on our to-do list. So, I think the invitation will help make the business climate better, but it will still take a while for us to make the changes.”

Opportunities for Private Investment

Despite the lack of a national tourism office and its limited transportation infrastructure, the country’s competitive advantages are many. BiH is cheap compared to most other European countries; the diversity of product and culture in a relatively small area is appealing, and its proximity to the rest of Europe are bonuses. Plus, the country is making substantial headway in Gulf markets.

About ten years ago, Ajdin Sehic, sales manager for the Tarcin Forest Resort and Spa, part of Accor’s  MGallery Hotel Collection, says BiH became increasingly popular among Saudis and other Middle Easterners looking to escape the scorching summers at home. Aside from its natural advantages, such as mountains and waterways, Sehic said Bosnia was particularly attractive because “it is a cheap destination in terms of accommodation and food (particularly attractive to Middle Easterners looking to stay for several weeks or months) and it is a ‘brotherhood’ country.” Muslims comprise the single largest religious community in the country, with the majority of those concentrated in the Federation of Bosnia and Herzegovina.

Where GCC travelers went, investment followed. Saudi investors in particular made note of the increasing demand and invested in several hotel properties, including the Tarcin Forest Resort and three other properties which were brought under Accor flags (the Novotel, Ibis Style and Swissotel, all located in Sarajevo). All of these properties opened between 2017 and 2019.

Frank Reul, Accor’s vice president of development for Northern Europe, Eastern Europe and the Balkans, says that after a pandemic pause, the company is once again exploring partnership possibilities in the country. Targets include the cities of Mostar, Banja Luka and Tuzla, plus resort locations in the mountainous regions. Given that the market “cannot carry many five-star hotels,” says Reul, “we are looking at growing the midscale Mercure brand and the premium Movenpick brand in the country.” He thinks the time for international investment in tourism is right. “It’s a tremendous opportunity, as the country is underdeveloping in terms of exploiting its tourism potential.”

Courtney Chubb, mission director of USAID/Bosnia and Herzegovina, concurs, saying: “The tourism sector offers tremendous investment potential. We are already seeing examples of successful foreign investments in the hotel and entertainment sector. For example, Hotel Malak Regency, a five-star hotel on the outskirts of Sarajevo, Tarcin Forest, Swissotel and several other resorts are examples of Middle East investments that have done well.”

Moving forward, Chubb adds: “Opportunities exist in the conferencing and exhibition space for new facilities, mixed use facilities (hotels with serviced or non-serviced residences), and in transport. In the hotel sector specifically, there are opportunities to increase international brand presence, as this is an area that offers ample room for brands to either invest or come in with management contracts to brand and operate local hotels.”

This article first appeared in Hospitality Insights.

Why Gluten-Friendly is Like Being a Little Bit Pregnant: Part One

My inspiration for writing this post was a meal I recently ingested at a restaurant located at a five-star resort. Note the phrase ingested rather than enjoyed or indulged in. Now, a much-hailed items at this eatery was homemade potato chips. Long overdue for lunch, I spotted a chicken salad sandwich, served on a croissant, served with a big heaping of said chips on a table nearby. It looked delicious; just the carb-filled sustenance that my body craved. I knew, as someone who is gluten-intolerant, that I would have to forego the croissant. But the chips--ooh, la, la.

A facsimile of the meal I craved, courtesy of Trip Advisor

But quickly, and sadly, I learned that those delicious homemade potato chips were not, in fact, gluten-free. My only alternative–carrot and celery strips. But listen, restauranteurs, I beseech you. If you advertise homemade potato chips, let all of us enjoy them. It's an easy fix. Just put 'em in their own dang deep fryer.

As someone who has been gluten-intolerant for more than 30 years, it flummoxes me that today, even with all of the science and education available about the allergen; the places where it can be hidden (soy sauce, soups and processed meats--here’s looking at you); and the dangers of cross-contamination; that so many food and beverage outlets still get it wrong.

Please understand that for a guaranteed 100 percent gluten-free experience, food would have to be prepared in a kitchen where there are absolutely no traces of gluten. But for most people, if food is carefully prepared with tools that have not touched a source of gluten (i.e., a toaster, a deep fryer, an unwashed mixing bowl), most people with celiac disease and gluten intolerance are going to be just fine eating out at a regular restaurant.

So, as a long-time travel and wellness journalist and consultant, let me provide a little tutorial on the ABCs of GF.

Lesson #1: A GF label on a menu should only reference Gluten-Free, not Gluten Friendly.

The *GF I often see on menus these days connotes, when one reads the very fine print, "gluten-friendly".....not gluten-free. As I once said to a server, isn't gluten-friendly like being a little bit pregnant? Something is either gluten-free or it's not, and marking it gluten-friendly doesn't help anyone, even the gluten-trendy wannabe.

Lesson #2: Wheat is Wheat, Even by Another Name

Durum, semolina, farro and farina are simply wheat by another name. Spelt is a species of wheat, and it contains gluten, albeit not as much as your classic variety. Therefore, it will likely “spelt” trouble for those with gluten sensitivities.  On the other hand, buckwheat, aka kasha, is not wheat. However, the problem with buckwheat products is that the buckwheat is often mixed with gluten-containing flours. So, eater beware. 

verywellhealth.com

Lesson #3: Getting Granular with Grains

NOT GF

Other grains containing gluten include rye, barley (a must ingredient in beer and a frequent ingredient, in the form of barley malt, in many seemingly gluten-free cereals, like Rice Krispies).  Oats are always a question mark. Some people can tolerate them; some can’t. The problem, as I understand it, isn’t the oat itself, which by nature is gluten-free, but rather cross-contamination from being planted among gluten-laden grains. So, for example, I can tolerate Trader Joe’s Gluten-Free Oats, but sometimes have issues with Quaker Oats. 

Grains that are gluten-free include millet, amaranth and teff, as are rice, corn and quinoa.

That's enough to digest for now. More lessons to come in an upcoming post.

New Wrinkles in Senior Living: Looking Toward an Intergenerational Future

When the Global Wellness Summit once again asked me to contribute to its annual Wellness Trends Report, my pitch may have seemed a bit out of my usual travel/ wellness wheelhouse. That said, the idea of writing about "New Wrinkles in Senior Living" evolved out of the work I have been doing for the past two years in the wellness real estate sector. On the face of it, it's a subject matter that may seem to have limited appeal. But in actuality, as the trend report is more about the value of intergenerational living, it's something young, old and everyone in between should read. Here's a teaser.

Click to Get the Full Report

Summary: For years, it’s been said that 60 was the new 40. But now, according to leading aging experts, 90 will be the new 40 within a decade. The exponential jump in longevity means that people are retiring later, aging younger, and focusing on being active and engaged with self-care and personal growth into old age.

Healthier, more youthful, and more active than their cohorts in previous generations, this incoming senior class doesn’t “feel old” and doesn’t want to be defined by  age, nor socially segregated by it. That’s why today’s age-segregated models of senior living communities are no longer cutting it with a new generation that doesn’t believe in the concept of being put out to pasture upon retirement.  

To meet the changing expectations of aging adults, we believe “senior living” (a term that we would like to see retired) needs to focus more on intentional intergenerationality.  This goes back to days of yore, when people were not so transient and communities stayed organically intergenerational. Such old-school intersectionality still exists in the world’s Blue Zones,  places like Okinawa, Japan and Sardinia, Italy, which also happen to be among the places where people live the longest and age the healthiest.

A multigenerational family living in the Blue Zone
of Sardinia, Italy (franoi.com)

In this trend report, we examine new models for intergenerational living, environments that can set the stage for reducing age segregation, while increasing social connections and decreasing loneliness, which is an epidemic at this point. These new models have great potential for resulting in better health and wellbeing outcomes for all residents. We look at the development of pocket neighborhoods, innovative mutually-beneficial intergenerational co-living models, and strategies for designing for intergenerationality. These new models have great potential for resulting in better health and wellbeing outcomes for residents of all ages.

An example of pocket neighborhood design

Let’s point out that this concept of intergenerational housing goes beyond brick and mortar. There’s an overall ethos involved, in which a community is intentionally designed so that people of all ages have multiple opportunities for connection, collaboration and friendship. To meet this objective, a community must allow people of different ages to live side by side as good neighbors, so that they can share their talents and resources, develop relationships and provide mutual support. 

Trend Introduction: They say that everything old becomes new again  and so it seems to be going with the concept of so called “senior living” (a term that, frankly, we would  like to see retired).  

In days of yore, neighborhoods and communities were organically intergenerational. People rarely  moved away from the community in which they  spent their adulthood. Every kid on the block knew  each other and grandparents often lived with  their descendants. This idea of intergenerational  intersectionality still exists in the world’s Blue  Zones, places like Okinawa, Japan, and Sardinia,  Italy, which also happen to be among the places  where people live the longest. 

However, in many industrialized countries, the  days of yore ended with the rise of suburbia. Cue  developer Del Webb, who introduced the now stereotypical version of a retirement community  back in 1960. Webb pioneered the active adult  concept, a self-sustaining ecosystem filled with  amenities like pools, parks and dining areas, with the opening of Sun City in Arizona. Its success led  Webb to replicate the concept in warm weather destinations across the US throughout the next  few decades.  

This is senior living at Del Webb
 (image courtesy Del Webb)

Due to the popularity of Webb’s projects, standard  home builders started getting into the act by the  mid-1970s. They began designing active adult com munities, age-segregated developments that included amenities like fitness centers, walking trails, swimming pools and social clubs. Not only were these  places age-segregated, but they were usually geographically segregated as well. To live in this type of  community, people often had to move far away from  where they spent most of their adult life.  

Credit: lifeover50.net

Today, though, this old-school Active Adult concept isn’t cutting it with younger Baby Boomers and  Gen Xers who don’t believe in the concept of being  put out to pasture upon retirement. The generation  that invented youth culture is now reinventing  what it means to grow old. They are retiring later,  aging younger and focusing on being active and  engaged with self-care and personal growth. 

That is why the concept of intentionally-designed, intergenerational real estate development may be on the cusp of altering the direction of the senior living

To read the entire trend, click here. 

Glamping Offers New Investment Opportunities for Hospitality Operators

As reported in the RLA Global Wellness Real Estate Report, which I co-wrote, glamping has been one of the beneficiaries of the social distancing, back-to-nature trends brought on by COVID. During 2020 and 2021, the trend for glamping sites accelerated and popped up everywhere, from the most remote countryside locations to urban backyards.

Glamping is a portmanteau combining “camping” and “glamour”. Aside from safari camps in Africa, the concept has largely developed as a one-off Mom and Pop conceit, with individual owners setting up shop on small plots of land. Oftentimes, the latter has had little to do with glamour.

However, within the past couple of years, glamping has become a more serious business, as facilities are becoming more sophisticated, outfitted with the services and amenities experienced at four or five-star hotels. Aside from amenities, what sets the next wave of glamping resorts apart is their focus on landscape, architectural design and development of a unique creation story set in the local environment.

Glamping-style properties have witnessed explosive demand during the COVID era due to their ability to combine socially distant, stress-free and secluded sojourns with immersion in nature. The pandemic has not only helped glamping leap from niche to more mainstream, but it has created a growing demand for a more upscale, sophisticated product. Thus, for developers looking to diversify their lodging portfolios, glamping may offer a solution for a reasonable price.

While the exponential growth of the past two years may slow a bit after COVID, glamping is a phenomenon that is not going away. With the glamping proposition gaining traction among the investment community thanks to high EBITDA margins and low upfront development costs, and among consumers for its back-to-nature, experiential mentality, glamping will continue an impressive forecast to expand at an annual growth rate of 16.7 through 2028.

Beyond making investments in midscale, multi-unit operators like Under Canvas, Hipcamp and Collective Retreats (all of which have secured multi-million dollar deals from the investment community), there’s even more opportunity for investors ahead.

After all, as the glamping consumer becomes more sophisticated, it will take much more than merely “pitching a tent” to attract them.

There is great potential for development in a number of areas.

1. Glamping Sites in Rural Areas

Locations within a three-hour driving radius of major urban centers may proliferate, particularly if those rural areas feature natural assets like lakes, mountains, or national and state parks. There is a great deal of unexploited potential in this realm, particularly in the American Midwest, which is currently somewhat bereft of glamping opportunities.

2. Year-Round Glamping

Part of the reason we mainly see glamping facilities in places like California and Florida has been the nature of the glamping structures. But as glamping structures evolve beyond tents and treehouses to more four-season constructs (tiny houses, cabins or A-frame structures), this drawback may be allayed to a certain degree, thereby opening the glamping market to a broader array of destinations.

3. Resorts Add Glamping to the Mix

Instead of adding new rooms, some established resorts started added glamping units to their offerings during the pandemic. Eastwind Hotel in New York’s Catskills region added 10 glamping cabins to its resort mix this summer, and they regularly sold out.

4. Dedicated Glamping Resorts

A glamping site typically costs 33 to 50 percent less to develop than a standard brick and mortar resort. That’s part of the reason we see a future for dedicated glamping resorts made up of glamping-style units complemented by resort-like features including a spa, F & B outlets, and recreational facilities like a pool or tennis courts. Developer risk can be reduced by locating such facilities in traditional resort areas where the consumer may be looking for something a bit different. Additionally, by building glamping resorts with some permanent infrastructure attached, resale possibilities grow exponentially.

For developers looking for opportunities with limited financial risk, glamping can be the right way to go. But as in any kind of real estate, location, location, location will be vital. The best options for success sit within a three-hour radius of a major urban area, and will be directly sited by an attractive natural asset. But as the glamping consumer becomes more sophisticated, location will not be enough. The glamping schemes that will stand out in an increasingly crowded market with be those they add quality service and value-added facilities (such as spas and restaurants) to the product mix.

Why the Trend-Seeking Luxury Consumer Loves the Branded Residence Sector

 This article first appeared in Hospitality Insights in mid-October.

Aston Martin. Baccarat. Porsche. Versace. Aside from being ultra-luxury brands, what do these companies have in common? All have lent their names to branded residences.

Branded residences emerged as a real estate market segment about 20 years ago, when hotel brands started creating mixed-use developments. Adding a residential element to hospitality projects made it easier for developers to get financing and more immediate return on investment while simultaneously benefiting from a long-term revenue stream on the hotel side. 

For hotel companies, branded residences were a natural brand extension for luxury groups like Four Seasons and Ritz-Carlton, trading on a tradition of hospitality, service and high-end amenities. After all, who wouldn’t enjoy living in a place that shared concierges, housekeepers, celebrity chefs and spas with the most discerning hotel guest? Riyan Itani, head of Savills International Development Consultancy, put it simply: “The concept of branded residences, from its inception, has been based on the provision of services and facilities that one would typically find in a hotel.”

The synergies between high-end hotel brands and branded residential developments, then, are somewhat obvious. But what value does an automotive brand, or a jewelry brand, or a fashion brand bring to the dining room table?

The Porsche Design Tower in Miami

According to Savills, during the last ten years, the number of branded residences increased by 170 percent, adding more than 52,000 units across 370 projects. In the beginning, branded residences were almost exclusively the domain of luxury hospitality brands, but that is changing. as more and more non-hospitality luxury brands enter the fray. Part of the reason for the shift is that some markets have reached capacity in terms of luxury hospitality branded offerings, while in places more driven by trends, developers are looking for sexy points of product differentiation.

Palazzo Versace, Australia

While a few such non-hospitality brands were prescient early on (Palazzo Versace on Australia’s Gold Coast was actually quite revolutionary when it opened in 2000), most of the newer players have come on the scene during the last five years. The Porsche Design Tower opened in Miami in 2017.  Aston Martin will add more automotive cachet to the Miami residential scene in 2022, and Bentley will enter the mix there by 2026. Lamborghini is shifting into high gear in Dubai with an immense project (8,000 residential units) to be opened by 2024. Italian car design firm Pininfarina is growing its presence through branded residences in Brazil and Guatemala. High-end consumer goods brands like Baccarat, Roberto Cavalli and Armani are also players, although most of these branded developments are one-offs, mostly located in hot branded residential real estate markets like Dubai and Miami.

Cyrela by Pininfarina, Sao Paolo, Brazil 

The Appeal For Companies, Developers and the Consumer

There are three stakeholders in every branded residential scheme. There’s the brand, the developer and the consumer. In theory, the branded residences sector offers an opportunity for high-end products to expand their brand profile and diversify their business model, while giving developers a unique selling proposition and providing consumers with bragging rights. For non-hospitality brands to succeed, says Chris Graham, author of The Branded Residence Report, an understanding of local markets and developers, careful buyer targeting and brand alignment are all essential.  

Having branded residences allows the Bulgaris, Versaces, Armanis and Baccarats of this word to attach an experience to their products, according to luxury branding expert Piers Schmidt, while at the same time, says Graham, offering a big WOW factor that will result in extensive PR. 

“Brands can create a theater of dreams; a temple to the brand at which the consumer can come and worship,” said Schmidt. Theoretically, this can lead to a deeper relationship with the brand’s consumer. But that prospect comes at great risk to these brands, according to Barry Landsberg, a long-time veteran of the branded residence world. “The service culture is inherent in the DNA of hospitality brands. Non-hospitality brands do not bring the advantage, so that to be successful competitors in the high-end residential space, they will need to invest in the hospitality ingredients that have been a mainstay of the industry, or potentially risk tarnishing their brand equity. If they don’t get the service component right, that’s the biggest risk if they don’t deliver.”

For the developer, a non-hospitality luxury brand may offer more flexibility in terms of design and required levels of service. That’s because non-hospitality brand deals may not come laden with extensive royalty fees, license fees and service charges, along with strict requirements to ensure the development meets brand service standards, according to Landsberg. Furthermore, developers are always looking for an edge, and adding a seductive brand label to a building, particularly in saturated, status-savvy markets, can increase the allure and the price of the product. That said, Savills notes that while luxury hospitality brands add an average of a 31 percent price premium to branded residences, non-hospitality luxury brands bring in a price premium average of 25 percent.

So, it appears that some consumers are still willing to pay a premium for their non-hospitality branded residences. But the experts say there are caveats, especially given that there is not an automatic assurance of consistent quality service that is baked into hospitality brands.

For a non-hospitality branded residence to sell, a consumer must really buy into the brand at hand. But is that enough? After all, while there are natural synergies between luxury hotels and luxury real estate, one may wonder what value crystal or car brand brings to a potential homeowner. How do you translate the brand essence of a dress or a piece of jewelry or an automobile into where you live? After all, “new car smell” doesn’t really translate in a home environment. But automotive brands, for example, in trying to bring the brand aesthetic home, are doing everything from adding automotive elevator systems which enables residents to store their vehicles in their very own “sky garage” (a multi-car glass display case situated right next to their living room), to sweetening the purchase of a multi-million dollar condo with a “throw-in” of a car, to adding design elements borrowed from the car itself. There may be more relevant synergies in terms of design with fashion houses, particularly those that have homeware or interior design in their portfolios, but in all cases, the service factor is still an unknown. 

A "sky garage" in the Porsche Design Tower
cnn.com

What the Future of Non-Hospitality Luxury Residences May Look Like

What kind of competition will these schemes offer vis-a-vis hospitality projects?

For a while, it looked like non-hospitality branded residences were merely the new shiny object. But, according to Landsberg, certain projects have proven that "if a brand has the ability to draw from a dedicated affinity group; if it works with a developer who understands the local market and the branded residence space; and it brings on designers to incorporate elements of product integration," he said, "in other words, there is a managed process through architecture, design and service, it can be a success, especially in places like Miami and Dubai, which are dynamic, design-forward markets, and developers there understand their markets well and are looking for ways to differentiate in those crowded markets." 

In fact, the success of the schemes may be more dependent on market than on brand, according to Graham. In his Branded Residence Report, he writes, “The non-hotelier segment is typically more focused in emerging markets than the branded residence sector as a whole. Demand for high-end properties has risen quickly in emerging markets in parallel to wealth creation. The nouveau riche buyer may be more attracted to unique products and these lifestyle orientated brands resonate well amongst brand-friendly and knowledgeable purchasers.” Such  buyers, he added, are quite prevalent in places like Dubai, Miami and Brazil, where “bling and design appeals.” 

Because of their success in those places, Graham says “the viability question of non-hospitality brands has been put to bed. Look at brands like Versace and Armani, which all decided to license their names and design as a brand extension and way to get additional revenues. They took a leap of faith that the product would extend into residential and people would pay a premium and it came to be. Subsequently, the sector has taken on a life of its own.” 

Piers Schmidt, however, is not quite as bullish on the sector. “I am pretty negative about it, given that many schemes have not worked and those that have haven’t grown beyond one or two brand residence properties," he said.

Unlike hotel brands, which seem to be able to plant their flags anywhere, non-hospitality brands will be limited, to those specific markets that may be more prone to be susceptible to the label factor of a brand. In that respect, non-hospitality luxury branded residences may end up being more of a one-off novelty than a replicable international model.