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.

During 2020, glamping went from trendy to mainstream. I have spoken about the topic at several travel industry conferences, and recently wrote this trends piece for the 2021 Wellness Hospitality Real Estate Report.

Glamping is defined as an elevated form of camping that allows travelers to stay in unique accommodations (tents, treehouses, tiny houses) with services and amenities more often experienced at four or five-star resorts. Certainly, the pandemic helped glamping leap from niche to more mainstream. Glamping-style resorts have witnessed explosive demand due to their ability to provide socially distant, stress-free and secluded sojourns with immersion in nature.

Glamping in the bush in Australia
australia.com

During the past year, numerous scientific studies have highlighted the inherent mental and physical benefits of being outside. At the same time, the use of outdoor wellbeing experiences to improve the quality of life has been increasing exponentially. In a forecast released prior to the Covid-19 pandemic, the global glamping market size, valued at $1.8 billion, was predicted to expand to $5.41 billion by 2028. Grandview Research’s Glamping: Market Size & Trends also forecasts an annual growth rate of 14.1 percent from 2021 through 2028. 

Glamping in Istra, Croatia
campng-adriatic.com

Given the boost the sector has received during the Covid era (one of the few hospitality sectors that actually benefited from the pandemic), those forecasts may now be on the low side. In fact, glamping, a high-end form of camping that appeals to a broad range of travelers looking to spend more time outdoors, appears to be the right product for the right time. While the type of safari tents often used by glamping developments were once solely associated with trips into the wilds of Africa, today, we see glamping resorts popping up throughout Europe and North America.

Some U.S. resorts, like Eastwinds in New York's
Catskills, are adding glamping units to their offerings.

Europe has the biggest current revenue share (34.9 percent) of the global glamping market, but the North American glamping market is predicted to expand at a faster annual growth rate (16.7 percent) through 2028. Non-Covid factors fueling the growth of the sector included easier access to exotic, unconventional landscapes; the ability of social media to promote small, remote glamping sites at a low cost; and greater interest in outdoor adventure among luxury travelers. 

The glamping proposition is gaining traction among the investment community thanks to high EBITDA margins and low upfront development costs. Hospitality operators who invest in tented projects can expect to generate a quicker return than their bricks and mortar counterparts. As a result of such attractive numbers, and the growth of interest in glamping among travelers writ large, industry players have been able to secure multi-million dollar deals from the investment community.

Of Biophilia, Friluftsliv and Mother Nature

I recently penned a 5,000-word opus on behalf of Hawkins International that envisages the lexicon that will dominate the headlines in 2021. The list includes seven words that have come to the fore due to the effects of the pandemic. Here’s another sneak preview. 

Mother Nature’s power to soothe was rediscovered during the pandemic. We craved outdoor spaces for exercise, dining and chatting from safe social distances. We fled cities for the countryside, mountains or beaches. This yearning for the great outdoors will last, manifesting over the next decade with increased emphasis on architecture that encompasses both indoor and outdoor spaces – think spas, shopping malls, and office buildings dotted with courtyards, open-air atria and rooftop gardens.

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All of that will mean greater use of biophilic design. The discipline emphasizes natural light, natural materials and patterns evoking nature. It’s also about reflecting nature in color palettes and creating areas of protective refuge. (See more in this brief bible of biophilic design from environmental consultant Terrapin Bright Green.)

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To heighten access to nature, more hotels will likely be driven to add balconies or verandas to guest rooms, or at very least windows that actually open. Public spaces will also go alfresco, as we saw during the pandemic with F&B offered in outdoor spaces to enable social distancing, and spas using rooftops for exercise classes and open-air cabanas for treatments. Both trends will likely continue into the future. More meeting areas will likely be designed for indoor/outdoor flow, with The Gettys Group already envisioning the redesign of boardrooms and event areas with plants enhanced by digital projection to simulate nature in places where outdoor access is limited. 

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Collective Retreats 

Love of nature was reflected in our travel choices in 2020, which saw a huge rise in demand for camping, glamping and RV rentals. RVshare, a recreational vehicle-sharing marketplace, booked record numbers last year, fueled by the desire of cooped-up pods to get out on the open road. Thanks in part to the RV boom, many camping sites, including several national parks, experienced record numbers. Already trending up, glamping became mainstream, with resorts adding glamping-style units and companies like Collective Retreats and Under Canvas experiencing rapid growth.

Framing Friluftsliv

Then there is the Scandinavian import Friluftsliv, Norwegian for “free air life.” "It’s really putting nature at the forefront of everything that you’re doing in your life,” said Dayna Isom Johnson, Etsy’s trend expert. “In 2020 I think it was the first time a lot of us really gave a sense of more appreciation and connection to the outdoors, and so I think for 2021 that sensibility is going to continue to increase.”