Developing a luxury resort today can be a great idea. This is because luxury tourism is experiencing a significant boom. Therefore, it is not insane to develop tourist complexes that offer travelers complete relaxation and recreation experiences.
In this article, we will explore the key aspects to consider when developing a luxury resort in today’s competitive market. From macroeconomic challenges to industry-defining trends, we’ll look at how this form of hospitality has evolved. In addition, we will show why Spain stands out as an ideal destination to invest in this segment.
THE RESORT AS A CATEGORY OF LUXURY ACCOMMODATION
A resort is a type of tourist accommodation that offers a wide variety of services and amenities for guests. It is designed to provide a complete relaxation and recreation experience, and usually includes a variety of leisure and entertainment activities. Unlike a hotel, a resort is not limited to providing accommodation and food, but also includes recreational and relaxation facilities.
A resort can include a variety of facilities, such as swimming pools, golf courses, tennis courts, ski areas, recreation areas, spas, and many other amenities.
Now a luxury resort is a tourist establishment whose objective is to offer high quality services. In this way, clients are guaranteed unique and memorable experiences.
MACROECONOMIC CHALLENGES TO DEVELOP A LUXURY RESORT
If you are thinking of developing a luxury resort, it is important that you take into account the economic outlook. Currently, the hotel market faces several challenges that we cannot ignore:
The global situation is characterized by the constant rise of interest rates, bankruptcies of financial institutions and persistent inflation. This high interest rate environment has triggered a global recession of moderate to medium magnitude that, according to experts, could begin to subside in late 2023 or early 2024.
Impact on technology and finance
Technology and finance are experiencing significant challenges that directly impact demand for luxury products and services in key markets. These challenges can have a lasting effect on consumers’ perceptions and ability to spend.
The situation in Asia
Despite a strong economic recovery, Asia is not without its challenges. Bankruptcies in the real estate sector and risks related to consumption still persist, which may affect economic stability in the region.
The Ukrainian War
The conflict in Ukraine remains a critical factor of instability both globally and regionally. This conflict keeps inflation at high levels and threatens economic growth around the world, especially in Europe.
High costs for consumers
High accommodation rates and airline ticket prices could become a significant challenge for consumers who aspire to enjoy luxury experiences. This could limit the access of certain market segments to exclusive destinations and services.
These are some of the challenges you should consider when developing a luxury resort.
MARKET GROWTH, FORECASTS AND PROJECTIONS AS AN INCENTIVE TO DEVELOP A LUXURY RESORT
According to a report by Mordor Intelligence, the luxury hotel market presents a dynamic and promising outlook. According to estimates, its size will reach an impressive USD 99.88 billion in 2023. Furthermore, projections point to substantial growth up to USD 146.05 billion by 2028. This remarkable expansion translates into a CAGR of 7.90% during the period spanning from 2023 to 2028.
This data can be an incentive for those who want to develop a luxury resort. Also, taking into account that there are favorable trends for this sector. We will talk about these later.
However, it has not always been a smooth road for the luxury hotel market. In 2020, the sector faced significant losses as a direct consequence of the COVID-19 pandemic.
In terms of the geographical distribution of the luxury hotel market, from 2023 to 2028, North America is expected to lead the market, followed closely by Europe.
CONSIDERING THE TRENDS TO DEVELOP A LUXURY RESORT
INCREASE IN DEMAND FOR LUXURY HOTELS
As the travel and tourism industry recovers, steady growth is seen in luxury hotel market trends. The demand for these establishments varies depending on various factors, such as location, size, and the amenities offered at the location. In this context, an increase in disposable income is anticipated, driven by the popularization of weekend getaways, the accessibility of air services and the rise of the service sector.
On the other hand, purchasing power and standard of living are key components that attract customers to luxury resorts. Likewise, the organization of sporting events attracts additional clientele. Sports teams and fans traveling from different destinations for tournaments often choose to stay in luxury hotels. This also translates into an increase in demand and bookings.
INCREASE IN THE DIGITALIZATION OF SERVICES AND ONLINE RESERVATION
An increase in direct bookings has been seen on luxury hotel websites. In this sense, there is a statistic that indicates that travelers visit an average of 38 websites before booking. According to this data, chains such as Hilton have launched campaigns such as Stop Click Around. In this, they applied a communication strategy that changed customer behavior, convincing them to book directly on their website.
Now applications have a crucial role in managing the services that hoteliers offer their clients. Well, these allow you to monitor numerous aspects of the cycle and the guest experience. Therefore, digital technology is a key factor in developing a luxury resort.
Today, customer-facing services are being redefined due to the increasing adoption of technological solutions. Among the most notable are mobile check-in, contactless payments, voice control and biometrics.
Guests who already unlock their smartphones, for example, using their fingerprints, will soon expect the same convenience when accessing their hotel rooms.
INCREASE IN LUXURIOUS LIVING DURING VACATIONS
Another growing trend is travelers seeking a luxurious lifestyle during vacations or holidays. They consider it a totally relaxing and rejuvenating experience. This trend has become especially popular among newlywed couples and older people. Well, they see these luxury stays as experiences of a lifetime.
In this sense, anyone looking to develop a luxury resort must evaluate all of these luxury experiences.
SUSTAINABILITY AS ANOTHER CRITERION FOR CHOOSING LUXURY HOTELS
Sustainability plays an increasingly crucial role in the tourism industry as a whole. But its relevance seems even greater in the luxury tourism sector. Today, 74% of luxury travelers are willing to pay a higher price for a more sustainable experience. This change in attitude has driven a notable increase in preference for accommodation that embraces sustainability.
Luxury hotels are responding to this demand by adopting more environmentally friendly practices. As a result, they offer their customers experiences that focus on well-being and connection with nature.
Currently, sustainability is one more criterion when booking a hotel. Therefore, if you are thinking of developing a luxury resort you must ensure that it is as sustainable as possible.
SPAIN AS ONE OF THE BEST DESTINATIONS TO DEVELOP A LUXURY RESORT
Spain is positioned as one of the best destinations to develop a luxury resort or any luxury accommodation. This is because the luxury hotel segment is experiencing a significant boom. In 2022, five-star and five-star luxury hotels represented 37% of total investment in the sector. This investment reached 1,154 million euros.
Between 2019 and 2022, Spain witnessed nearly 60 openings of five-star and high-luxury hotels. And only 40% of them occurred in 2021.
There is also a slight inclination towards vacation hotels instead of urban ones. And almost half of the new openings were concentrated in the Balearic Islands. Projections point to more than 90 future openings scheduled between 2023 and 2028. And of these openings, 25% are expected to be in the high-luxury sector and 70% to be located in coastal regions.
The rise of luxury tourism is a phenomenon present in the current hotel industry. Therefore, it is an attractive opportunity for investors and entrepreneurs. In this case the opportunity can be taken advantage of by developing a luxury resort. However, entrepreneurs must pay special attention to aspects such as sustainability, the digitalization of services and the search for quality experiences.
On the other hand, countries like Spain are emerging as strategic destinations for the development of world-class resorts. Despite macroeconomic challenges, the outlook remains promising for those seeking to offer travelers unforgettable experiences in luxury surroundings.