Regenerative tourism is booming. It’s become a facet for many of the highest RevPAR hotels and resorts around the globe. But a student of history may tell you that it’s part of a far larger trend, and understanding this can help guide you in evolving your brand over the coming decade.
This current growth in luxury resorts, residential communities and other estates with regenerative or ‘immersion in nature’ elements actually has striking similarities to the late imperial era of the Roman Empire. Most of us are at least a bit aware of how this late imperial era for Roman Empire collapsed around the 5th and6th centuries – barbarian hordes, civil wars, currency debasement, government corruption and irresponsible spending all played a role.
But collapse is asymmetric. And within that two-century-long process, there were a lot of businesses that actually prospered. One of which were the landed estates that had sharply localized supply chains in order to never lose an income stream. For example, a Spanish olive producer supplying all cities in the Iberian peninsula was more resilient than an Italian textile manufacturer reliant on Tyrolean (present day Lebanon) purple seashells as dye.
As nodes in the network broke down, locavores and multi-stream estates could pivot far more nimbly. We don’t mean to be pessimists here or wish for collapse, only to imply that the framework of our current global economy is changing before our eyes: war, supply shocks, AI, digital currencies and so on.
You need to be prepared. You need to think long-term, especially as travel is one of the first industries to suffer during any correction event.
Amidst all this present-day uncertainty, we’re already seeing a big push towards more flexible, resilient forms of real estate:
- Mixed use master plans or towers
- Agriluxury or farm hospitality
- Agrihoods (a portmanteau for agriculture-centric neighborhoods)
- Ultraluxury and quiet luxury brands
- Dual-branded hotels
- Hotel sub-partnerships
- Club communities
- Hotels with alternative revenue streams like their own spa product line
- Even the growth of conservation easements can apply here
These trends are related, albeit not quantifiably in a quarterly income statement. Many people are comparing the present day to the Roaring Twenties or even the Gilded Age, but consider going farther back to the late Roman era to see how real estate and various forms of land use changed or stood strong amidst shocks to supply networks or geopolitics.
So, what can you do?
- Regenerative tourism is a very real and lucrative trend. Yes, it’s a buzz word and there’s some ‘regener-washing’ happening, but the pursuit of calm against the chaos is a huge demand driver.
- Review your Scope 3 emissions as an exercise to reveal any weak nodes in your hotel’s network and also to develop a plan for energy sovereignty.
- Perform some deep guest segment analysis, particularly to see who will be most impacted by any future AI-born recession (MIT published a great study on this recently).
- Conduct a big picture review of long-term HR policies and automation tools to derisk against the possibility for rising labor costs (if interested in an economic mechanism here, read up on Baumol’s Cost Disease).
- Investment in artisanship and stewardship. Hotels talk a lot about ‘local’ and ‘authentic’ and this will continue to be a popular topic for the next few decades.
Above all, while the name of the game for all hotel assets is ultimately optimizing for NOI and free cash value, a more aspirational question to ask is: “What can I help create that my grandkids would be proud of?”
