Economics & Investments

The Role of Hotel Industry in Medical & Wellness Tourism

Economics & Investments

Medical tourism or wellness tourism has been around for centuries, but its growth as a viable, mature industry is hastening in a manner similar to the expansion the hotel industry experienced from the 1950s to the 1980s.

Propagated in 1950s and 1960s, hotel systems reached maturation in the late 1970s, becoming an efficient and differential industry in management systems, marketing, finance and accounting, measurement, benchmarking, and disciplined in operations (Steve Rushmore).

In this paper we address the crucial role that the hotel industry can play in complementing medical tourism’s positive developments.

In the U.S., national and regional hotel & lodging professional associations emerged in early 1900s, mainly to protect lodging industry against fraud, and paralleled the growth of the 1970s to offer a wide breadth of promotional and educational programs, as well as legislative support (AH&LA).

Today, many medical tourism companies and health clusters are instituted around the world to aid the development and standardization of the industry. The American Medical Association is taking the lead, partnering with universities and frontrunners to deliver education and certification, promote best practices, and spearhead evolution.

What does the future looks like?

Our prediction is that medical tourism will mature even faster than the three decades that culminated in the rise of hotel industry, mainly due to today’s sophistication in operations, system design, brand strategies, technology, and so forth.

However, maturation of medical/wellness tourism industry will not happen on its own merits, since this industry relies heavily on many players and in some cases, an entire community. For that reason alone, medical tourism will face many more challenges, than more defined tourism segments like timeshares and theme parks.

Why hotel accommodations are a crucial part of the medical tourism and wellness industry?

Hotel/lodging industry partnership is one small, yet critical piece of the development of several segments of the tourism industry. A case in point, the U.S. timeshare industry that commenced nearly 30 years ago (Randall S., Upchurch & Kurt Gruber) only realized widespread success when major hotel chains, such as Marriott and Hilton partnered with firms in the segment.

With their experience in brand development, customer loyalty, and significant resources including real estate brokers, large investors, and innovative mixed projects’ the industry’s evolution reached its status today.

Let us begin with the Mayo Clinic’s community approach to overall patient experience and healthcare delivery. Mayo’s number one goal is: understand human needs, design services, products and business models to meet those needs.  (

Obviously, patients and families traveling to receive healthcare have many needs. Some are tangibles, such as efficient transportation, lodging, foodservice, shopping, and tourist activities. The intangibles, the cornerstone of the hotel industry culture, encompass the experience during pre-departure, encounter, and post-departure.

A well-balanced medical/wellness tourism destination must address almost all of the tangibles and intangibles, which is well beyond the scope of this paper. Therefore, we explore how the lodging industry can position itself to make its services available to medical/wellness tourists through:

1) supply of accommodations,

2) convenient and efficient business models, and

3) innovative design, amenities, and services.

  1. Supply: Hospitals and healthcare facilities need one another more than ever before. Cost pressures force hospitals to discharge patients in a timely fashion to hotels or homes nearby; demand for hospitality services within hospitals compel healthcare facilities to act more like hotels; and hotel companies see opportunities in building hotels near healthcare facilities. The interplay of these attractions makes a perfect marriage. Hotel industry’s appetite for building hotels near hospitals is further fueled by optimizing occupancy and financing needs:
  2. Occupancy: A study by Bruce Serlen (Hotel Business) stated that hotels near healthcare facilities achieved higher occupancy during 2007 recession. This statement has been amplified by many sources, such HVS. As a result, developers are more interested to build hotels near hospitals to create a recession proof facility. (Bruce Serlen, Hotel Business, 02/07/09, vol. 18, no.3)
  3. Financing: In a flat economy, both banks and hospitals are appropriately interested in financing such projects. Mark Laport, CEO of Raleigh, NC –based Concord Hospitality stated, “With U.S. new hotel development at a near standstill, one of the few niches where new properties continue to get built is the hospital-adjacent hotel market. Developers of these hotels can pitch financiers on their built-in customer base and, in many cases, make side agreements with lodging-starved hospitals that may procure assets such as free parking or below-market-cost land.”
  4. Convenient and efficient business models: Lodging operators and healthcare facilities could integrate in at least in three ways.
  5. First, the most common model in the U.S. in which hotels and hospitals arrange memorandum of understanding (MoUs) to collaborate, sometimes in the form of providing discounted rates, transportation, concierge services, etc.
  6. Second, hotels and hospitals are housed together in the same building. Either the hospital devotes a few stories to patient/family rooms (University of Michigan’s Med Inn, Bumrungrad International Hospital of Thailand) or a major hotel allocates a floor or two to a wellness/medical care facility (Shilla Hotel, Seoul, South Korea).
  7. Third, hotel and hospital build a mixed project under the same ownership. These facilities are strategically situated to accommodate the hotel’s patient needs, the needs of their families, and needs of transient guests (Grand Resort Bad Ragaz, Switzerland).

These models are already established around the world, we do not yet have enough research and analytics to verify the advantages and disadvantages that each model provides, as well as the specific needs of various patients and their families, and the economic viability of each of the models.

For now we wait and see what model will emerge that best matches the advantages of each destination and the needs of their customers.

  1. Innovative design, amenities, and services: While developers may rush to build hospital-adjacent hotels, we have not yet designed a brand that is optimal for medical/wellness tourism travelers. Many challenging issues remain that need further research. The most important of these are, building modifications, amenities modification, and service modifications.
  2. Building modifications: The lodging industry has not yet developed an efficient room design that can fully satisfy the needs of patients, business and leisure travelers. A hotel room resembling a hospital-room is, undoubtedly, less appealing to business or leisure customers yet must thoroughly accommodate ADA requirements by both removing architectural barriers, such as accessibility to all services including pool, sauna, etc., and providing auxiliary aids and telecommunication devises.

    Such an efficient design remains to be seen. Furthermore, entrances to facilities and guest movement within the property must be designed appropriately that are convenient for all target customers’ needs.
  3. Amenities modification: What are the most desirable amenities that patients must have? To my knowledge there is no valid data that considers the needs of all types of guests as well as customer preferences. Logically the following amenities seem smart, but are they?
  4. Adjustable beds
  5. Nurse call systems
  6. Wi-Fi
  7. Bedside controls
  8. Individualized TVs
  9. Hot bath
  10. Individually controlled air
  11. Bathroom amenities suitable for the needs of recovering patients
  12. Family needs, such as microwave, refrigerator, washing machines, etc.
  13. Service modifications: This is one of the most challenging factors that the hotel industry must face partnering with hospitals or wellness centers. Hotels are one of the most important touch points in a patient encounter phase.  To provide seamless services to all types of guests and particularly traveling patients, hotels must consider the following:
  14. Quick check-in process (e.g., at the airport)
  15. Efficient concierge
  16. Translators
  17. First aid training
  18. Prescription delivery
  19. Coordinators
  20. 24-hour room service
  21. Shopping services
  22. Shuttle services
  23. All-inclusive pricing
  24. Nursing and dietitian staff

All of this requires substantial investment in staff training and recruitment activities. The majority of hotel employees are attracted to this industry without major background to deal with patient needs. Research is needed to explore the cost/effectiveness of such training efforts.

Additionally, we need to explore what type of employees will succeed in this segment? What characteristics are needed to model performance? What credentials are necessary? Finally, what services are a must have?

In conclusion, though the industry, as a defined segment, appears more viable than ever before, there are many challenges ahead, among them, community engagement and partnerships, large financing requirements, management systems, distribution channels, legal issues, marketing and branding, standardization, and measurements/benchmarking. All these challenges provide many opportunities to all parties involved, which we hope to witness as other industries have achieved before us.

About the Authors

Dr. Ali A. Poorani, Director Hospitality Associates for Research & Training (HART) is Associate Professor of Hospitality Leadership and Entrepreneurship at the Lerner College of Business & Economics, at the University of Delaware.

Ryan Poorani
is a Business Development Intern and Project Manger at Keck Medical Center of University of Southern California. He has also developed an outlet-wide training program for new employees to foster buy-in and improve new-employee satisfaction at the Ritz-Carton Hotel Company in Los Angeles, California.

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