How is the recreational development industry navigating the COVID-19 pandemic and other sea changes of contemporary times?
ULI MEMBER–ONLY CONTENT: Members of ULI’s Recreational Development Councils discuss the impact of COVID-19 on the recreational development industry, changing consumer preferences, popular amenities, the influence of technologies on vacation and leisure experiences, and other trends.
What do today’s consumers want from their vacation, resort, and leisure experiences?
Claire Humber: That’s always the question, especially during disruptive times. Ten years ago, the industry was asking, how is the Great Recession going to change what people want? Today, we’re all pondering how COVID-19 might change things. But whenever we ask the question, we keep coming back to the fundamental response: consumers want to spend time with their family—however they define that—doing the things that they love in an environment where they can relax and enjoy themselves. External factors may change the details, units get bigger or smaller, price points change, but what people want from resorts or vacation homes ultimately doesn’t change.
Bryan Auchterlonie: Until a medical solution is developed, the pandemic will have a lasting and deep impact on the experiences consumers seek compared to those they previously sought. For example, travel to remote destinations with vulnerable health systems and high-density experiences will suffer greatly. Drive-to destinations offering consumers the greatest perception of safety will be early winners. Vacations offering both emotive and restorative amenities to facilitate in-person connections will be attractive. Luxury travel is much more about branded destinations than it is about affiliations with big boxes serviced by anonymous flags. The days of developing massive concrete structures that keep resort travelers inside are going by the wayside, along with massive spas, oversized lobbies, and other high-density offerings.
Jeff Woolson: Consumers are looking for experiences. I went to Baker’s Bay Golf and Ocean Club in Abaco, the Bahamas, and they offer an excursion to an island to feed the pigs who live there. Kids love to feed them, and it creates an experience they’ll remember for a long time. The second-home/vacation-home market has suffered because it’s not like the old days where the family went to the lake house every summer. Today’s consumers want to broaden their experiences: they don’t want to go to the same place over and over again as much as they used to. The fractional ownership model offers consumers the chance to have experiences in different places.
Also, families are more interested in Airbnb-type accommodations so they can be together in one big house, not in separate hotel rooms. I’m starting to see a trend toward building residential homes specifically to be rented to vacationers.
Channing Henry: We are helping a number of clients get involved with glamping and a service-light connection to the environment. Consumers want to create their own experiences as opposed to entering a fully curated, beautifully designed physical space. Glamping has evolved from luxury tents to cabins, treehouses, and groups of Airstream trailers around a campsite, at a variety of service levels and price points. It’s more about the landscape that people want to experience than about the product type.
What amenities are becoming most sought after?
Henry: Sports equipment rental, such as kayaks or bicycles, is popular. Wellness is definitely a major area of expenditure in our economy. Now an estimated $640 million is being spent on wellness tourism each year. It can be a challenge to capture a piece of that money with glamping and service-light offerings. There may be a way to connect guests to local masseurs and yoga classes, for example.
Humber: The number-one thing consumers ask for, over and over again, is trails. The ability to get outside and move through the environment without having to rely on automobiles is extremely important. That’s true for urban and suburban primary-home communities as well as secondary-home communities. People may not want to spend extra for amenity packages, but they’ll always want some level of outdoor recreation and gathering spaces and trails they can walk, hike, bike, and ski on. Trails may not be a primary revenue generator, but if people come to your place to access a trail network, they will buy food in your restaurants, they will sleep in your hotel, and they will drink beer at your brewery.
Woolson: Traditionally one of the most popular amenities, golf courses were overbuilt by residential developers. But different kinds of golf are becoming more popular—foot golf, Frisbee golf, nine-hole golf courses. By far the single biggest craze I’ve seen in the last five years is pickleball. If a resort has one tennis court, it can be turned into two pickleball courts.
Auchterlonie: The best brands are facilitators of experiences—those who can reduce the walls between the guests and the destination and distill that locale for consumers. We’re invested in a boutique hotel that we manage in Sonoma County—a very bespoke experience—and we have five concierges who tailor experiences for our guests. Our mission is to introduce people to the sense of place and help them experience what the place has to offer. We think that will lead to long-term brand retention.
“Trails may not be a primary revenue generator, but if people come to your place to access a trail network, they will buy food in your restaurants, they will sleep in your hotel, and they will drink beer at your brewery.”—Claire Humber, SE Group
How is technology disrupting the leisure and hospitality industries?
Auchterlonie: People used to stay somewhere based on the flag, and they would rely on that flag to provide amenities, food and beverage, and all guest experiences during their vacation. Now, consumers are less loyal, test new brands, and rely much more on reviews from other travelers on sites such as Yelp and Tripadvisor. Importantly, consumers trust direct consumer reviews and the way the brand speaks to their identity. These are much more powerful than longevity or size of the brand.
Henry: Technology means that you don’t necessarily need to be an established brand to provide recreation and accommodations. Owners of extra ranch land, for example, can make it available for glamping via specialized online travel agencies. So technology democratizes the ability to offer guests cool experiences. I think a lot more could be done with technology to enable people to connect with others who are going to the same place to enjoy an activity. For example, it would be a great idea if someone created a platform for avid skiers heading for the same slopes to meet up.
Woolson: The arrival of driverless cars is going to impact resorts because most resorts tend to have extensive parking lots and parking structures. As self-driving vehicles become more common, that will free up land currently used for parking, which will be especially useful for land-restricted properties like oceanfront resorts. Architecture firms are now designing parking structures that can be converted into office buildings or hotel rooms.
Humber: Today’s consumers want flexibility in what they want, how they want it, and when they want it. Technology supports that spontaneity with options like online booking resources that let people compare prices and availability. It can be a challenge for the purveyors to be responsive enough to provide that flexibility and instant gratification. At the same time, technology allows operators to gather information about their users. Vail Resorts, for example, sells hundreds of thousands of Epic season passes each year, and because of this, they know a lot about their customers.
How can the hospitality industry best prepare for and navigate the economic uncertainties ahead?
Woolson: During recessions, drive-to resorts fare better than fly-to resorts. So I think we’ll see those types of properties becoming more popular with investors and consumers. This crisis is not like a hurricane, which might wipe out a region. There, the answer is to rebuild. The coronavirus is causing an unprecedented amount of unemployment throughout the United States, and this will impact tourism throughout the country. It would seem unlikely that this pandemic will be the last one, so hopefully the industry will be better prepared for the future because of this.
Auchterlonie: All in the hospitality industry are learning to do more with less. It will take several years for staffing levels to return to their previous levels. Also, for the foreseeable future we will be very local and parochial consumers of vacations. The drive-to destinations are more likely to prosper, as are outdoor-oriented accommodations that connect people to nature and can provide low-density guest interactions—traditional camping and RVs, glamping, vacation rentals, and other kinds of experiences that involve the beach or the mountains.
Henry: It will be a challenge to recover from the pandemic, just as it was a challenge after the Great Recession. It will be difficult to find capital for new developments because investors will be focusing on value acquisitions. If property owners have the capital, now would be a great time to make smart improvements to increase occupancy once people start traveling again. It seems that consumers are feeling a tremendous amount of loyalty to hotel and restaurant brands. Many hotels are helping out in the crisis by reaching out to cities to offer beds to medical workers and hospitals. That creates a lot of good will, which is one of the greatest assets that every brand operator can capitalize on. It is beautiful to see people banding together to support one another in hard times.
Humber: This is part of a larger conversation about resiliency. The hospitality industry is having to consider how to best sanitize the public domain and how to assure guests that their rooms are germ free. Resorts with trail networks have to consider whether to widen trails or turn them into one-way trails to limit interaction. As designers, we often think about how to use the large amount of space at the base of ski slopes, because in the winter, you need it to accommodate the thousands of people coming in and out, but in the summer you need to scale it down. Now, having such a large amount of space might be an advantage because there is enough room for people to gather and still be separate.
What other trends are affecting the industry?
Auchterlonie: Resort investors and investors in group-oriented destinations have faced particularly challenging outcomes. I expect that there will be significant consolidation of different lodging providers and that the capital markets providers will apply a greater risk premium to the sector.
Henry: I feel consumers are starting to feel more loyalty to brands than they did before and are taking advantage of rewards programs for their loyalty. This has been true with airlines for a while. As more resorts and hotels are built—Nashville, for example, has been experiencing a record growth in the number of beds available over the last several years—loyalty programs are going to drive consumers’ decisions more.
Woolson: I believe that two industries that have struggled since 2008, golf and vacation homes, could get an unexpected shot in the arm due to the impact of the COVID-19. Golf is an outdoor recreational activity that can be played with proper social distancing. Golf courses that are open during this crisis are logging unprecedented rounds. I also think that people will reconsider the benefits of having a second home, especially one you can drive to, based on the recent stay-at-home orders. Thanks to technology, working from home has never been easier, and wouldn’t it be great to have two homes to choose from?
RON NYREN is a freelance architecture and urban planning writer based in the San Francisco Bay area.