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FocusOn: Medical travel – fad or focus for hotel operators and investors? 1

Focus On
Medical travel – fad or focus for...
2 FocusOn: Medical travel – fad or focus for hotel operators and investors?

Aradhana Khowala, London

FocusOn: Medical travel – fad or focus for hotel operators and investors? 1

Medical travel – the elusive panacea?

2 FocusOn: Medical travel – fad or focus for hotel operators and investors?

Key drivers for the industry

Push Drivers...
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Pull Drivers – How developing nations     ...
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Key medical travel destinations

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Opportunities for hotels                  ...
6 FocusOn: Medical travel – fad or focus for hotel operators and investors?

Where are the profits?                    ...
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How can hotel operators and owners take a ...
8 FocusOn: Medical travel – fad or focus for hotel operators and investors?

Challenges and risks for hotel operators a...
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Who is promoting medical travel?
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Malaysia                                 ...
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The medical travel industry is...
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Jones Lang LaSalle Hotels’ Research
We ha...
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Research Document 3674


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Research Document 3674

  1. 1. FocusOn: Medical travel – fad or focus for hotel operators and investors? 1 Focus On Medical travel – fad or focus for hotel operators and investors?
  2. 2. 2 FocusOn: Medical travel – fad or focus for hotel operators and investors? Contributors Aradhana Khowala, London Karen Wales Vice President Research, Asia Pacific Jones Lang LaSalle Hotels, the first and leading global hotel investment services firm, is uniquely positioned to provide both the depth and breadth of advice required by hotel investors and hotel companies, through a robust and integrated local network. In 2007, Jones Lang LaSalle Hotels provided sale and purchase advice on 259 hotel transactions globally; representing a combined value of US$13.9 billion, a total of 54,763 hotel rooms in 84 cities. In addition advisory and valuation services were provided on 660 assignments globally for 182,048 rooms across more than 300 cities. The global team comprises 270 hotel specialists, operating from 31 offices in 18 countries. The firm’s advice is supported by a dedicated global research team, which produced over 45 publications in 2007 in addition to bespoke client research. Jones Lang LaSalle Hotels’ services span the hospitality spectrum; from luxury single assets and large portfolios to select service and budget hotels, resorts and pubs. Their services include investment sales, mergers and acquisitions, capital raising, valuation and appraisal, asset management, strategic planning, operator selection, management contract negotiation, consulting, industry research and project development services. Jones Lang LaSalle Hotels’ clients have access to the resources of its parent company, Jones Lang LaSalle (NYSE: JLL).
  3. 3. FocusOn: Medical travel – fad or focus for hotel operators and investors? 1 Medical travel – the elusive panacea? Introduction Fancy a nip and tuck as part of your fortnight in paradise? A spot of liposuction to show off that brand new swimsuit? Or even cardiac surgery in a world-class private hospital on the other side of the world? The multi-billion dollar medical travel sector could be just what the doctor ordered for the tourism industry. In the past, the wealthy elite of developing nations used to fly to industrialized nations for their health care needs. Today, that trend is being reversed. People from developed nations are flying in to Thailand, Singapore and India for high-quality medical care and combining it with a restorative holiday. Inexpensive air travel, cutting-edge information technology and international accreditation programs have opened up a world of options for patients – and a potentially lucrative niche market for hotel operators. Latest estimates from McKinsey & Company and the Confederation of Indian Industry - cited in Laura Moser’s “The Medical Tourist” and Bruce Stokes’ “Bedside India” - put gross medical tourism revenues at more than $40 billion worldwide and with a determined effort from healthcare and hospitality organizations, along with enthusiastic support from governments, most pundits think this rapid growth could see the industry rise to $100 billion by 2012 . And it is not only the tourism operators and medical industry that will benefit from this trend: governments and other corporates will take a share of the spending power of medical tourists, making an important contribution to wider economic growth. With an ageing population in many developed nations, a growing obsession with wellness and ever- increasing waiting lists for elective surgeries, hotel operators and investors would be wise to watch this emerging market. The medical travel sector could be an important money-spinner for the industry, as prospective patients often travel with family members, have a longer length of stay than leisure travelers and book many months in advance. This segment of the tourism market is, importantly, not tied to the vagaries of seasons or climatic conditions so it may make up a profitable and reliable base business for hotel operators. For investors, especially in the current market climate with uncertainties surrounding the discretionary nature and higher cost base of travel and tourism, medical travel would be shielded and should remain one of the most resilient of all travel segments. Rather than cannibalizing existing businesses with tourists substituting holidays with medical travel, early indications highlight an augmenting of current travel trends. Hotel operators, Intercontinental Hotels Group, Global Hyatt Corporation, and Marriott International have already entered the foray and formed strategic partnerships in key geographies across the world. Investors also have the opportunity to capitalise on opportunities this sector presents by expanding with existing operators or attracting new ones into this niche market. Medical Tourism has the potential to become a significant tourism segment with investment opportunities ranging from large scale hotel developments adjacent to city hospitals or specialist offerings with some minor modifications to existing product. In either scenario, the amount of incremental capital expenditure will depend on the size and opportunity within the market and should be a key consideration for any investor. 1
  4. 4. 2 FocusOn: Medical travel – fad or focus for hotel operators and investors? Key drivers for the industry Push Drivers – Organisation Over 40 million Americans have no health insurance at all, and millions more are forced to forgo elective procedures that do not for Economic Co-operation and qualify for insurance coverage. Development (OECD) Drivers Increasing National Health Expenditure in USA Ageing population and changing demographics The population of OECD countries is ageing. By 2040 some 30-40% 4,500 25 of the population of developed nations will be over 60 years old, up 4,000 20 3,500 from the current 20-25%. Baby boomers, armed with wealth and the 3,000 15 desire to live longer, healthier lives will be prime targets for medical GDP ($bn) % of GDP 2,500 2,000 travel – whether it be preventive, cosmetic, curative or corrective. 1,500 10 This affluent generation, with a taste for adventure and a pragmatic 1,000 5 eye on the ever-increasing waiting lists for elective surgery in their 500 0 0 own nations, may opt to venture abroad for their medical needs. 19 0 63 19 6 69 19 2 75 19 8 81 19 4 87 19 0 93 19 6 99 20 2 20 05 20 E 20 1E 20 E E 6 6 7 7 8 9 9 0 08 14 17 19 19 19 19 19 19 19 20 1 Percentage of Population above 60 years % of GDP (RHS) National Health Expenditure Source: US Bureau of Census, International Data Base, Merrill Lynch 40% Japan 26% 40% Italy 26% In some European countries, the healthcare system is so stretched 36% Germany 25% that it can take a considerable amount of time to get medical care. France 21% 32% Many popular operations, such as cardiac and orthopedic surgeries, 31% have waiting times of more than 18 months. It is these surgeries, UK 21% along with cosmetic procedures, that developing nations may be 25% US 17% able to capitalize on in their bid to lure medical tourists abroad. 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% The UK and European markets are smaller, due to the universal 2040 2004 provision of publicly-funded healthcare. Nevertheless, the system Source: US Bureau of Census, International Data Base, Merrill Lynch has its own challenges, with significant waiting times for many surgical procedures. Almost all procedures have waiting lists with some up to two years and, in the case of cosmetic procedures, this can blow out to five to eight years. According to a recent survey Income vs Expenditure Trends in Elderly Households (65 Years+) by health tourism website, Treatment Abroad, about 50,000 British 38,000 tourists traveled abroad for treatment in 2006, spending £161 million 36,000 – 25% more than in 2005. Most of the surgeries were cosmetic, 34,000 32,000 including breast augmentation, tummy tucks, liposuction and 30,000 facelifts, worth an estimated £50 million. The most common elective 28,000 26,000 procedures were hip and knee replacements, laser eye surgery and 24,000 cataract removal, worth £37 million. Dental procedures, particularly 22,000 20,000 implants, are another lucrative market with 20,000 British people 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 traveling abroad every year for their teeth – spending a combined £50 million. Income after Taxes Average Annual Expenditure Source: Bureau of Labour Statistics, US Department of Labour Canada also has a universal healthcare system and a strong political commitment to keep it as such, with the requisite long waiting lists for many popular surgeries. Budget cuts have seen High cost of healthcare in industrialized nations 30% of healthcare expenditures in Canada placed outside the public The ageing population in the developed world has put upward system. Consequently, about 32 million Canadians are potential pressure on healthcare costs in OECD nations. Healthcare in the medical tourists. US makes up 16% of GDP, up from 8% in the 1970s and is tipped to reach 20% by the middle of next decade. Nevertheless, millions of Americans find themselves unable to pay for their healthcare needs because they are either uninsured, uninsurable or underinsured.
  5. 5. FocusOn: Medical travel – fad or focus for hotel operators and investors? 3 Pull Drivers – How developing nations Overall cost savings are meeting this demand Lower operating costs for hospitals in the developing world enable a dramatic reduction in the cost of many surgical procedures. If we Affordable and quality alternatives take the example of a cardiac procedure in the US, the cost savings In Asia Pacific, countries such as India, Malaysia, the Philippines, of undertaking the same surgery in a developing nation are almost 50- Singapore and Thailand are developing first-class facilities with highly 75%. This saving of US$15,000 enables medical tourists to purchase skilled medical specialists, many of whom trained abroad. These a round trip air ticket, recover in a five-star resort, buy a new wardrobe hospitals offer highly-qualified and board-certified physicians, top and return home with money to spare. In their report “Barriers to tier nursing staff and medical technicians, and highly personalized Movement of Healthcare Professionals”, the Centre for International care. This translates into high success rates for complicated surgical Trade, Economics & Environment in collaboration with World Tourism procedures and high patient satisfaction rates. Organisation (WTO) Cell, and Ministry of Health & Family Welfare, Government of India, suggests that a knee replacement can be Doctors in these nations can operate at far lower costs because performed in Thailand at one-fifth of the cost incurred in developed medical malpractice insurance is much cheaper. With lower countries and laser eye surgery worth US$3,700 is available in many litigation expenses, lower salaries and lower overheads, hospitals in countries in Asia for around US$730. developing countries can offer high quality medical care at a fraction of the cost of their developed peers. Global Cost Differences for Cardiac Surgery (US$) People’s readiness to venture abroad, which has been enhanced 30,000 by rapid globalization, makes medical travel a far more appealing 25,000 prospect now than even a decade ago. 20,000 Cost in US$ Accreditation and assurance 15,000 Standards for medical facilities across the world are becoming 10,000 increasingly transparent through internationally recognized accreditation and quality certification schemes such as Joint 5,000 Commission International (JCI) and the International Organization 0 for Standardization (ISO). Managerial oversight from world- United United Malaysia Singapore Thailand India States Kingdom renowned medical providers like Mayo and Cleveland Clinic and Destinations Harvard Medical School has gone a long way towards boosting Source: “Apollo Hospitals – First-World Health Care”; Oberholzer-Gee, Khanna and Knoop; consumer trust. Harvard Publications, 2007 Access to information Advances in information technology have opened up a world of Overall, a compelling combination of convenience, quality assurance options. The internet plays a key role in providing information on and affordability have aligned to offer real, high quality medical services and costs worldwide, with websites enabling customers to alternatives to medical tourists faced with significant costs or waiting select hospitals, make travel arrangements and book all-inclusive times at home. Rather than waiting 18 months for a hip replacement packages. Prospective patients can research available options, in the UK, patients could opt for immediate surgery in India at a price compare costs and contact providers for detailed information. They that is within the reach of many. Waiting lists are unheard of in these can compare hospital accreditation, doctor’s credentials, review places and with extensive pre-visit consultations and sharing of medical patient testimonials and communicate directly with service providers records before the actual trip in most cases the patient can be attended and medical specialists. to immediately on arrival. Ease, affordability and growth of international travel One of the key drivers of medical travel has been the ease and affordability of international travel. The continued development of low cost airlines has made air travel affordable and accessible for many. The International Air Transport Association (IATA) expects a 4% average annual growth rate in international passengers between 2007 and 2016, equating to 971 million passengers worldwide by 2016 – an increase of 315 million passengers within a decade.
  6. 6. 4 FocusOn: Medical travel – fad or focus for hotel operators and investors? Key medical travel destinations Patients with no insurance coverage Patients seeking to cut short their waitlists • These patients come from developed countries that either have • These patients, also primarily from developed countries such no, or inadequate, health insurance coverage. as the UK and Canada, face long waiting lists for non-elective surgery and other critical procedures. • Many come from Europe, Australia and Japan but the bulk are • Many of these individuals choose to pay for medical treatment from the US. abroad to avoid long waiting lists even though the national health care system ensures free treatment for all. Patients seeking affordable cosmetic surgery Patients seeking specialised care • This group includes individuals from Europe, Australia and Japan • Includes individuals seeking quality-assured often specialized with a significant number again coming from the US looking for care that is unavailable or in short supply in their own countries. affordable cosmetic procedures which are not covered by most national health insurers. • Increased demand for surgical procedures such as facelifts, hair • A significant number come from the Middle East with destinations transplants, dental treatment and liposuction, as well as non- ranging from Jordan, Saudi Arabia and Bahrain, to more distant surgical procedures such as botox and hair removal, and the countries like Malaysia, Thailand and the US. Many people from relatively high cost of these procedures drives people to find more Bangladesh and Nepal go to India for medical treatment. Medical affordable alternatives abroad. travel from Indonesia to Malaysia, Singapore and Thailand is also increasing.
  7. 7. FocusOn: Medical travel – fad or focus for hotel operators and investors? 5 Opportunities for hotels Which product appeals? Medical travel is a burgeoning market which is aggressively Key benefits Type of medical being developed by both public and private sectors, healthcare tourists organizations and the travel sector. There is enormous potential for partnerships between hotel chains, property developers, airlines, • Close to hospitals, • Suits patients insurance companies and financial institutions. These partnerships airports and city requiring immediate are vital as medical travelers need the security and peace of mind City centre centre. care or corrective provided by purchasing an all-inclusive package for their trip, as they hotels surgery with restricted will not want to leave any part of their visit to chance. Developing movement in cities these tailored packages for medical tourists will enhance the next to hospitals professionalism of the industry and allow for greater transparency • Secluded, out of • Suits patients seeking and consumer trust. reach, quiet locale, cosmetic procedures. Rural hotels ideal for recovery in Medical tourists travel abroad seeking three different types of care: anonymity. preventive, cosmetic and curative or corrective. Depending on their • Comfort, wellness • Ideal for those requirements, they may opt to spend their time in a hospital, hotel facilities, peace and seeking reventive or health spa. This flows into multiple niche markets that can be Resort hotels nature. and wellness, targeted by hoteliers, including the wellness market, with an aim of rejuvenation and illness prevention, relaxation and general wellbeing. relaxation. • Long recuperation • Suits patients time, family who are travelling Long stay/ accommodation, for corrective Medical Tourism Serviced long vacation. or preventive apartments treatments, especially with families. Preventive Cosmetic Corrective/Curative Clearly a specialist medical hotel is not an option for all patients; in fact those that stay are carefully vetted. The patients must be Cosmetic medical Surgical procedures stabilized when they arrive from surgical centers and hospitals in services like like transplants, the area. Those undergoing such procedures as joint replacement, liposuction, dental cardiac operations, hernia repair, cosmetic surgery and liposuction can comfortably implants, breast hip/knee use such medical hotels. Those receiving outpatient chemotherapy augmentation replacement treatment or those in need of physical therapy can also use them. The majority of patients come as planned admissions and may stay for up to 21 days. These specialist medical hotels also offer respite care, giving families a break from caring for sick relatives. Services for specific Wellness services illness prevention like spa, massage, - ayurveda, yoga accupunture
  8. 8. 6 FocusOn: Medical travel – fad or focus for hotel operators and investors? Where are the profits? Impact on occupancy and rate While hotels targeting medical tourists have a broad spectrum of Medical tourists offer a distinct advantage for hoteliers with bookings services to choose from, operators and investors need to focus on often made well in advance and guests staying longer than leisure those services that will offer the largest profit margins for minimal travellers. The high probability of medical tourists travelling with additional outlay. family members also presents an opportunity for additional room nights. Wellness Alternative Cosmetic For a 300-room hotel, with an average occupancy of 70%, a mere Services Spas, Ayurveda, Dental care, 12 additional room nights from medical tourists could effectively offered stress relief, Siddha, plastic surgery, mean a 4% uplift in occupancy over a year. As guests with special rejuvenation treatment breast needs, hotels would be justified in charging a premium rate and centers. for diseases enhancement, be able to block rooms well in advance. This allows for better e.g. arthritis, tummy revenue management. Nevertheless, hotel operators and investors rheumatism reductions, skin must ensure they do not incur extra operating costs from providing treatments additional carers, transport to and from medical facilities and other Profit High Medium Medium modifications like panic alarms in bedrooms. margins for hotels Mixed-use developments Thailand, India, Cuba, Another emerging trend is mixed-use developments, with hospitals Key players India, Thailand Thailand, and hotels building for the future. Hotels are increasingly seeking Eastern Europe, Brazil, locations close to hospitals. The Singapore Marriott Hotel is within Turkey Mexico, five minutes walk from the renowned Mount Elizabeth Hospital in Eastern the centre of the city, as well as other hospitals popular with medical Europe, tourists. Philippines, Singapore In Panama, the opening of the Punta Pacifica Hospital has sparked a raft of developments nearby. The hospital is the first in Latin America to be affiliated with Johns Hopkins Medicine, one of the The wellness market offers the highest profit margins for minimal United States’ most respected healthcare providers, and the additional cost. With stress being declared as one of the causes of Trump Organization is building the Trump Ocean Club adjacent to serious diseases, it is not surprising that people want to manage the hospital. Elsewhere, this trend is being replicated. Narayana their lifestyles more carefully and invest in wellness products and Hrudayalaya, a specialty cardiac institute in India’s Bangalore is services. building ‘Narayana Health City’, a 5,000-bed specialist hospital which will include a five-star hotel in its grounds to accommodate The spa industry comprises several revenue centers with sales medical tourists. extending into the leisure, lifestyle and wellness industries. A typical resort spa offers traditional spa treatments as well as fitness, yoga, retail and food and beverage outlets. This combination of separate but complementary business units magnifies profit potential for hotel investors and offers a diversity of experiences for medical tourists. As travelers become more discriminating, they will continue to seek out hotels and resorts that offer a complete array of amenities. Medical spas, medical travel and rehabilitation at desirable destinations will play a large role in the new generation of spa resorts. In Dubai alone, there are at least 120 spas, health clubs and clinics offering wellness services. By 2015, it is predicted that the United Arab Emirates will be amongst the top spa destinations in the world with an estimated 200 hotels offering world-class facilities.
  9. 9. FocusOn: Medical travel – fad or focus for hotel operators and investors? 7 How can hotel operators and owners take a stake? Conventional wisdom has it that most patients choose their 8. Reform the existing marketing cooperation – Having entered the hospital based on its clinical reputation, location or their physician’s medical travel market, hotels may benefit from a professional recommendations. However, a recent article in McKinsey Quarterly representative body with strict membership criteria to ensure titled “A better hospital experience” underscores just how important high standards of care. This body should: non-clinical factors have become, with patients also considering factors such as comfortable rooms and convenient registration • Create a standard definition of wellness and medical vacations processes. The study indicates that patients are increasingly willing in each country that distinguishes wellness from curative/ to switch hospitals in favor of accommodation that best serves their surgical stays needs. • Acknowledge and establish quality management as a key component in medical travel Clearly, it is important that any foray into the medical travel market is • Intensify training at all levels exhaustively planned. As new entrants to this market, hotel players • Aim for cooperation between tourism and health policy- would benefit from joining forces with other industry and government makers partners. So, how can hotel operators and investors break into this potentially lucrative market? 9. Linking with local traditional medicine practitioners – Countries like India, Hungary, Turkey and Thailand have a strong base 1. Partnerships with accredited hospitals – This is critical to ensure in traditional medicines and/or wellness and there is potential the quality of care. Accreditation by reputable quality-assurance for hotels to promote this alongside more mainstream medical agencies, such as JCI and ISO, could also facilitate connections travel. with foreign insurance companies and help position the hotel brand along with only the best hospitals worldwide. 10. Exploit the synergies in hotel and hospital operating structures – Hotels and hospitals should learn lessons from each other 2. Partnerships with international health insurers – Concerns about and explore the potential of using management contracts or the quality of care and clinical expertise in developing countries leases to manage a medical hotel. has led to a push for both insurance and regulatory regimes. More and more private insurers are joining forces with accredited Hotel operators, investors and their partners in the healthcare sector hospitals. By forming partnerships with international insurers, have a mutual interest in working towards these recommendations. hotels can target customers with portable health insurance. This approach will boost their credibility and allow for streamlined access to potential customers. With opportunities for travel agents 3. Partnerships with government – Hotel companies can align their and hospitality providers on the increase, and with more and more interests with governments which are actively promoting medical patients looking to travel to trusted locations for their medical care, it travel and, through this, gain the ability to blanket market their is important that the medical and hospitality industries work together services. to create a single, compelling and safe proposition for prospective patients. 4. Act systematically and undertake research – Hotels need to understand what medical tourists value in the non-clinical Recent examples of strategic partnerships between hotel operators aspects of their treatment and then decide how and when to and the global medical industry invest to meet those expectations. • Ascott Residences in Kuala Lumpur when completed will be part 5. Agreement with hospitals for assured room nights – One of of an integrated development that will house one of Malaysia’s the key concerns with a hotel serving medical guests is the leading medical, heart and diagnostic centres, HSC Medical prohibitively high operating and fit-out costs. If a hospital were Centre. prepared to underwrite the project or usage by providing a guaranteed number of contracted room nights, this could make • Intercontinental Hotels Group has partnered with the Medical the project viable. Tourism Association, an international, non-profit association made up of the top international hospitals, insurance companies, 6. Selective investment in what really matters – Hotels considering healthcare companies, medical tourism companies, and other any expensive investment aimed at winning new business affiliated companies in Latin America to spearhead an initiative must balance the priorities of hospitals and patients with the to facilitate medical tourism into Latin America. incremental cost of adding, staffing and maintaining those facilities. • Accor group offers maternity care facilities at both the Sofitel Melbourne on Collins and Novotel Melbourne Glen Waverley. 7. Focus on the market that you can best serve – Always consider the hotel’s brand and capabilities and the offerings of • Global Hyatt’s Park Hyatt Sydney has partnered with Mater competitors. For example luxury operators would likely do best Private Hospital with dedicated rooms at the hotel for maternity to appeal solely to the niche market by offering suites with high- facilities. end services for those who can afford it.
  10. 10. 8 FocusOn: Medical travel – fad or focus for hotel operators and investors? Challenges and risks for hotel operators and investors Medical tourists are a potentially lucrative niche market for hotel operators and investors. Nevertheless, the sector is not without its challenges. • Impact on other guests – Although hotels are used to welcoming guests of all kinds, it is not common to have stretchers wheeled through the lobby or hotel porch every day. Some guests may complain about how this affects their experience and this might force hotels to rethink access. • Liability – Medical travel abroad comes with increased risk. Individuals receiving medical care overseas would need to resort to the legal process available in the foreign country should anything go wrong, putting pressure on insurers and partners like hotels. • Staff on-call 24-hours/high operating costs – Hotels may have to invest in panic alarms, patient friendly room layouts and ensuring extra medical staff are on-call 24 hours a day in case of emergency. • Competition from hospitals – Hospitals now have marketing offices that not only reach out to inform potential customers of the types of treatments on offer, but also work in collaboration with local travel agencies to arrange special health packages. They are starting to incorporate health spas and swimming pools and some have even built all-suite hotels to cater to foreign patients. • Getting the mix right – Hotels need to ensure they capture the right blend of medical tourists and not overbook the rooms with one segment. • Just another source market – There is a danger of medical tourists becoming just another source market for hotels not worthy of investing time, energy and resources.
  11. 11. FocusOn: Medical travel – fad or focus for hotel operators and investors? 9 Who is promoting medical travel? Hospitals are increasingly working with medical travel facilitators and traditional travel agencies to offer competitive airfares and affordable vacation packages to exotic destinations. Such partnerships allow all players to focus on their core business which, in the end, benefits the patient as well as the individual businesses. Recognizing the potential for increased tourist numbers and revenues, many governments are also keen to promote medical travel. An overview of the main players in the industry, along with their estimated earnings from medical travel, is summarized below. Country Arriving from Estimated earnings (US$) Strengths India Middle East, US, UK, Canada, $480 million (2005) Cardiac surgery, joint replacements, Ayurveda and other OECD countries other wellness treatments, dental treatments, eye surgery Malaysia Indonesia, US, Japan $40 million (2004) Cardiology, cardiothoracic surgery, cosmetic surgery Singapore Middle East, rest of Asia, Australia, $560 million (2004) Liver transplants, joint replacements, cardiac Russia, Canada, Britain and the US surgery Thailand US, UK, Middle East, China, Japan $1 billion (2006) Cosmetic surgery, organ transplants, dental treatment, joint replacements Poland Germany, UK, other countries from the $65 million (2006) Plastic surgery, dental and fertility treatments Soviet bloc Brazil US, other Latin American countries $4 million (2006) Plastic surgery, dermatology, weight reduction Israel US $40 million (2006) Therapeutic spa, fertility treatments Source: Various industry sources, Government websites India Singapore India’s efforts to promote medical travel took off in late 2002 when In 2003, Singapore created Singapore Medicine, a government- the Confederation of Indian Industry and McKinsey & Co produced industry partnership to develop the city state as one of Asia’s a study (McKinsey and the Confederation of Indian Industry, Press leading medical hubs for medical travelers, research, conventions Trust of India, 2005) showing that medical travel in India was growing and education. The authorities identified three key growth areas: at 30% per year and would be a US$2.2 billion industry by 2012. cardiac and eye surgery as well as cancer treatment. The Singaporean Government plans to invest US$974 million in medical research and has hired McKinsey & Co to consult on the project. The Government is working with private hospital groups to Their ambition is to serve one million foreign patients annually address deterrents such as concerns regarding treatment and care by 2012, up from 400,000 in 2006, and generate US$3 billion in standards, insurance coverage and general infrastructure. As a revenue. Private hospitals are getting onboard by slashing prices result, the quality of Indian hospitals has improved significantly and for tour operators. international accreditation has increased. Insurance coverage for treatment in Indian hospitals is also increasing. According to the Federation of Indian Chambers of Commerce and Industry, the Thailand healthcare market will account for up to 8.5% of GDP by 2012. Furthermore, the Indian Government has a planned investment Thailand is one of the world’s leading healthcare destinations, with pipeline of US$6.5 billion to encourage medical travel, including over 1.4 million medical tourists in 2006 and an annual turnover of setting up affordable hospitals and hotels for patient’s relatives. US$1 billion. Private hospitals offer relatively inexpensive medical In addition to the cost advantages of advanced medical care, the procedures and have concentrated on hospitality and building Government is also promoting alternative treatments like Ayurveda, brand equity. The Thai Ministry of Public Health works closely with Yoga and Kairali. the Thai Ministry of Tourism to promote this market segment. Thailand also built a strong health infrastructure during its economic boom by encouraging private and public participation. Priority was given for foreign direct investment in the healthcare sector, with the Government processing 3,000 foreign direct investment proposals in just four years. The Japanese still form the bulk of medical travelers, although Americans, British and travelers from the Middle East are now also coming in significant numbers.
  12. 12. 10 FocusOn: Medical travel – fad or focus for hotel operators and investors? Malaysia Eastern Europe Although a late entrant to the game, Malaysia has become a Over the past two decades, Eastern Europe has emerged as a significant player. The Government has formed the National significant and popular destination for health tourism. It has a well Committee for the Promotion of Health Tourism, which cooperates established medical infrastructure built around prominent research with private hospitals, tour agencies and other relevant bodies to hospitals at one-third of the costs seen in the developed world. develop packages to attract health tourists. Earnings from medical Its proximity to Western Europe initially convinced tourists from travel were estimated at US$50 million in 2005 and this is tipped to neighboring countries to consider dental treatments and cosmetic grown to at least US$600 million by 2010. The majority of foreign surgery vacations in the East and now people from US have patients receiving medical treatment in Malaysia are from Indonesia, followed suit. Western Europeans travel to Hungary, the Czech Singapore, Japan and West Asia. Recently, Malaysia started working Republic and Poland for spa treatments as well as biomedical with Thailand to explore joint promotion of medical travel. interventions. Specialized travel agencies offer a series of dental treatments, without the high cost and bureaucratic procedures seen Philippines elsewhere. The Philippines has been quick to recognize the opportunities of medical travel. It has a high-quality medical labor force, competitive Western Europe cost of service and wants to become the next hub for medical travel Medical patients from Western Europe travel within the continent in Asia. At the end of 2005, it had hosted medical tourists from China, because the treatments are usually covered by insurance if the Japan and the Republic of Korea as well as France, Germany, patient can produce a doctor’s prescription. Germany has more the Netherlands and the United States. It aims to attract 700,000 than 250 officially recognized spa and health resorts, attracting over medical tourists annually and achieve almost US$250 million in seven million visitors in a year. Italy has more than 200 curative spa revenues. Building a viable medical travel industry is also seen as centers attracting approximately six million people in a year. Spas a key strategy to address the exodus of medical professionals from have also been renowned for a long time in Greece with most of the the Philippines, by creating job opportunities at home. centers found in coastal regions. Latin America Dubai Medical travel into Latin America has increased exponentially over The Middle East has become a key market for medical travel. The the past decade, with both patients and insurance companies looking Dubai Healthcare City is one of numerous specialist ‘cities-within-a- for viable, innovative alternatives to manage healthcare costs. In city’ in Dubai and is targeted at the healthcare and pharmaceutical June 2008 InterContinental Hotels Group and the Medical Travel industries. The US$1.8 billion development consists of a collection Association, an international, non-profit association representing of medical teaching institutions, 17 private hospitals and clinics, international hospitals, insurance companies and other affiliates, pharmaceutical offices and research centers, and spas and joined forces to facilitate medical travel in the region. This network rehabilitation centers. It includes residential villas, apartments and will allow prospective patients to research everything from the five-star hotels and will be fully operational by 2010. The teaching medical care itself, to the specifics of traveling, including pre- and hospital and post-graduate medical training centre in the city will be post-procedure hotel rooms for patients and their families and a affiliated with Harvard Medical School. variety of other amenities.
  13. 13. FocusOn: Medical travel – fad or focus for hotel operators and investors? 11 Conclusion The medical travel industry is driven today by Asia, particularly popular destinations such as Thailand, Singapore, Malaysia and India. International tourists flock there because of the high-quality and relatively low-cost healthcare offered. With destinations such as Eastern Europe, Turkey and Dubai getting in on the act, this market is poised for rapid expansion in the future. Medical travel has a host of proponents, with governments keen for tourism receipts, hospitals seeking to retain their best medical talent and travel agents and airlines working together to offer value-added packages. Increasingly, the hospitality industry is seeing the potential of exploiting this profitable niche market. With medical tourists willing to pay a premium, traveling with an extended family and staying for longer periods than their leisure compatriots, hotels have realized the potential for reliable, high-yielding business that does not come and go with the seasons. Now, all the stakeholders must ensure that the medical travel industry offers accessible, affordable and high-quality care to cement the reputation of this fledgling sector and allow the traveling public to make informed choices about their medical care.
  14. 14. 12 FocusOn: Medical travel – fad or focus for hotel operators and investors?
  15. 15. FocusOn: Medical travel – fad or focus for hotel operators and investors? 13 Jones Lang LaSalle Hotels’ Research We have made an extensive commitment to industry research, integrating it into all our services and providing clients with a clear competitive advantage, based on tracking and analysing the hotel investment market for over a decade. Hotel Investment Outlook (Global) An in-depth forward looking analysis, which tracks global hotel investment trends. The key investment drivers are assessed at a global, regional and country level. Hotel Investor Sentiment Survey (Global) Our unique survey identifies the weight of opinion of future trends and establishes a benchmark position on key issues, covering almost 90 major hotel and resort markets worldwide. Hotel Investment Highlights (Regional) This concise newsletter identifies regional investment trends, hot markets and a forward looking analysis of the hotel investment market. FocusOn (Global and Regional) An in-depth look into significant topics of interest for the hotel investment market. Hotel Intelligence (Regional) Comprehensive market reports, specifically assessing the hotel investment market and the key drivers for future developments. Tailored Research Services Our team is dedicated to providing a seamless research service from local data sourcing and single assignment analysis through to the construction of global investment, development and locational strategies.
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