Luxury hotels are no longer just places to stay; they are increasingly the primary reason travelers choose a destination. Recent large-scale developments—including Nobu Barbuda, a 391-acre property in Barbuda, and Canyon Ranch Austin’s 600-acre wellness campus—exemplify this shift toward self-contained hospitality ecosystems rather than traditional lodging assets.
For instance, the Nobu property consists of a restaurant and beach club and accommodations of 1- to 3-bedroom bungalows with private pools, most with direct beach access, providing an immersive experience. Similarly, Canyon Ranch Austin offers a full wellness campus with spa, fitness and nutrition facilities, multiple dining concepts and private villas, allowing guests to stay on property for the entirety of their visit while accessing a comprehensive health and lifestyle experience.
This evolution extends beyond the luxury segment. Hotels integrating wellness, residential, culinary and experiential components are reshaping development strategies, capital structures and guest expectations across the industry.
The Rise of the Destination Hotel
Affluent travelers increasingly favor all-in-one experiences that reduce the need to leave the property. Responding to this trend, developers are starting to build expansive campuses combining lodging, private villas, wellness facilities, multiple dining concepts and curated programming.
A key element is branded residences, which allow hotels to sell homes tied to the brand while offering access to hotel services. Brands such as The Ritz-Carlton and Auberge Collection leverage these sales to monetize land value, diversify revenue and reduce reliance on nightly rates. From a capital perspective, branded residences provide early liquidity, offset construction costs and improve underwriting certainty, particularly in large, resort-style developments.
While most visible in luxury, this trend influences the wider market. Luxury properties set guest expectations, which cascade to upper-upscale and lifestyle segments. Social media, hotel-focused TV shows like The White Lotus, and media coverage amplify these standards, emphasizing personalization, on-site experiences and integrated amenities.
Implications for Operators and Developers
This evolution requires a rethink of service, design and programming, and there are at least several key implications for operators and developers:
- Service models are evolving. Hotels emphasize curated experiences. Instead of daily housekeeping, think wellness, culinary and activity partnerships requiring sophisticated agreements covering liability, brand standards and revenue sharing.
- Design is a strategic asset. Architectural design is a strategic asset in luxury hospitality. Purposeful spaces —and the way guests move through them—shape perception, engagement and revenue. From arriving by boat to traveling between amenities by bike or cart, journeys through the resort are integral to the experience.
- Amenities are expected. Wellness, flexible gathering areas, coworking lounges and immersive outdoor amenities are no longer perks—they are core expectations that define the modern luxury resort. As these destinations evolve into mixed-use environments, they increasingly function like master-planned communities, bringing complex architectural, zoning and governance considerations that demand an integrated vision and execution.
- Programming is a revenue driver. On-site offerings, from targeted wellness retreats to culinary events, generate new income streams but introduce operational and legal complexity. Hotels must navigate insurance, regulatory compliance and consumer disclosure for activities extending beyond lodging.
What to Expect
Destination-oriented luxury hotels are reshaping the competitive landscape. Hotels now compete not only with nearby properties, but also with wellness retreats, private clubs and lifestyle communities offering a sense of place, exclusivity and a “wow factor” (e.g., access requiring a boat or flight from the mainland).
For owners and investors, success depends on more than RevPAR and occupancy. Revenue diversification, strategic design and long-term guest engagement are increasingly central to asset value. At the same time, hotels functioning as mixed-use communities face heightened legal and regulatory complexity, from residential governance and zoning to consumer protection and tax considerations.
As luxury hospitality continues to redefine expectations, the industry must adapt. In a market where travelers demand more than a room, the hotel itself, including its layout, programming and legal structure, has become the product.
Story contributed by Gita Gandhi, partner at Herrick, Feinstein LLP.
