Hotels Banking on Pickleball

Hotels Banking on Pickleball

The Setup: Host Hotels, a large owner of luxury hotels, held their Investor Day on May 23rd. During the presentation, management discussed future plans for their real estate portfolio, including perspectives on growing their pickleball footprint across their properties.

The Inside View: The team noted the attractive revenue opportunities associated with ‘group experiences’, which uniquely benefit from sporting amenities. They highlighted two case studies: 1) Topgolf Swing Suite at the Marriott Marquis sees high utilization rates among groups and serves as a draw for conference / business groups who are looking for things to do while they’re in town. 2) Coronado Island Marriott converted the existing tennis courts and built new pickleball courts over the past 4 years at the request of hotel members and has hosted tournaments which draw players from across the country and provide new revenue streams.

Diving Deeper: The Coronado Island Marriott shifted plans for their sport facility and amenity renovations in 2019 to meet the demands of their 300+ local community members who sought an expanded pickleball offering. Initial design plans were revised to add an additional four courts, bringing the total to 8 courts, with 3 tennis courts that can be used for tournaments. The Coronado location has since hosted the World Pickleball Tour San Diego Classic, which drew 313 players competing for $5k in cash prizes and generated additional revenue through room reservations, event space bookings, and concessions. Host Hotels sees these active lifestyle offerings as a unique incentive for health conscious consumers when deciding where to stay on vacation.

The Reset’s View: Pickleball court construction (or conversion) appears to be a lucrative opportunity for property owners that have the pre-existing infrastructure in place to host events that benefit the core business (hotel room reservations).

The 5 advantages:
1️⃣ Gives travelers an additional reason to select these hotels. Pickleball courts are a unique amenity for travelers of all ages and skill levels to participate in a social and competitive activity during their trip. More avid players can easily bring their own equipment (try flying with a tennis racquet), and beginners or families can use off-the-shelf paddles to quickly get into a game.

2️⃣ Hosting nationally recognized pro and amateur pickleball tournaments provides ancillary revenue that is hard to monetize from tennis courts. If you assume a high-end hotel has 3-4 tennis courts, then they would struggle to host a legitimate tennis tournament. However, those courts can be converted to 12-16 pickleball courts, making it feasible to host most tournaments. The additional foot-traffic benefits the hotel’s core and higher margin businesses through higher room utilization rates, restaurants, and on-site concessions.

3️⃣ Companies that already own the existing real estate and facilities see better economics from converting their preexisting assets into pickleball courts. For hotels that already host tennis courts or indoor basketball courts as a guest amenity, they’re able to more quickly construct new courts to capture demand, compared to new market entrants that have to first buy land / facilities, determine the type of player base they want to target, and then conduct a full build-out. Stay tuned for a future breakdown of Life Time Fitness’ advantageous economics around court conversion.

4️⃣ Having a valuable sporting amenity opens the door to offer memberships and pay-to-play offerings for local community members who want to access premier facilities. These memberships help hotels open an additional revenue stream, increase the likelihood of cross-selling other hotel offerings to members (e.g. food & beverage), and build brand awareness for members when they travel or recommend accommodations to visitors.

5️⃣ Provides hospitality chains the infrastructure to host pickleball-centric travel experiences, such as Pickleball Getaways, Pickleball Trips, Straight Away Travel, and Destination Pickleball.

As always, feel free to reach out if you want to discuss anything in more detail with us! You can set up a time to talk here.

- Ryan & Braxton