The market for hot springs resorts is heating up in the United States. Hospitality and real estate companies are investing in new and upgraded facilities, as they vie for a larger segment of the growing pool of wellness tourists.
The demand for thermal/mineral springs tourism worldwide will increase 14.3 percent a year through 2027, according to the 2023 Global Wellness Economy Monitor. The report notes that the U.S. has the sixth largest hot springs market in the world, one that expanded 24.1 percent between 2020 and 2022. Yet, the sector is still underbuilt in the United States. And many of the hot springs facilities that do exist are past their prime or in dire need of updating.
According to Vicky Nash, former executive director of the Hot Springs Association, about 28 states have springs in one form or another. More than a century ago, many forward-thinking operators started developing lodging around the sites, making them popular commercial ventures. But as the 20th century moved on, the hot springs crowd did as well. By the 1970s, hot springs resorts were out of style, and most of the facilities went out of business. But now, many of these dowagers, after being shuttered or used for other purposes for years, are reopening as 21st century wellness centres thanks to multimillion dollar investments.
Those facelifts are happening throughout the country, from Virginia to Colorado to California. According to Jessica Meath, executive director of the Hot Springs Association, renovations of older facilities and new construction around hot springs sites are proceeding at an unprecedented pace. “As the general interest in the wellness sector has grown,” says Meath, “One of the big transitions is the interest in investment in large-scale renovations. Investors are looking at revamping the entire design of the resorts very consciously, and in doing that, are not just adding rooms and pools, but other wellness activities as well.”
Properties both large and small are being gobbled up by developers. During the past year alone, several deals have been announced. For example, Colorado-based hotel company 5 Senses Hospitality made a large investment in The Waters Hotel, Tapestry Collection by Hilton, located in Arkansas’ Hot Springs National Park. Maryland-based DiamondRock Hospitality bought Chico Hot Springs in Montana (which first opened in 1900) last summer for $33 million dollars. In California, IHG Hotels and Resorts alongside investors Weller Development Partners and Pegasus Capital Advisors is building a wellness-focused Six Senses outpost in a part of Napa Valley known for its thermal springs.
Renovation updates
Many investors are choosing to expand existing properties or to completely overhaul long-dormant resorts. For example, Murrieta Hot Springs, located in Riverside, California, opened as a fashionable wellness destination in 1902. But in the latter part of the 20th century, the facility was purchased by a church and was used to host a bible school and religious retreats. After the pandemic, the church decided to relocate its flock. It sold the 46-acre property to the Olympus Real Estate Group, a Texas-based real estate investment and development firm, for $50 million dollars. During the past two years, Olympus has put in another $60 million for renovations. The revitalized resort, which opens on February 1, features 174 rooms, a historic bathhouse, a thermal-focused spa, plus 50 geothermal pools, water features, and cold plunges.
Olympus Real Estate Group is also pouring money into The Springs Resorts in Pagosa Springs, Colorado, which it purchased in 2018. The property currently consists of 25 hot springs pools, 79 guestrooms, a spa and a small fitness studio. The owners are spending $70 million to double the room count, while also adding more geothermal pools, an updated spa, and a farm-to-table restaurant. The updates will debut in mid-2025.
On the other side of the country, The Omni Homestead in Hot Springs, Virginia recently renovated its historic warm springs bathhouses to the tune of four million dollars. The renovation involved a comprehensive restoration of the site’s original bathhouse structures, which were used by the likes of Thomas Jefferson back in the late 1700s. According to Mike Smith, executive vice president of real estate and development of TRT Holdings, the parent company of Omni Hotels & Resorts, “The renovation of the pools was part of a larger $155 million renovation of the entire resort. While the pools were not a top priority, we learned along the way that they will be a financial investment success, not only for The Homestead, but for the local community as well.“ That’s because other hospitality businesses in this rural area are largely dependent on tourism driven by the pools.
Mike Watts, who co-owns Castle Hot Springs in Arizona, bought the property in 2014, after it sat dormant for more than 40 years (that property dates back to the 1890s). To other investors looking to take the leap, Watts recommends looking beyond the springs. “Hot springs are the draw, but as you build, you have to diversify activities beyond them,” says Watts. “The more small pieces that you can put together — horseback rides, adventure courses, nature trails, water-based wellness options — the more reasons people will have to visit and to stay longer.”