Research Document 3674

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

Focus OnMedical travel – fad or focus for hotel operators and investors?

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

Contributors

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).

Aradhana Khowala, London

Karen WalesVice President Research, Asia [email protected]


1

IntroductionFancy 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.

Medical travel – the elusive panacea?


Push Drivers – Organisation for Economic Co-operation and Development (OECD) DriversAgeing population and changing demographicsThe population of OECD countries is ageing. By 2040 some 30-40% of the population of developed nations will be over 60 years old, up from the current 20-25%. Baby boomers, armed with wealth and the desire to live longer, healthier lives will be prime targets for medical travel – whether it be preventive, cosmetic, curative or corrective. This affluent generation, with a taste for adventure and a pragmatic eye on the ever-increasing waiting lists for elective surgery in their own nations, may opt to venture abroad for their medical needs.

High cost of healthcare in industrialized nationsThe ageing population in the developed world has put upward pressure on healthcare costs in OECD nations. Healthcare in the 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.

In some European countries, the healthcare system is so stretched that it can take a considerable amount of time to get medical care. Many popular operations, such as cardiac and orthopedic surgeries, have waiting times of more than 18 months. It is these surgeries, along with cosmetic procedures, that developing nations may be able to capitalize on in their bid to lure medical tourists abroad.

The UK and European markets are smaller, due to the universal provision of publicly-funded healthcare. Nevertheless, the system 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 by health tourism website, Treatment Abroad, about 50,000 British tourists traveled abroad for treatment in 2006, spending £161 million – 25% more than in 2005. Most of the surgeries were cosmetic, including breast augmentation, tummy tucks, liposuction and facelifts, worth an estimated £50 million. The most common elective procedures were hip and knee replacements, laser eye surgery and cataract removal, worth £37 million. Dental procedures, particularly implants, are another lucrative market with 20,000 British people traveling abroad every year for their teeth – spending a combined £50 million.

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 30% of healthcare expenditures in Canada placed outside the public system. Consequently, about 32 million Canadians are potential medical tourists.

Key drivers for the industry

Source: US Bureau of Census, International Data Base, Merrill Lynch

Percentage of Population above 60 years

Japan

Italy

Germany

France

UK

US

0% 5% 10% 15% 20% 25% 30% 35% 40%

40%26%

26%40%

36%

32%

31%

25%17%

21%

21%

25%

45%

2040 2004

Income vs Expenditure Trends in Elderly Households (65 Years+)

Source: Bureau of Labour Statistics, US Department of Labour

38,00036,00034,00032,00030,00028,00026,00024,00022,00020,000

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Income after Taxes Average Annual Expenditure

% of GDP (RHS) National Health Expenditure

Increasing National Health Expenditure in USA

GD

P ($

bn)

% o

f GD

P

1960

1963

1966

1969

1972

1975

1978

1981

1984

1987

1990

1993

1996

1999

2002

200520

08E20

11E20

14E20

17E

25

20

15

10

5

0

4,5004,0003,5003,0002,5002,0001,5001,000

5000

Source: US Bureau of Census, International Data Base, Merrill Lynch

Over 40 million Americans have no health insurance at all, and millions more are forced to forgo elective procedures that do not qualify for insurance coverage.


Pull Drivers – How developing nations are meeting this demandAffordable and quality alternativesIn Asia Pacific, countries such as India, Malaysia, the Philippines, Singapore and Thailand are developing first-class facilities with highly skilled medical specialists, many of whom trained abroad. These hospitals offer highly-qualified and board-certified physicians, top tier nursing staff and medical technicians, and highly personalized care. This translates into high success rates for complicated surgical procedures and high patient satisfaction rates.

Doctors in these nations can operate at far lower costs because medical malpractice insurance is much cheaper. With lower litigation expenses, lower salaries and lower overheads, hospitals in developing countries can offer high quality medical care at a fraction of the cost of their developed peers.

People’s readiness to venture abroad, which has been enhanced by rapid globalization, makes medical travel a far more appealing prospect now than even a decade ago.

Accreditation and assuranceStandards for medical facilities across the world are becoming increasingly transparent through internationally recognized accreditation and quality certification schemes such as Joint Commission International (JCI) and the International Organization for Standardization (ISO). Managerial oversight from world-renowned medical providers like Mayo and Cleveland Clinic and Harvard Medical School has gone a long way towards boosting consumer trust. Access to informationAdvances in information technology have opened up a world of options. The internet plays a key role in providing information on services and costs worldwide, with websites enabling customers to select hospitals, make travel arrangements and book all-inclusive packages. Prospective patients can research available options, compare costs and contact providers for detailed information. They can compare hospital accreditation, doctor’s credentials, review patient testimonials and communicate directly with service providers and medical specialists.

Ease, affordability and growth of international travelOne 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.

Overall cost savingsLower operating costs for hospitals in the developing world enable a dramatic reduction in the cost of many surgical procedures. If we take the example of a cardiac procedure in the US, the cost savings of undertaking the same surgery in a developing nation are almost 50-75%. This saving of US$15,000 enables medical tourists to purchase a round trip air ticket, recover in a five-star resort, buy a new wardrobe and return home with money to spare. In their report “Barriers to Movement of Healthcare Professionals”, the Centre for International Trade, Economics & Environment in collaboration with World Tourism Organisation (WTO) Cell, and Ministry of Health & Family Welfare, Government of India, suggests that a knee replacement can be performed in Thailand at one-fifth of the cost incurred in developed countries and laser eye surgery worth US$3,700 is available in many countries in Asia for around US$730.

Overall, a compelling combination of convenience, quality assurance and affordability have aligned to offer real, high quality medical alternatives to medical tourists faced with significant costs or waiting times at home. Rather than waiting 18 months for a hip replacement in the UK, patients could opt for immediate surgery in India at a price that is within the reach of many. Waiting lists are unheard of in these places and with extensive pre-visit consultations and sharing of medical records before the actual trip in most cases the patient can be attended to immediately on arrival.

Global Cost Differences for Cardiac Surgery (US$)

Cost

in U

S$

30,000

25,000

20,000

15,000

10,000

5,000

0United States

United Kingdom

Malaysia Singapore

Destinations

Thailand India

Source: “Apollo Hospitals – First-World Health Care”; Oberholzer-Gee, Khanna and Knoop; Harvard Publications, 2007


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 no, or inadequate, health insurance coverage.

• These patients, also primarily from developed countries such 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 from the US.

• Many of these individuals choose to pay for medical treatment 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 with a significant number again coming from the US looking for affordable cosmetic procedures which are not covered by most national health insurers.

• Includes individuals seeking quality-assured often specialized care that is unavailable or in short supply in their own countries.

• Increased demand for surgical procedures such as facelifts, hair transplants, dental treatment and liposuction, as well as non-surgical procedures such as botox and hair removal, and the relatively high cost of these procedures drives people to find more affordable alternatives abroad.

• A significant number come from the Middle East with destinations ranging from Jordan, Saudi Arabia and Bahrain, to more distant countries like Malaysia, Thailand and the US. Many people from Bangladesh and Nepal go to India for medical treatment. Medical travel from Indonesia to Malaysia, Singapore and Thailand is also increasing.


Key benefits Type of medical tourists

City centre hotels

• Close to hospitals, airports and city centre.

• Suits patients requiring immediate care or corrective surgery with restricted movement in cities next to hospitals

Rural hotels

• Secluded, out of reach, quiet locale, ideal for recovery in anonymity.

• Suits patients seeking cosmetic procedures.

Resort hotels

• Comfort, wellness facilities, peace and nature.

• Ideal for those seeking reventive and wellness, rejuvenation and relaxation.

Long stay/ Serviced apartments

• Long recuperation time, family accommodation, long vacation.

• Suits patients who are travelling for corrective or preventive treatments, especially with families.

Medical travel is a burgeoning market which is aggressively being developed by both public and private sectors, healthcare organizations and the travel sector. There is enormous potential for partnerships between hotel chains, property developers, airlines, insurance companies and financial institutions. These partnerships are vital as medical travelers need the security and peace of mind provided by purchasing an all-inclusive package for their trip, as they will not want to leave any part of their visit to chance. Developing these tailored packages for medical tourists will enhance the professionalism of the industry and allow for greater transparency and consumer trust.

Medical tourists travel abroad seeking three different types of care: preventive, cosmetic and curative or corrective. Depending on their requirements, they may opt to spend their time in a hospital, hotel or health spa. This flows into multiple niche markets that can be targeted by hoteliers, including the wellness market, with an aim of illness prevention, relaxation and general wellbeing.

Opportunities for hotels Which product appeals?

Medical Tourism

Cosmetic

Cosmetic medical services like

liposuction, dental implants, breast augmentation

Services for specific illness prevention

- ayurveda, accupunture

Preventive Corrective/Curative

Surgical procedures like transplants,

cardiac operations, hip/knee

replacement

Wellness services like spa, massage,

yoga

Clearly a specialist medical hotel is not an option for all patients; in fact those that stay are carefully vetted. The patients must be stabilized when they arrive from surgical centers and hospitals in the area. Those undergoing such procedures as joint replacement, hernia repair, cosmetic surgery and liposuction can comfortably use such medical hotels. Those receiving outpatient chemotherapy 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.


Impact on occupancy and rate Medical tourists offer a distinct advantage for hoteliers with bookings often made well in advance and guests staying longer than leisure travellers. The high probability of medical tourists travelling with family members also presents an opportunity for additional room nights.

For a 300-room hotel, with an average occupancy of 70%, a mere 12 additional room nights from medical tourists could effectively mean a 4% uplift in occupancy over a year. As guests with special needs, hotels would be justified in charging a premium rate and be able to block rooms well in advance. This allows for better revenue management. Nevertheless, hotel operators and investors must ensure they do not incur extra operating costs from providing additional carers, transport to and from medical facilities and other modifications like panic alarms in bedrooms.

Mixed-use developmentsAnother emerging trend is mixed-use developments, with hospitals and hotels building for the future. Hotels are increasingly seeking locations close to hospitals. The Singapore Marriott Hotel is within five minutes walk from the renowned Mount Elizabeth Hospital in the centre of the city, as well as other hospitals popular with medical tourists.

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 United States’ most respected healthcare providers, and the Trump Organization is building the Trump Ocean Club adjacent to the hospital. Elsewhere, this trend is being replicated. Narayana Hrudayalaya, a specialty cardiac institute in India’s Bangalore is building ‘Narayana Health City’, a 5,000-bed specialist hospital which will include a five-star hotel in its grounds to accommodate medical tourists.

Where are the profits? While hotels targeting medical tourists have a broad spectrum of services to choose from, operators and investors need to focus on those services that will offer the largest profit margins for minimal additional outlay.

Wellness Alternative Cosmetic

Services offered

Spas, stress relief, rejuvenation

centers.

Ayurveda, Siddha,

treatment for diseases e.g. arthritis, rheumatism

Dental care,plastic surgery,

breastenhancement,

tummy reductions, skin

treatments

Profit margins for hotels

High Medium Medium

Key players Thailand, India,

Eastern Europe, Turkey

India, Thailand

Cuba, Thailand,

Brazil, Mexico, Eastern Europe,

Philippines, Singapore

The wellness market offers the highest profit margins for minimal additional cost. With stress being declared as one of the causes of serious diseases, it is not surprising that people want to manage their lifestyles more carefully and invest in wellness products and services.

The spa industry comprises several revenue centers with sales 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.


Conventional wisdom has it that most patients choose their hospital based on its clinical reputation, location or their physician’s recommendations. However, a recent article in McKinsey Quarterly titled “A better hospital experience” underscores just how important non-clinical factors have become, with patients also considering factors such as comfortable rooms and convenient registration processes. The study indicates that patients are increasingly willing to switch hospitals in favor of accommodation that best serves their needs. Clearly, it is important that any foray into the medical travel market is exhaustively planned. As new entrants to this market, hotel players would benefit from joining forces with other industry and government partners. So, how can hotel operators and investors break into this potentially lucrative market? 1. Partnerships with accredited hospitals – This is critical to ensure

the quality of care. Accreditation by reputable quality-assurance agencies, such as JCI and ISO, could also facilitate connections with foreign insurance companies and help position the hotel brand along with only the best hospitals worldwide.

2. Partnerships with international health insurers – Concerns about the quality of care and clinical expertise in developing countries has led to a push for both insurance and regulatory regimes. More and more private insurers are joining forces with accredited hospitals. By forming partnerships with international insurers, hotels can target customers with portable health insurance.

3. Partnerships with government – Hotel companies can align their interests with governments which are actively promoting medical travel and, through this, gain the ability to blanket market their services.

4. Act systematically and undertake research – Hotels need to understand what medical tourists value in the non-clinical aspects of their treatment and then decide how and when to invest to meet those expectations.

5. Agreement with hospitals for assured room nights – One of the key concerns with a hotel serving medical guests is the prohibitively high operating and fit-out costs. If a hospital were prepared to underwrite the project or usage by providing a guaranteed number of contracted room nights, this could make the project viable.

6. Selective investment in what really matters – Hotels considering any expensive investment aimed at winning new business must balance the priorities of hospitals and patients with the incremental cost of adding, staffing and maintaining those facilities.

7. Focus on the market that you can best serve – Always consider the hotel’s brand and capabilities and the offerings of competitors. For example luxury operators would likely do best to appeal solely to the niche market by offering suites with high-end services for those who can afford it.

8. Reform the existing marketing cooperation – Having entered the medical travel market, hotels may benefit from a professional representative body with strict membership criteria to ensure high standards of care. This body should:

• Create a standard definition of wellness and medical vacations in each country that distinguishes wellness from curative/surgical stays

• Acknowledge and establish quality management as a key component in medical travel

• Intensify training at all levels• Aim for cooperation between tourism and health policy-

makers

9. Linking with local traditional medicine practitioners – Countries like India, Hungary, Turkey and Thailand have a strong base in traditional medicines and/or wellness and there is potential for hotels to promote this alongside more mainstream medical travel.

10. Exploit the synergies in hotel and hospital operating structures – Hotels and hospitals should learn lessons from each other and explore the potential of using management contracts or leases to manage a medical hotel.

Hotel operators, investors and their partners in the healthcare sector have a mutual interest in working towards these recommendations. This approach will boost their credibility and allow for streamlined access to potential customers. With opportunities for travel agents and hospitality providers on the increase, and with more and more patients looking to travel to trusted locations for their medical care, it is important that the medical and hospitality industries work together to create a single, compelling and safe proposition for prospective patients. Recent examples of strategic partnerships between hotel operators and the global medical industry • Ascott Residences in Kuala Lumpur when completed will be part

of an integrated development that will house one of Malaysia’s leading medical, heart and diagnostic centres, HSC Medical Centre.

• Intercontinental Hotels Group has partnered with the Medical Tourism Association, an international, non-profit association made up of the top international hospitals, insurance companies, healthcare companies, medical tourism companies, and other affiliated companies in Latin America to spearhead an initiative to facilitate medical tourism into Latin America.

• Accor group offers maternity care facilities at both the Sofitel Melbourne on Collins and Novotel Melbourne Glen Waverley.

• Global Hyatt’s Park Hyatt Sydney has partnered with Mater Private Hospital with dedicated rooms at the hotel for maternity facilities.

How can hotel operators and owners take a stake?


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.

Challenges and risks for hotel operators and investors


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.

Who is promoting medical travel?

Country Arriving from Estimated earnings (US$) Strengths

India Middle East, US, UK, Canada, other OECD countries

$480 million (2005) Cardiac surgery, joint replacements, Ayurveda and 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, Russia, Canada, Britain and the US

$560 million (2004) Liver transplants, joint replacements, cardiac 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 Soviet bloc

$65 million (2006) Plastic surgery, dental and fertility treatments

Brazil US, other Latin American countries $4 million (2006) Plastic surgery, dermatology, weight reduction

Israel US $40 million (2006) Therapeutic spa, fertility treatmentsSource: Various industry sources, Government websites

IndiaIndia’s efforts to promote medical travel took off in late 2002 when the Confederation of Indian Industry and McKinsey & Co produced a study (McKinsey and the Confederation of Indian Industry, Press Trust of India, 2005) showing that medical travel in India was growing at 30% per year and would be a US$2.2 billion industry by 2012.

The Government is working with private hospital groups to address deterrents such as concerns regarding treatment and care standards, insurance coverage and general infrastructure. As a result, the quality of Indian hospitals has improved significantly and 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 healthcare market will account for up to 8.5% of GDP by 2012. Furthermore, the Indian Government has a planned investment pipeline of US$6.5 billion to encourage medical travel, including setting up affordable hospitals and hotels for patient’s relatives. In addition to the cost advantages of advanced medical care, the Government is also promoting alternative treatments like Ayurveda, Yoga and Kairali.

SingaporeIn 2003, Singapore created Singapore Medicine, a government-industry partnership to develop the city state as one of Asia’s leading medical hubs for medical travelers, research, conventions and education. The authorities identified three key growth areas: 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. Their ambition is to serve one million foreign patients annually by 2012, up from 400,000 in 2006, and generate US$3 billion in revenue. Private hospitals are getting onboard by slashing prices for tour operators.

ThailandThailand is one of the world’s leading healthcare destinations, with over 1.4 million medical tourists in 2006 and an annual turnover of US$1 billion. Private hospitals offer relatively inexpensive medical procedures and have concentrated on hospitality and building brand equity. The Thai Ministry of Public Health works closely with 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.


MalaysiaAlthough a late entrant to the game, Malaysia has become a significant player. The Government has formed the National Committee for the Promotion of Health Tourism, which cooperates with private hospitals, tour agencies and other relevant bodies to develop packages to attract health tourists. Earnings from medical travel were estimated at US$50 million in 2005 and this is tipped to grown to at least US$600 million by 2010. The majority of foreign patients receiving medical treatment in Malaysia are from Indonesia, Singapore, Japan and West Asia. Recently, Malaysia started working with Thailand to explore joint promotion of medical travel.

PhilippinesThe Philippines has been quick to recognize the opportunities of medical travel. It has a high-quality medical labor force, competitive cost of service and wants to become the next hub for medical travel in Asia. At the end of 2005, it had hosted medical tourists from China, Japan and the Republic of Korea as well as France, Germany, the Netherlands and the United States. It aims to attract 700,000 medical tourists annually and achieve almost US$250 million in revenues. Building a viable medical travel industry is also seen as a key strategy to address the exodus of medical professionals from the Philippines, by creating job opportunities at home.

Latin AmericaMedical travel into Latin America has increased exponentially over the past decade, with both patients and insurance companies looking for viable, innovative alternatives to manage healthcare costs. In June 2008 InterContinental Hotels Group and the Medical Travel Association, an international, non-profit association representing international hospitals, insurance companies and other affiliates, joined forces to facilitate medical travel in the region. This network will allow prospective patients to research everything from the medical care itself, to the specifics of traveling, including pre- and post-procedure hotel rooms for patients and their families and a variety of other amenities.

Eastern EuropeOver the past two decades, Eastern Europe has emerged as a significant and popular destination for health tourism. It has a well established medical infrastructure built around prominent research hospitals at one-third of the costs seen in the developed world. Its proximity to Western Europe initially convinced tourists from neighboring countries to consider dental treatments and cosmetic surgery vacations in the East and now people from US have followed suit. Western Europeans travel to Hungary, the Czech Republic and Poland for spa treatments as well as biomedical interventions. Specialized travel agencies offer a series of dental treatments, without the high cost and bureaucratic procedures seen elsewhere.

Western EuropeMedical patients from Western Europe travel within the continent because the treatments are usually covered by insurance if the patient can produce a doctor’s prescription. Germany has more than 250 officially recognized spa and health resorts, attracting over seven million visitors in a year. Italy has more than 200 curative spa centers attracting approximately six million people in a year. Spas have also been renowned for a long time in Greece with most of the centers found in coastal regions.

DubaiThe Middle East has become a key market for medical travel. The Dubai Healthcare City is one of numerous specialist ‘cities-within-a-city’ in Dubai and is targeted at the healthcare and pharmaceutical industries. The US$1.8 billion development consists of a collection of medical teaching institutions, 17 private hospitals and clinics, pharmaceutical offices and research centers, and spas and rehabilitation centers. It includes residential villas, apartments and five-star hotels and will be fully operational by 2010. The teaching hospital and post-graduate medical training centre in the city will be affiliated with Harvard Medical School.


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.

Conclusion


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Istanbultel: +90 212 350 0800fax: +90 212 350 0806

Jakartatel: +62 21 515 5665fax: +62 21 515 5666

Londontel: +44 20 7493 6040fax: +44 20 7399 5694

Los Angelestel: +1 213 680 7900fax: +1 213 680 4933

Madridtel: +34 91 789 1100fax: +34 91 789 1200

Melbournetel: +61 3 9672 6666fax: +61 3 9600 1715

Mexico Citytel: +52 55 5980 8091fax: +52 55 5202 4377

Miamitel: +1 786 662 6900fax: +1 786 662 6901

Milantel: +39 02 85 8686 72fax +39 02 85 8686 70

Moscowtel: +7 495 737 8000fax: +7 495 737 8011

Munichtel: +49 89 2900 8882fax: +49 89 2900 8888

New Delhitel: +91 124 460 5000fax: +91 124 460 5001

New Yorktel: +1 212 812 5700fax: + 1 212 421 5640

Paristel: +33 1 4055 1718fax: +33 1 4055 1868

Rometel: +39 06 4200 6710fax: +39 06 4200 6720

São Paulotel: +55 11 3043 6900fax: +55 11 3043 6999

San Franciscotel: +1 415 395 4900fax: +1 415 955 1150

Shanghaitel: +86 21 6393 3333fax: +86 21 6288 2246

Singaporetel: +65 6536 0606fax: +65 6533 2107

Sydneytel: +61 2 9220 8777fax: +61 2 9220 8765

Tokyotel: +81 3 5501 9240fax: +81 3 5501 9211

Washington, D.C.tel: +1 202 719 5000fax: +1 202 719 5001

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All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without prior written consent of Jones Lang LaSalle. It is based on material that we believe to be reliable. Whilst every effort has been made to ensure its accuracy, we cannot offer any warranty that it contains no factual errors. We would like to be told of any such errors in order to correct them.

Research Document 3674

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Transcript of Research Document 3674