Ms. Fenard

Spas, Health & Fitness

Global Spa Industry Trends: Being at the fore front as the industry stabilizes

By Elaine Fenard, Partner & Chief Operating Officer, Europe and U.S., Spatality

Trends: how you perceive them, what causes them and which ones should you pay attention to... starting with segmentation.

The spa industry has come a long way in recent years, gaining market share and respectability along the way and yet, it is still in itself considered a trend by many. To those of us in the industry it is in fact, a profitable business that is sustainable and more to the point, adds incremental revenue to the bottom line. Add to this the fact that spa is also rooted in ancient philosophy, and you have a business that will increase the value of your asset, and is sexy enough to appeal to the consumer on a level they understand, be it relaxation, instant gratification or lifestyle change.

Spa, now a billion dollar industry in the US, still has a way to go before it stabilizes. Consequently, there are many opportunities for hotel operators to position them selves at the forefront of the industry as it begins to settle and even out. It is no longer a competitive advantage to simply be in the spa business. Both operators and investors now have many decisions to make about the segment they wish to compete in and the guest they wish to target.

Spas and spa- related services are generating mass-market appeal while at the same time developing a sophisticated consumer who frequents spas and seeks a particular experience. This experienced spa consumer, frequently found in the luxury segment, makes travel and wellness decisions based on larger lifestyle and individual needs. While this segment is growing more and more aware of lifestyle wellness spas, the broader population is being introduced to spa services through the resort industry, the cruise ship industry and the local day spa. Because guests' spa needs shift and develop as they begin to become more comfortable in a spa environment, it is evident that each segment of the spa industry feeds the others leading to the conclusion that hotel companies can be in all of the spa markets in the same way they operate in various hotel markets.

This move towards a more segmented spa industry can be helpful in defining and adding to the brand positioning of the hotel. Mainstream spa goers can easily identify the difference between destination spas, resort spas and day spas. Establishing the hotel alliance to one or the other clearly defines who you are and what your spa objectives are. Today's trends diversify the spa world creating a clear connection to the hotel property. As spas manifest into hybrid spas created for niche markets, a thread of continuity emerges that links each of the properties within the portfolio.

Examples of hybrid/ niche markets are...

Through the rapid growth of the industry, spa is now an expectation in the 5 star market. Because of this, developers must look to define the space, create differentiation and produce models that are financially viable adding value to the asset.

Corporations who understand the value of spa and the need to provide developers with concise programming are working to create a defining segment of the spa market; the Corporate Spa Brand. Through well developed brands that align with and reinforce the positioning of the hotel, Starwood brought the Heavenly Spa program to market this year, Jumeirah recently announced its spa brand Talise and Fairmont has had success with Willow Stream. With the emergence of the corporate spa brand, consistency will become a defining factor in developing and maintaining brand loyalty.

While growth in the five- star market is expected to continue over the next few years, we can expect to also see substantial growth in the three- and four-star markets. The discretionary spending on spa and lifestyle products in this arena has increased. Spa is defining itself as not just an aspiration and luxury purchase, but as beneficial for maintaining balance and creating an instantly gratifying moment of time to relax and take care of personal needs. In the urban resort this can be an hour after an important meeting, a foot massage after a day of shopping or a weekend break that includes a couples massage and theatre tickets. In the destination resort it provides an alternative activity and a chance to experience treatments that are indigenous to the location. As spa- going becomes an integral part of the individual's regime, the trend will be to look for experiences while traveling and supplement these with regular visits to urban resorts and day spas.

In addition to the growth of the above spa models, the medical spa industry is growing rapidly and is now defined in two clear segments.

A growing segment is Integrated Health, with a focus on wellness and lifestyle, including preventative medical screening, along with body therapies, fitness, yoga, meditation, nutrition and spirituality. To date these programs have been found only in destination spas. As the spa industry grows as a whole, we are beginning to see these programs available in mixed use communities that combine hotel, residential and commercial services. Integrated Health is also under development in select medical facilities that are seeking to go above and beyond what is traditionally expected. This guest -centered philosophy is rooted in education, with proactive and preventative maintenance as the corner stone for content driven programs that address the individual as a whole. Comprehensive programs include both eastern and western diagnostics to provide guests with a guided approach to personal well-being. Integrated Health requires a highly skilled staff under the guidance of a physician and a medical team trained in traditional complimentary and alternative medicine.

The second segment of medical spa are the cosmetic medical spas which provide services such as micro-dermabrasion, injectables, chemical peels and other related cosmetic orientated treatments. While many spas are introducing these treatments on a limited basis, we anticipate that the branded cosmetic spa that has clearly defined boundaries is able to offer high service levels and builds its reputation of quality and trust will be the most successful. Beyond Spa at Harvey Nichols is a good example of how cosmetic spa can be introduced as a self- contained unit.

The biggest challenge foreseen to integrating a medical spa component into a hotel spa model is the liability issue. This can be minimized by partnering with the right physicians. The next challenge is improving the ambiance and the service levels on the medical side and creating a synergy between the spa team and the medical team. It is essential the team works together cross promoting services and developing trust.

Established spa brands look at trends for opportunities to distinguish themselves while reinforcing credibility, quality and consistency. So what are the trends predicted to surface in the next twelve months that could have a significant impact on your business if executed effectively?

Yield Management - As spa approaches critical mass in some markets it will become more important to manage the treatment room inventory. All of the major spa software applications have yield management capabilities. Resort Spas recently produced a white paper on the subject which is extremely informative. Harmes Software has also produced some very good tools to educate spa directors on the benefits of yield management.

Virtual Communities - Extending the spa through web based programs, on-line booking and tools that encourage participation, educate and create loyalty.

Fun - The lighter side of spa is expected to continue to surface in the form of group activities, and social events. Look for opportunities to host events and use your expertise to promote to groups.

Education - Spa consumers are becoming increasingly interested in the benefits of the treatments and the content of the products, be at the forefront offering a forum to collect and relay information. Virtual Communities are a great place to help your guest become better educated on the subject of spa.

Social Responsibility - Responsible and moderate use of water is not always easy in an industry that begins with water. However we can be more responsible in how we use our resources. In general going further than simple recycling, what can your operation do to give back to the world we live in? There are many ways to be socially responsible and our guests deserve to understand and participate in the programs we develop.

Lifestyle / Retail - Enhance the retail experience with lifestyle products and your menu with lifestyle training. This can encompass healthy living, fitness, personal accessories and home care.

Sleep - A wonderful bed is now an expectation for hotel stays, and has greatly enhanced the overnight sleep patterns of the business traveler. Encourage 'the nap' pre- and post- treatment and create spaces that encourage total relaxation. Sleep yoga programs and essential oils that encourage sleep can be introduced to the retail program.

Hybrid Fitness Programs - Cy-Yo is great example of this. The one hour holistic cardio workout combines yoga and cycling for a blend of cardio intensity with internal spiritual strength.

Elaine Fenard is an integral partner in Spa Strategy, one of the world's leading spa consulting and design firms. Joining in the Spa Strategy quest to create innovative and profitable spas, Elaine brought to the team more than 25 years experience in spa development and operations with one of the world's largest hotel companies and the leading international spa operations company. As an industry pioneer and recognized expert, Elaine is a frequent speaker at many conferences, and is a regular guest speaker at Cornell University. Ms. Fenard can be contacted at 303-573-8100 or Elaine@spastategy.com Extended Bio...

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