Ms. Fenard

Spas, Health & Fitness

The Spa Brand: No Longer a Trend but a Strategic Decision

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

The hotel industry has taken spas to a level of sophistication that would have taken years to attain in the main stream. According to the International SPA Association (ISPA), hotel spas are the largest growing spa segment. Yet, with the spa industry still in its infancy we continue to hear many of the same questions we did two decades ago. Is spa a trend? Will we end up with an albatross? To answer these questions we need to further understand how spas have evolved.

By looking at the spas of yesterday and today while thoroughly considering what research tells us, we can better understand where spas sit in our future. With this knowledge we can leverage and build our spa portfolios to effectively serve our guests while also meeting financial goals and expectations.

Two decades ago spas were primarily hair salons with a few treatment rooms. Most luxury hotels felt they had to have some element of spa but didn't want them to occupy prime space. Sometimes they appeared in retail areas and were often relegated to subterranean areas considered non-revenue spaces. They were always outsourced, poised to become someone else's "problem." Contracts were established that highly favored the concessionaire and the guest's needs were met with as little fuss as possible. The look and feel of the salon was rarely seamless with the hotel operation.

During the last decade, the tide of change began, albeit slowly. Hotel salons began to add beauty treatment spaces, and the occasional massage room was added to the gym. It was at this time the cruise ship industry really stepped forward. The first purpose-built spa at sea was constructed on the SS Norway in 1990. As the auxiliary revenues from the spas began to grow and it became a viable profit center, more prime space was given to the spa, introducing spa treatments to a captivated, broad market. Day spas were becoming evident in most major cities and the benefits of alternative treatments were becoming more widely understood and accepted.

Toward the end of the 1990's we began to see a significant swing toward building hotel spas, often due more to hotels wanting a point of differentiation than to a strategic plan. In looking for the next "trend," spa came to the forefront. Destination spas such as the United States' Canyon Ranch and Golden Door, Thailand's Chiva Som, and England's Champneys began to garner reputations. The spa industry was becoming more sophisticated and the effect on the bottom line was also becoming apparent.

By 2000, spa was almost as strong as restaurants when development plans were on the table. The larger hotel groups established spa divisions and strategy came into play.

Today's research indicates that building a spa must be a strategic decision. The 2004 ISPA Industry Study (the latest available comprehensive industry study) states the U.S. spa industry (excluding cruise ships) amassed a total $11.2 billion in revenue in 2003. Despite accounting for only 14 percent of all spa establishments, resort/hotel spas generated a staggering 41 percent of the total industry revenue or $4.5 billion.

Lifestyles of Health & Sustainability (LOHAS) describes a $228.9 billion U.S. marketplace for goods and services focused on health, the environment, social justice, sustainable living, and personal wellness and development. The consumers attracted to this market have been collectively referred to as Cultural Creatives, and represent a sizable group in the United States. Approximately 30 percent or 63 million adults in the United States are currently considered LOHAS consumers. The emergence of the Cultural Creatives as significant market drivers is unparalleled in U.S. history, with research supporting that one in four adult Americans is part of the group encompassing nearly 50 million people. These consumers are the future of the health, wellness, and spa industries.

In the past few years, the hotel industry's introduction of fractional units and timeshares has affected spa revenue in a very positive way. As hotel residences show a significant impact on spa revenues, it has become increasingly obvious that spas are also influencing the sale of these residences. This affects the way we think about spa development, as these spas are given a secondary feeder market that is quite substantial.

So what are the answers? Spa is clearly not just a trend, but a strategic decision, and if you plan and operate them effectively, they are lucrative. Spas are here to stay and are still evolving. It has been established that hotel guests stay longer and spend more money when there is a spa. There are formulas that assist the building process, ensuring the spa occupies enough revenue-producing space. Planning and execution have become an art.

The question now becomes, "How do we build on this and create the right spa facility to strategically support the brand and its objectives?" Let's review the options:

Spa is primarily an experience. It is a safe environment in which to relax and perhaps find tools to enhance your quality of life, an enviable objective in today's world. It is also an expensive addition to the build out, and it is a specialized area. Strategic alignment with the associated hotel brand is an essential first step to defining the right spa strategy. While the five options listed are not the only options, they offer an excellent starting point for discussion and offer primary solutions to how best handle a growing spa portfolio. There are many opportunities for creative hybrids and specialized spas, equipped to handle market segmentation. Additionally, spa brands can operate on several levels depending on the size and scope of the project.

Lifestyle is taking center stage in the growth of our hotels, and spa can enhance the guest experience by literally touching the guest in ways no other facility can. How the hotel is perceived as a lifestyle company is directly related to the experiences the guest has while on property. The bottom line is clear; considering the long term spa strategy is the key to building the spa portfolio for maximum return on investment and guest satisfaction.

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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