Ms. Fenard

Spas, Health & Fitness

Finding the Right Spa Partner

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

Spa is being embraced by a broadening spectrum of consumers, growing beyond traditional demographic profiles and target audiences. As a result, the industry has responded with more choice, offering an array of business models and branded spa concepts that address these niche consumer segments. This of course is a boon for hotel owners, developers and operators in terms of identifying the ideal spa solution for a property's amenity platform. It also makes choosing the ideal spa partner a very critical part of the equation.

There are a number of highly qualified individuals and organizations that specialize solely in the industry of spa, so don't be afraid to seek them out for advice and counsel. But let's first identify what "spa partner" actually means. In the field of spa, a partner can mean anything from an individual consultant to a thoroughly developed ready-to-deploy spa brand. A partner might offer franchising, management services, custom brand creation, design, pre-opening, operations, service standards, retail/product mix, training and any combination thereof. Realize that finding the right spa partner necessitates 1) an understanding of the various spa and customer segments and 2) an analysis of which partners provide the best brand alignment, operational support and spa management infrastructure.

Understanding the Market

In an increasingly segmented spa market, having an understanding of how clientele and usage patterns vary will help you identify those segments which best supports your specific spa objectives. Identifying the appropriate segment for your property will help you choose a spa partner that is experienced in that particular segment, creating a more focused analysis. This overview provides a glimpse at the primary spa segments, although it's important to note that new segments and even hybrid spa programs emerge constantly; keep this in mind if your situation doesn't easily fit within one of these primary segments.

1) Segment

2) Description

3) Full Service/Resort Spa

Offering full locker rooms facilities, wet amenities such as steam/sauna, vitality pools; relaxation lounges and a treatment menu which include a full range of body treatments including massage, skincare, scrubs, wraps, salon service and often fitness and caf'e components. Increasingly common in urban settings as well as resorts; moving toward a more gender neutral customer base.

Destination Spa
Comprehensive spa and wellness services platforms requiring extensive facilities and staff to support the program. Destination Spas offer a range of services depending on focus. These spas promote lifestyle changes through health, wellness and fitness platforms often combined with spiritual elements.

Currently there are very few programs with brand equity; such spas encounter high barriers-to-entry for many consumer segments.

Day Spa
Beauty-oriented, focusing on a range of treatments including massage, skincare and nails; typically female-centric; often located in a limited footprint with no locker rooms.

Medi Spa
Beauty-oriented, focusing on both non-invasive and invasive results-based treatments that can include botox, microdermabrasion, dental services such as tooth whitening; currently predominantly female centric

Wellness/Integrative Health
Holistic wellness programs offering complementary and alternative medicine (CAM) treatments and services which may include Traditional Chinese Medicine (TCM), Ayurvedic, consultation, diagnostics, nutrition, fitness, studio programs and body treatments.

Yoga/Spa
Primarily offering yoga and mind/body studio programs with spa services.

Massage Centre/Clubs
Typically located in an urban setting offering no frill, affordable massage often through a membership or series/package financial model.

Spa Partnership Opportunities
A spa partnership can be established in a variety of ways, but for the purposes of this article, we will examine three common scenarios including third party operators, product partners and co-branding.

Third Party Operators
The reality within the spa industry is that there remains a shortage of qualified spa management professionals who also understand fundamental business and hospitality practices required for success in a hotel or resort spa setting. Additionally, there is a learning curve for hotel, resort and asset management teams as it pertains to fully realizing the revenue and brand building potential of their spa programs. Third party spa operators have emerged as an attractive option to bridge this experience gap and bypass what can be a steep and costly learning curve. National or international spa management companies with expertise in particular segments can offer sophisticated and extensive support services via regional directors and corporate support teams and the technical expertise garnered from developing and operating multiple operations. Meanwhile, local spa operators would offer an in-depth knowledge of the local business environment and a fee structure more appropriate for smaller spa programs, for example, those featuring only three or four treatment rooms. In either case, the proposed spa brand, service platform and design scheme should be consistent and complementary to that of the hotel.

When selecting a third party operator consider the operational infrastructure the company offers and evaluate how that partner will integrate with your existing operations team. Back-of-house systems, reservations software and standard operating procedures must be capable of full integration and adaptation when required. Buy-in from both the spa and hotel management teams will be critical for success. Cross training of hotel and spa staff, and a spa induction program for management and executive teams can ensure a solid and cooperative partnership from inception. Under ideal circumstances, placing the spa director on the executive committee will ensure that transparency and alignment exist.

Ultimately, the spa program must support a seamless guest experience which requires that design, operational and service standards, marketing collateral and retail experience meet or exceed the same criteria of the hotel or resort.

Product Partners
Selecting appropriate professional product line(s) can have a tremendous impact on the spa operation, often influencing the concept, service platform, retail strategy, training and marketing. Identifying the ideal product partner requires evaluation from a variety of angles beyond a simple evaluation of the product line's therapeutic value and product range.

Of critical importance: Are the core values of the product brand, target market, and distribution strategy in line with yours? For example, if your core values include sustainability, does the product line complement those values? If a strong element of your customer base is men, does the product line offer packaging, scents and dedicated product lines which target or consider male consumer preferences? Additionally, what other retail outlets will be selling the product line you have identified? If the product line is available in competitive outlets or outlets which are positioned more or less luxurious than your own, this may negatively or positively impact brand alignment.

From an operational standpoint, the product line's ability to meet your service platform requirements is critical, but of equal importance is the training support provided. What training programs are offered by the product company to support your therapy staff? Does the training provided include retail strategy and implementation standards?

By evaluating a potential product partner on these criteria, you will ensure synchronous integration into your spa program, while realizing the full benefits of the partnership from both an operational and brand alignment standpoint.

Co-branding & Strategic Alliances
Domestically, given an increasingly lean and competitive housing market, developers are jumping at the opportunity to drive the value and unique selling proposition of their residential developments through spa partnerships. One such example is the 45 Province, a 32-storey, 138-unit luxury condo building in Boston which has secured an agreement with the Exhale Spa brand to offer on-site spa and yoga services to residents. On a global scale, strategic alliances and co-branding relationships are being formed between hospitality brands and spa brands in what is clearly a symbiotic relationship. Hotel brands are seeking to drive rate and occupancy through consistently executed branded spa programs while spa brands are seeking rapid global distribution. Brand loyalty is growing among spa consumers who are becoming increasingly spa savvy; the implication is that the correct partnership can influence booking decisions and drive perceived value.

Other recent examples of such agreements include Hilton International's partnership with Spa Chakra and the agreement between The Peninsula Group and ESPA. Notably, neither the Hilton nor the Peninsula Group partnership is exclusive; both Chakra and ESPA-branded spas can be found in competitive properties some of which include Ritz-Carlton, Hyatt and W Hotels.

Challenges in such global partnerships include a spa program's scalability in design and execution, brand relevancy and flexibility across cultures and host hotel environments as well as flexibility in business terms to include franchise, management or lease agreements. Primary threats include brand dilution and inconsistent service levels with the potential of damaging the equity of your hotel brand.

When selecting a spa partner for co-branded relationships one must consider: Will the spa brand differentiate me from my competitors? Are we aligned in terms of target market, design, vocabulary, attitude, and service standards? Does your brand 'communicate' with the spa brand? Is the development and management support infrastructure capable of meeting the distribution requirements and speed-to-market required by the pipeline, considering translation requirements and international licensing and regulatory issues? Are international locations supported by regional offices and infrastructure?

Get Your Partner Involved Early
Clearly, there are many factors which should be considered when taking on a spa partner. Defining what type of spa operation best suits the property or portfolio paired with the financial implications of such a partnership will narrow the field of viable partners and allow you to make an informed decision. Beyond expectations for departmental revenue potential, be sure to consider the impact the right spa partnership can have on brand loyalty, generating lift in rate, occupancy and real estate premiums which can dramatically accelerate ROI potential. While industry leaders are still working to quantify the impact of spa on the value of the asset, Smith Travel Research has quantified the impact on luxury properties as a $76 rate premium and marginal lift in occupancy. Look to the new and upcoming lifestyle residential Canyon Ranch and Miraval developments to prove out the impact on mixed-use wellness resort communities.

Involving a spa consultant and/or representative from the spa operator early in the de\elopment process will pay dividends once the spa is operating. Spa professionals should be involved in initial design charettes with architects to ensure that aesthetic beauty is balanced with operational efficiencies. Opening up a dialogue at the outset of the partnership will support a collaborative effort, ultimately maximizing the positive impact of the spa program.

Marchello Chimenti directs spa market research and feasibility and development services for emerging hospitality brands, existing global luxury brands and portfolios, as well as individual properties throughout the world. Utilizing an extensive database of proprietary historical financial data and research data along with the collective knowledge and experience of the Spa Strategy team, Chimenti and his team lead the industry in providing hotel and resort spa feasibility services.

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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