How the East and West Work Together to Expand the Hotel Spa Market

By Michael G. Tompkins Executive Recruiter, Hutchinson Consulting | July 16, 2017

In the last decade, we have seen an increased willingness of hospitality and spa companies to cross geographical and cultural divides and move into markets outside of their traditional regions. It is really a function of and a result of globalization, which is impacting all business sectors. One geographical jump that seems to be getting a lot of attention these days is the Asian hospitality market. Big investors in the East are diving head-first into the Western wellness boom by buying landmark spa properties in the United States, recruiting top executive talent to lead their spa divisions in Asia, and integrating their traditional spa modalities with modern wellness culture.

This influx of Asian investors isn’t necessarily seeking greenfield projects or new resorts to enter into the destination hotel market; they’re choosing iconic properties that already have a foothold on the market. For example, Two Bunch Palms, the oldest hot mineral springs resort in the country and the first carbon neutral resort in America sold to CCL Holdings in 2015.

Also, Lansdowne Resort and Spa, a historic property in Leesburg, Virginia, recently sold this past April to Dejia LLC, a first-time U.S. hotel investor based in Hong Kong. Typically, Asian investments are focused on the West Coast (for obvious geographical reasons), but Lansdowne is significant because it is one of the first east coast properties acquired by an Asian investor. Also, it is important to note that one of the investor’s main draws to Landsdowne was its wellness-oriented amenities, including the 12,000-square-foot spa. No doubt Dejia investors saw the opportunity to jump aboard the wellness tourism boom with an already established iconic brand.

Furthermore, last year Glen Ivy Hot Springs was purchased by Thailand-based GOCO Hospitality. GOCO plans to add a comprehensive wellness center, a Medi-Spa, organic farm and retail village, hiking trails, additional hot springs bathing zones, an education center for holistic medicine and a real estate component with 125 residential units—all while continuing to operate the iconic hot springs and spa.

So why are these Asian investors interested in iconic U.S. properties? First, Chinese tourism to the U.S. is at an all-time high. According to the latest United Nations World Tourism Organization World Tourism Barometer, Chinese tourist spent US$ 261 billion traveling abroad in 2016, a huge chunk of which was in North America. Asian investors are aware of this boom and wish to capitalize on it, and because the Chinese real estate bubble has Asian investors seeking alternative places to put their money, they’re looking to the United States. The combination of tourism influx and the wellness boom in the United States makes this an attractive market for these investors. They know the people are coming and want to be there when they do.

Outbound Chinese tourism aside, the ever-growing wellness industry, when paired with spa, continues to see upward trends in growth. According to International SPA Association (ISPA) Industry Studies from the past ten years, the U.S. spa industry has been on a steady incline of 5 percent increase in revenue year after year. ISPA spa revenue statistics show the U.S. spa industry topping US$16 billion. Hoteliers are no longer seeing spas as amenities positioned in the basement, but as full-fledged resources to drive guest numbers and increase hotel revenue. With lifestyle and experiential travel at the height of baby boomer and millennial minds, hotels are looking to spa as differentiators and drivers to room nights.

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Coming up in February 2018...

Social Media: Engagement is Key

There are currently 2.3 billion active users of social media networks and savvy hotel operators have incorporated social media into their marketing mix. There are a few Goliath channels on which one must have a presence (Facebook & Twitter) but there are also several newer upstart channels (Instagram, Snapchat &WeChat, for example) that merit consideration. With its 1.86 billion users, Facebook is a dominant platform where operators can drive brand awareness, facilitate bookings, offer incentives and collect sought-after reviews. Twitter's 284 million users generate 500 million tweets per day, and operators can use its platform for lead generation, building loyalty, and guest interaction. Instagram was originally a small photo-sharing site but it has blown up into a massive photo and video channel. The site can be used to post photos of the hotel property, as well as creating Instagram Stories - personal videos that disappear from the channel after 24 hours. In this regard, Instagram and Snapchat are now in direct competition. WeChat is a Chinese company whose aim is to be the App for Everything - instant messaging, social media, shopping and payment services - all in a single platform. In addition to these channels, blogging continues to be a popular method to establish leadership, enhance reputations, and engage with customers in a direct and personal way. The key to effective use of all social media is to find out where your customers are and then, to the fullest extent possible, engage with them on a personal level. This engagement is what creates a personal connection and sustains brand loyalty. The February Hotel Business Review will explore these issues and examine how some hotels are successfully integrating social media into their operations.