Owners Demand More Accountability in Wellness/Spa Investments and Operations
By Laszlo Puczko Director of Industry Intelligence, Resources for Leisure Assets | July 10, 2016
It may seem to be relatively straight forward to talk about accountability and investment in spas or wellness centers. Reality however proves otherwise. Interestingly, the industry has not yet accepted a definition for spa, or for wellness centers (or different types of spas). According to the International SPA Association "Spas are places devoted to overall well-being through a variety of professional services that encourage the renewal of mind, body and spirit." Although ISPA's relevant terminologies are often referred to, these are not global definitions. Still, at least there are some descriptions available for spas. Wellness centers represent an even less clear arena.
There are several interpretations of what a spa or wellness center can actually be. The International Wellness, Spa and Travel Monitor for example enlists and collects information about some 15+ different types. Cultural traditions, natural resources and historic events all have contributed to this proliferated typologies.
This fuzzy landscape is not particularly helpful in creating a clear the framework for hospitality and real estate developments or for operational management. Ultimately, it's critical that a development identify exactly what facilities, services and products constitute the spa or wellness center so that the pathway to managing the investment and creating the accountability is transparent and clear for all stakeholders.
From our point of view, spaces dedicated to spas and wellness centers should be considered as a standalone business and profit center with measurable financials. This has seen the owners and project stakeholders we work with gain a better understanding of what to expect from the investment and the impact it will have on the project as a whole.
Furthermore, owners and the owner representatives are now demanding more and more transparency and better performance information to aid analysis of the operations. This gives them more control and influence in the project because of the lack of relevant market intelligence and knowledge of what to compare their investment with. How to benchmark it and how to select the relevant competitors?
Spas or wellness centers range from beauty oriented units through thermal water based centers to medical spas with highly specialized medical equipment. All have very different CAPEX requirements and consequently different ROI opportunities. To make the comparison or benchmarking even more complicated, hotel owners or developers can include rather different elements to what they consider as a spa, e.g. are outdoor pools, exercise equipment or the yoga studio part of the spa? Hence, why I have stated you need to understand what your spa/wellness center actually represents. Why many destination spas have difficulties to provide the expected returns? Why thermal water based spa hotels (or hotels with spas) can indicate the expected returns only if TRevPAR (i.e. combined) figures were considered?
The categorization and service approach can make all the difference. Benchmarks often take place based on physical attributions. Investment and development plans look at the proposed spa or wellness unit as a spatial unit that occupies certain percentage from the floor space. Marketers, however, can confirm that guests look more and more for serviscapes, value proposition and experiences and less and less for spaces with a 'spa' label on them. Of course, this begs the question: how to put a price tag on experiences?
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