Segmentation to benefit industry
How much is the international spa industry worth?
Andrew Gibson: It is almost impossible to get a true reflection. How do you measure the increased room revenue a five-star hotel generates by adding a spa? The profitability of a hotel’s spa should never be measured purely by the P&L account of the spa itself.
There are at last, however, attempts to try to place a monetary value on a spa and funds and powerful investors are taking a serious interest in the global spa industry. Perhaps they see an industry moving beyond infancy and ready for consolidations and professional groups. This is an area of great interest, having seen how the fitness industry has capitalized on financial and professional management support.
Richard Dusseau: No studies have been conducted to determine the size of the global spa industry. It is important to consider that the spa industry, particularly as it relates to the hotel and resort market, is comprised of several revenue centres, therefore sales extend into several leisure, lifestyle and wellness industries. A typical resort spa offers traditional spa treatments and services as well as fitness, yoga, retail and food and beverage outlets. The combination of these separate but complementary business units magnify the financial scope of what is traditionally considered spa revenue.
So how much do travellers spend on spa services, when on holiday or business?
Richard Dusseau: Many major hotel companies have begun collecting and tracking data on spa performance. However, many multinational hotel spa operators track sales very differently from property to property. Until benchmarking and tracking is standardised, it will be difficult to gather information from individual market segments and revenue centres.
So what’s the potential for the industry internationally over the next few years?
Andrew Gibson: We will see more specialization and great awareness of spa categorization by the public. There is a need to distinguish the difference between a massage parlour, a beauty salon, a spa and a hot tub. All can carry the name spa and all can give a very different experience. Medical spas, medical tourism and rehabilitation at desirable destinations will play a big part in a new movement of spas. Dubai is ideally placed with the Health City and I think it has an excellent opportunity to make this a premier destination in the world.
Richard Dusseau: The spa industry is just emerging in many markets around the world and it will expand as the luxury hotel and resort market expands. In addition, we will find increased segmentation to meet the demand of the mid-market consumers. Specialized spas for specific populations such as men, teens and consumers seeking specific therapies will also continue to grow. The largest growth in the spa industry will eventually be concentrated in developing countries. We will see a marked increase in the number of spas where labour is abundant and payroll costs are low.
So what’s the potential for the Middle East, specifically?
Andrew Gibson: The Middle East has the usual drivers of warm hospitable people, great weather, dynamism and will to succeed and plenty of space to develop. Innovative spas offering genuine service with talented therapists will be able to promote the destination as well. There are some interesting challenges, however, such as the clash of cultures between European visitors and local residents where spa etiquette is very different – but this gives rise to innovation and creativity.
Richard Dusseau: The Middle East is currently developing some of the most luxurious hotels and resorts in the world. As this continues, similar role-models for the spa industry are being developed. Many of the region’s cultural considerations provide an opportunity to set new standards for specialized facilities such as men- or women-only spas. Such products will only expand the existing consumer base.
What trends can we expect to see over the next few years?
Andrew Gibson: One major trend is integrated resorts and gated communities that offer a particular lifestyle combining location, activity and healthy living. These are rapidly developing in the USA and catching on in Asia. The Middle East has a wide catchment area to entice people into such communities. Where spa comes in is that we offer spa, fitness, nutrition, preventive medicine advice and experts that take a genuine interest in your wellbeing. This is the ultimate version of a spa dating back to the Greek and Roman thermae.
Richard Dusseau: As globalization impacts the leisure and business travel industries, it will be important for developers to maintain differentiation by reinforcing the local culture and customs at their spas. Travellers will expect spas in each destination to reflect the location they are visiting. Traditions related to bathing and self-guided services like those found in European countries such as Germany, and Asian countries like Japan will become more prevalent around the world. We will also see the rise of the ‘urban resort’ in major international cities – as urban centres become more congested, local residents will seek out opportunities for retreat and wellness within their own cities.
Finally, are spa facilities a differential in consumers’ choice of hotels?
Andrew Gibson: With a few exceptions the spa in the first decade of this century has done to hotels what the swimming pool did for hotels in the late 70s and what the health club did for hotels in the 80s and 90s. The more successful spas stand out because they have benefited from consultants operating in the industry for the last 20 years who understand how spas work. As spa seekers become more knowledgeable about treatments and experiences, they seek out spas based on the programmes and quality of therapists offered. The mass market that sees a spa treatment as an indulgence will be more enticed by the physical facilities available – even if they do not know how to use them. There is a place for both.
Richard Dusseau: Absolutely. We have witnessed many hotels and resorts around the world reposition their properties with the addition of a well-defined spa concept that supports the overall guest experience. Many guests make travel decisions based the perceived quality of the spa. As travellers become more discriminating in their destination choices they will continue to seek out hotels and resorts that offer a complete array of amenities that allow guests to maintain their lifestyle while travelling. Spas have become the primary vehicle to package and deliver these services.