Hoteliers will often tell you their spa makes money – but not all that much. A look at the data, however, suggests they should be making a whole lot more, and if they’re not it’s probably their own fault. Put simply, demand for spa services is on the increase but there’s a whole lot more to spa success than meets the eye. This is one area where expert input really does make a difference, and for the best results it starts when the property is still on the drawing board. Hotelintel.co talked to Ingo Schweder of GOCO Hospitality for some specialist insights for those who wish to tap into the rapidly growing spa and wellness sector.
The numbers behind the spa trend are compelling; demographics are the underlying driving factor, and the financial results speak for themselves. Ingo pointed out that the over-50s generation have significant wealth, and unlike the over-50s of previous generations, the current batch are much more interested in living life to the full. Therefore, they are fully aware of the need to take care of themselves to stay healthier for longer. While the 30-50 age group tend not to be big spenders, the millennials also comprise a key market segment for spas. They may not have the spending power of their seniors, but they have far fewer inhibitions when it comes to parting with their cash in exchange for new experiences.
These customer habits can be readily translated into profits, as the data will confirm. The global wellness tourism industry was valued at US$605 billion in 2016, having doubled in the span of just five years. Although well established in Europe and North America, where growth rates barely touch double digits, the sector is making significant gains across Asia, and there are additional reasons for hoteliers to sit up and pay attention.
Wellness travelers spend on average around 60% more than regular travelers. This is partly because they purchase treatments in addition to rooms, and also because their hotel stays tend to be longer. Case studies in Hong Kong, Bangkok, London, Hawaii, and New York present consistently higher spending per day, longer stays, and an increased likelihood of paying for suites whenever spa customers are compared to other guests. The hotel category which tends to top the revenue-per-sqm charts today is the boutique hotel with spa. What’s more, these hotels are not affected by seasonal trends to the same extent as regular properties; low season occupancy figures in Thai resorts have shown wellness hotels thriving while other hotels have only half the number of guests.
Furthermore, as a niche market, wellness customers are inclined to book direct with their hotel of choice or a specialist agency rather than through the OTAs. The repeat customer rates also tend to far exceed the levels experienced by the ‘ordinary’ five-star competitor. In short, it makes sense to have a spa.
However, it is essential that hoteliers who choose to take the spa route know what they are doing right from the start. All too often, hotel developers have expertise in constructing normal hotels, or offices, but limited experience in spas. As Ingo observed, “when a developer understands the business, the spa will be on the upper floors; when he does not, it will be in the basement, simply ticking the ‘spa’ box.”
Mistakes, or simply a lack of understanding at the design stage, can be difficult to fix. “It’s not like F&B – to change a spa takes a jackhammer,” said Ingo. The plumbing cannot be altered without considerable expense, so the layout has to be correct from the outset. The importance of Ingo’s advice on this point is exemplified by one of his own projects in Bangkok, which currently brings in twice the revenue of its nearest rival, in only two-thirds of the space. Functionality is the key; all too many spas look nice, but function badly.
With a well-designed spa ready to open, operational considerations come to the fore. One aspect is yield management. Spas are at their busiest in the afternoons, from 1-6 pm – with one exception; in Japan and China, treatments involving water remain popular late into the evening, so once again it is vital to understand the customers. In Asia-Pacific, Mondays tend to be slow; in California the down-day is Tuesday. Knowing the local tendencies can help in pricing appointments – but what works in a downtown location won’t necessarily work for a resort, and vice-versa. In a resort, customers have fewer alternatives and greater flexibility, so they can be scheduled at the spa’s convenience. In the city, appointments are at a premium, and if a customer cannot have the time they want, they will go elsewhere.
Finally, the service provided will ultimately determine customer satisfaction. In Asia, the biggest issues are training and language. If a therapist cannot communicate adequately with a client, it becomes difficult to deliver services to a high standard. Similarly, if staff are poorly trained, the quality on offer will disappoint. Interestingly, while Western therapists on average are better trained, or more highly skilled in the technical aspects of their trade, Asian hospitality provides a warmth and instinct for service which can make for a better customer experience. And when the staff are all doing a great job, it’s also essential to keep a close eye on all the equipment at all times to make sure the hardware is functioning exactly as it should.
Running a spa can be a highly profitable activity, especially for properties which take the full wellness option, with professional consultations, healthy diet, and a carefully constructed activity program. However, it is all too easy to come up short of the mark in this sector if you proceed with a lack of expertise.