The challenges the spa industry faces today are numerous. Many of them are a consequence of the way the sector has evolved in recent years. Although spas becoming mainstream is faced with many obstacles, future trends hint towards a more rapid process.
Those spas that are willing to improve the quality of services through specialisation and an appropriate pricing policy will undoubtedly have a competitive advantage in the market. In order to achieve that, it is essential to implement, once and for all, a clear business model focused on the needs of the client along with a coherent pricing policy.
Valuable exchange of ideas
Apart from sharing our opinions on the spa industry, one of the main ideas behind our trade professional blog is to encourage conversation with other experts and professionals in the industry. At Spa Balance, we value the exchange of ideas that can arise from our blog’s content.
After reading our post on budget spas, Mr. Diego Gomez, Owner of the Sabáh Spa in Zaragoza, shared with us some interesting reflections based on his own experience in the industry. Thanks to these reflections we created a very stimulating exchange of ideas with Mr. Gomez. The following content offers some of the most important insights from our conversation.
The development of the spa industry in Spain
During the last decade, Spain experienced a big boom in terms of the number of spas and wellness centres in the market. However, this development in terms of quantity was not matched in terms of quality of services and treatments.
This development was partly due to the economic welfare Spain lived during the past decade. Boosted by the real estate boom and an abundant capital flow, the spa industry was introduced and positioned in the luxury market, but without an appropriate business model to sustain this niche market position.
This growth process brought several negative effects for the industry. Firstly, majority of the spas were managed by unqualified entrepreneurs. Second, investors came in with unrealistic expectations fueled by suppliers of spa products and equipment including construction companies. This process consolidated an ‘elitist’ label within industry where the degree of opulence and the size of the spas ended up justifying ever escalating prices for spa treatments and services.
Third, this pricing structure that was created has proven a lack of flexibility in terms of meeting fluctuations in demand. Fourth, the industry failed to create a defined consumer. Fifth, due to the steady flow of capital, the industry did not feel the need to consolidate an effective business model. Hence, when the crisis hit Spain only those few spas that had implemented a profitable and coherent business model have been able to survive.
Considering the recent development of the spa industry in Spain, the obstacles the industry faces today regarding spas becoming mainstream are also related to the current supply and demand in the market.
On the one hand, the supply continues to be defined by a luxury-centred model and qualified personnel whose specialist services cannot be cheap in a country like Spain. Additionally, the poor level of training and education of professionals in the sector along with the rigid labour system where working hours are not adaptable to market and demand fluctuations, further worsen the problems that the supply faces today.
On the demand side, the general public still sees spas and wellness centres as places where luxurious and pampering services are offered to a more privileged segment of the population. This perception has partly been shaped by the consumerism frenzy that prevailed during the years of economic boom in Spain. The problem now is that these services are being perceived as an indulgence that can be eliminated from the general public’s budget.
The current economic crisis has raised another problem where many spas have cut their costs dramatically without reducing the prices they charge for their services. This is not only creating a lack of consumer confidence but is also jeopardising customer loyalty towards our industry. The loss of consumer confidence in the services provided by our industry relies on the fact that clients still pay high prices for a poorer quality of treatments and customer service. Hence, the danger we face is that the perceived value of our services might be reduced. The rise of aggressive promotions offered by sites like Groupon have accentuated this loss of value.
Moreover, there is still not a clear idea amongst consumers about the value that these centres can provide in terms of health and wellness. This perception has been worsened by the fact that very often professionals within the industry communicate spa services in a contradictory way.
Last but not least, there is an additional challenge the industry faces today: what is it that the consumer is looking for? It is essential to figure out what the client is looking for (relaxation, health, leisure, etc.), and to understand whether all these services can be offered under a specific spa model.
Evolution of the sector
Despite the obstacles that exist regarding spas becoming mainstream, there are already clear indications on the imminence of this process. The ‘popularization’ of spas is not that distant an idea. Going forward, the national social security system will not be able to sustain the growing ageing population and therefore will be forced to seek new partnerships with various related fields including the spa industry. These alliances will enable the health sector to focus on the promotion of preventive services that will minimise the costs involved in reactive models in the longrun.
On the other hand, budget spas are set to be a reality for the future. The key factor will be to improve the pricing policy and to start to define different business models.
In order for the spa industry to face the imminence of its services going mainstream and to create a set of services available to a wider audience, it is important to consider some factors. Firstly, it is essential to improve the training of professionals. Not only at the therapist level but also at the management and investment levels.
Secondly, it is important that we as an industry get together and establish standards in terms of quality of service and treatments. Failing that, it is going to be difficult for the spa industry to change the common perception of spas being seen as luxurious places catering for a more elite and privileged segment of the population. Similarly, that change must be accompanied by an internally coordinated communication within the industry that allows the consumer to understand the benefits that spas can offer in terms of health and wellness.
Initiatives such as SpaEvidence, the world’s first web portal providing information on the medical benefits provided by spa therapies, is a good example to follow in order to improve the internal communication within our industry.
Last but not least, spas must clearly define their level of specialisation and to outline a concrete plan towards the public they want to serve. In so doing, spas will not only improve the quality of the services they provide and but will also be able to implement a pricing policy that goes hand in hand with the level of services that are offered. The question is: Who will be the first to specialise in something and do it well?