As the spa business matures into an increasingly global phenomenon, we are seeing an increasing level of specialisation, professionalisation and cross-disciplinary focus. In this in-depth article, spa business specialist Sonal Uberoi explores the top 10 business trends for next year. Find out how you can optimise your business and drive more revenue in 2015.

 

 

List of contents

 

1. Tighter relations between investors, spa operators and hotel operators

2. More specialisation

3. A lean spa business approach

4. Spa managers are becoming more specialist

5. Spa managers will use the Internet to self-educate

6. KPI focus

7. Growing interest in user experience

8. Spa software is no longer a luxury

9. Increased importance of credibility and scientific proof

10. Increase in guest therapists

 

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1. Tighter relations between investors, spa operators and hotel operators

In 2014 we saw a continued disconnect between these stakeholders, sustained by the increasing number of ‘add on’ spas opening in emerging markets, often in resort areas or as part of luxury hotels. As a direct result, many spas in these emerging markets did not have the same business focus as standalone ones outside of the hotel industry. Also, global wellness tourism brought new investors into the market, including many who are not spa-savvy. These investors put money into the spa businesses, but had unrealistic expectations about the return on their investments.

Eva Jensch, principal at Spa Concepts, discusses the problems caused by ‘over the top expectations’ on the part of investors in a LinkedIn discussion we initiated:

 

1 Eva Jensch's comments

 

However, for 2015 we predict the disruption of this trend. As pointed out by Andrew Gibson, VP Spa and Wellness at Fairmont Raffles Hotels International, it is critical for hotel owners and investors to look at just how much spas add to the hotel’s bottom line beyond what happens within the spa’s treatment rooms. Room rates are higher. Bar tabs are higher. Food bills are better. Having a spa within the facility raises the value of that complex, providing significant returns. As a direct result, then, smart investors must consider not just the bottom line within the spa’s financials, but also the benefit and revenue that’s indirectly being brought to the company as a result of the spa being located there.

The approach of Susan Harmsworth, Founder and CEO of ESPA International, also supports this idea. She suggests that stakeholders should look to establish a ‘Return on Ego’ rather than a straight ‘Return on Investment’. In this scenario, the investor does not expect high initial profits, but instead provides a higher quality of service to the customer. The ‘Return on Ego’ investor is more likely to provide better features and service instead of looking just at the bottom line and return on investment. However, the mid to longer term business picture for spas that take a ‘Return on Ego’ seriously is likely to be positive, as satisfied customers communicate their satisfaction on review sites and social media, as well as becoming repeat customers.

The comments of Elisa Silverman, a B2B content writer and spa-lover, supports this approach:

 

2 Elisa's comments

 

It’s easy to get caught up in thinking of what investors and operators want, but if we don’t please our customers then the spa return on investment is likely to be extremely disappointing. Bearing this in mind, we predict that spa investors and hotel owners will begin to look beyond unrealistic expectations and ROI in 2015 and see the bigger picture. As Elaine Fenard, Partner at Spa Strategy, says: “At the end of the day what the investor, operator and consumer want are the same. A good investment that builds a successful operation and a great consumer experience.”

 

2. More specialisation

In 2014 we started to see a move away from the ‘one size fits all’ approach to running a spa. In 2015 we predict that this trend will accelerate as spas look to further leverage their USPs. The spa industry is vast and there are several types of services and treatments in the market, with new ones popping up all the time, particularly in emerging markets. Spas are realising the importance of differentiating themselves and standing out from the crowd.

Spafinder Wellness 365’s excellent 2014 Trends Report: Top Ten Global Spa and Wellness Trends Forecast identifies possible areas of specialisation, including:

1. Hot springs: “There’s never been a hotter moment for thermal springs, with more and more people seeking out this affordable, social, beneficial and natural therapeutic spa experience.”

2. Suspending gravity: “We’re seeing more weightless stress – and mind-melting flotation tanks, chambers and pools at spas, and on the fitness front, a global craze for aerial and anti-gravity classes and yoga, along with new equipment like anti-gravity treadmills.”

3. Death and Spas: “As baby boomers – the group that has been the largest spa-going demographic for decades – start thinking seriously about aging and death, we’re seeing spas of all kinds help clients tackle life’s biggest transition.”

4. Ferocious fitness: “For others, fitness has become a major ingredient in their social life. A key factor in this new “Ferocious Fitness” trend is FUN.”

 

3. A lean spa business approach

This approach is based on Eric Ries’s lean startup methodology. The lean approach is about learning what your customers really want, testing your vision continuously, adapting, and adjusting before it’s too late.

 

3 lean startup image
Eric Ries – The Lean Startup, London Edition [Betsy Weber]

 

Experienced spa operators are now realising that there are two sides to opening a spa:

1. what the spa investor wants to create and build, and

2. what the consumer really wants in terms of their wellness needs

In 2015 we predict that we’ll see more spa operators educating investors and hoteliers about the importance of following the consumer and their needs instead of getting carried away with the plethora of spa and wellness therapies that are on offer today – but which consumers might not be that interested in.

We also predict that 2015 will see more spa managers taking inspiration from Eric Ries’s maxim: Build, Measure, Learn, (then repeat), as they increasingly appreciate the need for testing services and treatments and any other changes they might want to make to their businesses before investing significant sums of money on new facilities, equipment, therapists, and so on.

We’ll also see an increase in spa managers, hoteliers and investors focusing on extracting the most value from their existing spa operations, and their treatment and services offering, as they can, repackaging them and marketing them in more effective ways to each of their target audiences.

 

4. Spa managers are becoming more specialist

As the industry is growing, and has become more mature, there is a growing trend for spa managers to become more specialised. Managers will continue to specialise in different sectors of the industry: preopenings, operations, medical spas, just to mention a few. Also, as spa managers gain more experience and as the market gains maturity, spa managers are recognising what kind of spas they actually like working in and want to leverage their experience.

We will also see the market (investors, hoteliers, spa owners) continue to look for spa managers who don’t necessarily hold a spa management degree, but who have hands-on experience in managing a certain type of spa in a certain market.

Previously, we saw a specific trend for spa managers with a business background being in high demand, but more recently we’ve seen an increasing demand for therapists with a strong therapies and operations background to act as spa managers. This is specifically the case in hotel spas, where the director of operations or the hotel GM already has the business acumen to drive a business forward, but not the knowledge of how to manage the day-to-day of a spa. We predict that this trend will continue into 2015.

Case study: Searching for a specialist spa director for the conversion of the famous Spa Botanica in Singapore to a So Spa

4a Spa-Botanica copia
4d_SpaBot_Singapore_main copia

The former Spa Botanica is a large and prominent spa on the Sentosa island, with nineteen treatment rooms, meditative labyrinths, mud pools, floatation pools, and outdoor pavilions, among other facilities. I was involved with recruiting a sufficiently experienced and specialised spa director. We needed someone who had a sound knowledge of the local market; who had plenty of operations experience; who had experience of being in the field; the ability to liaise in a collaborative manner with corporate office, onsite department heads, local suppliers and government bodies, and owners. It was decided that a therapist background or experience was not necessary for this role.

Sonal Uberoi, founder of Spa Balance Consulting and former Regional Director of Spa Asia Pacific, Sofitel Luxury Hotels

 

 

5. Spa managers will use the Internet to self-educate

There are now many good quality spa management courses available in the market, some online. However, prices for these courses are still extremely high compared to what spa managers are getting paid. This means that spa managers who want to improve their skills may look to free resources on the Internet to continue their education instead.

These resources include blogs by leading industry professionals, slideshow presentations derived from conferences and talks, and in-depth articles by industry publications and organisations, like the Global Spa and Wellness Summit. This latter trend is also enriched by the rise of industry publications targeting emerging markets, like the Spa Professional Mexico.

 

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There is also still a lot of confusion around which courses, resources and training suggestions are credible and perceived as such by the industry.

Aspiring spa professional and graduate Colette Chaubert talks about the problem of gathering spa knowledge and training:

 

6 Colette's comments

 

Freelance journalist Irvina Lew also points out that although courses can provide a good baseline, experience and attitude are also vital:

 

7 Irvine's comments

 

Sadly, companies still seem reluctant to invest in training spa managers in fear that spa managers defect to competitors (especially in emerging markets where spa managers will move for a higher salary). Hopefully, 2016, if not 2015, will see more companies realise that investing in the education of spa managers is actually a great way to improve their bottom line as well as to guide their employees through credible training paths.

 

6. KPI focus

We predict that 2015 will see an increased focus on the essential KPIs that spas need to follow for their type of spa. We’ve seen this ourselves, with the popularity of our recent special report: Boost Your Spa’s Performance with these 10 Key Performance Indicators.

 

Boost your spa's revenue

 

We’ll also see a greater interest in realistic benchmarking as spa managers and hotel managers not only look at what other spas are doing, but also see what a spa can realistically expect to achieve given their business realities (consumer behaviours, economic and socio-political climates, location, staffing challenges, operational specialties, and so on).

For example, a spa manager of a resort spa in the Maldives will expect to have a 55% hotel guest capture rate whereas a spa manager of a hotel in Hong Kong would be happy with a 3-5% capture rate.

The increasing trend to openness in the digital space is also seeing the breaking down of geographic barriers and the beginnings of more open communication. Spa managers are coming out of their ‘holes’ and freely sharing information with one another to see how their spas are performing compared to the rest. We predict this trend will continue to bloom in 2015.

 

7. Growing interest in user experience

The digital world embraced the concept of User Experience (UX) many years ago, but the spa industry (among other industries) has been slow to catch up. However, we are noticing a change in the way spas are doing business. The business-centric approach of doing what you want because you think it will work, and leaving aside the consumer, is starting to look old-fashioned.

In increasingly competitive markets, we predict that spas will be much more engaged with their consumers. Guest satisfaction KPIs, for example, will be on the increase. We also expect to see a growing sophistication in the way that user experience is tracked.

UX experts Jakob Nielsen and Don Norman discuss how to create a great user experience:

The first requirement for an exemplary user experience is to meet the exact needs of the customer, without fuss or bother. Next comes simplicity and elegance that produce products that are a joy to own, a joy to use. True user experience goes far beyond giving customers what they say they want, or providing checklist features. In order to achieve high-quality user experience in a company’s offerings there must be a seamless merging of the services of multiple disciplines, including engineering, marketing, graphical and industrial design, and interface design.

For example, we would expect to see more care taken with UX issues such as these:

1. Putting the spa in the least attractive part of the resort or hotel. Typically, we still see spas in basements or previous storage areas, or other ‘useless’ areas hoteliers want to optimise now. This often results in customers having to traipse down back stairs in their dressing gown, feeling silly. It is not a good start to what is meant to be a luxurious experience.

2. Poor signage, where it is evident that managers have failed to put themselves in the shoes of hotel guests and consider what information they need at what point in their spa experience.

3. Lockers that don’t have enough space. This is an obvious UX problem and detracts from a customer’s satisfaction with the spa as they try and shove their expensive new coat in a space that is just not large enough.

4. Not enough thought given to sound insulation – it is not a good UX for customers to be trying to relax while hearing someone else’s conversation or the sound of people walking up and down a corridor.

5. Treatment beds that are too narrow, low or uncomfortable, leading to customers having a less than satisfactory experience of treatments for which they have often paid a substantial amount of money.

 

8. Spa software is no longer a luxury

As the spa industry is becoming increasingly sophisticated, paper and pencil scheduling for spas will soon become obsolete. We’ll see more spa owners and hoteliers understanding that the time they spend collecting data could be better spent in driving their businesses forward.

Spa owners and hoteliers are also increasingly realising that investing in spa software brings myriad benefits:

1. Improved productivity. A software system allows you to have everything (reservations, inventory tracking, customer preferences, and so on) in one place, and frees your employees’ time so that they can concentrate on what is important – promoting your business and providing seamless service to your guests.

2. Real-time business visibility. The ability to take out reports that give you a concise overview of your business’s performance allows you to be on top of your business instead of in it.

3. Personalisation of service. Most spa software systems today have CRM tools integrated. With just a click, you can access your guest preferences in terms of treatment type, therapist, massage oil, and so on, including reminders for special occasions. This gives your team an opportunity to create amazing spa experiences for your guest and recommend products according to their wellness needs.

4. Effective marketing. With automated social media alerts, spa software systems allow you to promote your business more effectively by adapting your sales initiatives according to your client mix.

5. Guest privacy. Spa software systems permit controlled access to guest information, so users can see only what they need to know to carry out their job. This allows you to maintain the integrity of your guests and their medical information.

So, our prediction for 2015 is that the question will not be: “Should we use spa software?” but “Which spa software should we use?”.

 

9. Increased importance of credibility and scientific proof

Word-of-mouth has always been an important way for spas to market themselves and this won’t change, although the channels used by customers probably will. Instead of recommending a spa to a friend by phone or in person, customers are just as likely to use social media or email to tell friends, family, their wider network, and even complete strangers, about their great spa experience.

We’ll also see a distinct need for spas to show their credibility rather than just talk about it. Anyone can say their spa is brilliant; it doesn’t mean anything and increasingly discerning customers know this. What does work, however, is providing credible proof that customers and industry professionals rate your spa. For example, collecting genuine testimonials with a photo and name will offer credible proof that your spa is good. Be careful of anonymous quotes though – customers might think you’ve just made them up!

Industry awards can reassure customers that your spa is top class, while press articles can be also ‘prove’ the quality of your spa, although consumers are smart enough to see that industry ‘puff pieces’ saying how great your spa is may not be worth much. They will probably investigate further and if consumer reviews say the opposite then they will look elsewhere.

Customers are also getting a bit tougher in terms of wanting proof that a new wonder treatment will actually work. We’ll see spa evidence playing a greater role in spas’ daily operations, as consumers demand this evidence. This is a trend that has been steadily strengthening over the past few years. In 2012 we saw the launch of Wellness Evidence, the first portal in the world providing medical evidence for spa and wellness treatments.

In 2015, spas will need to understand the science behind their products and treatments, and make sure that they do what they claim. Moving forwards, we expect to see more concepts like those developed by ESPA life at the Corinthia Hotel where guests can enjoy “revolutionary lifestyle programmes, covering everything from biological ageing, detox, sleep, weight-loss, pregnancy and general vitality.”

 

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For more information about the importance of scientific proof to spas, see: Access to alternative therapies through spas and wellness centres and Spa Trends 2012 Revisted: Spa Evidence – Showing the Science Behind Spa.

 

10. Increase in guest therapists

Just as the Food & Beverage division in the hotel industry works hard to attract guest chefs, we’ll also see spa therapists and visiting practitioners, who are specialists in certain therapies, taking the lead.

In the Food & Beverage department in hotels, there is a growing trend for hotels to construct a strong sales and marketing campaign around a famous chef that works in another hotel but will be a ‘guest chef’ at their hotel for a certain period. The hotel chef gets lots of publicity; the hosting hotel gets to show that their restaurant serves great fine dining food and can attract great chefs; while the hotel for which the chef usually works gets great exposure. After all, people go to a restaurant because of the reputation of the food and the chef, and less because of the restaurant.

Leading players in the spa and hotel industry are imitating this trend, and we predict that it will become even more popular in 2015. This is because a significant number of customers are searching for a certain type of therapy or well-known therapist, rather than for a spa as such.

Case study: Six Senses Spas

10 Six Senses Duoro Valley

According to a press release about the Six Senses Duoro Valley, “the spa will also include the Six Senses Visiting Practitioner Program which features over 100 of the world’s best wellness healers, practitioners and experts.”

We predict that this list of the top 100 of the world’s best wellness healers, practitioners and experts will be much in demand, both by the industry and by health-conscious customers, in 2015 and beyond.

 

These are our top 10 spa business trends for 2015. Want to make sure that your spa business in on trend for 2015? Contact top spa business specialist Sonal Uberoi to help you optimise your business.

Click here to contact Sonal Uberoi.

 

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