Home Revenue Management Spa 4 Key Points to Identify if Your Hotels Need a Spa

4 Key Points to Identify if Your Hotels Need a Spa

Jul 27, 2018  By 


‘A new hotel without a spa? Is that even possible within the hotel brand that we want? Probably not as per brand standards. Seems like this would be obvious that a spa would round out the hotel’s offerings/amenities. This is not always the case. From an operator’s perspective the spa in the hotel would be a required necessity or one of the amenities. From an owners’ perspective looking at the bottom line, however, the capital investment and the operational costs can hardly be justified.

Based on our combined global knowledge and experience in 4

 ‘A new hotel without a spa? Is that even possible within the hotel brand that we want? Probably not as per brand standards. Seems like this would be obvious that a spa would round out the hotel’s offerings/amenities. This is not always the case. From an operator’s perspective the spa in the hotel would be a required necessity or one of the amenities. From an owners’ perspective looking at the bottom line, however, the capital investment and the operational costs can hardly be justified.

Based on our combined global knowledge and experience in 4 continents we can verify that one of the major problems when choosing to include a spa is the generalization with which the industry as well as financing bodies look at the market and hospitality as a whole.

The hospitality industry especially in terms of accommodation provision has excelled. There are a vast variety of hotel types to be considered. City hotels, business hotels, congress hotels, resort hotels, lifestyle hotels, spa hotels, thermal hotels, etc. Do they all need a spa or more accurately, which ones needs a spa?

When we consider a ‘hotel spa’ it makes a huge difference what kind of hotel we have in mind. Market segments and guest use patterns differ greatly not only by hotel types but also by location, even for the same brand. Mainstream hotel operators may have limited experience in operating spas therefore many choose to outsource such operations. It is no surprise that the more spa-orientated a hotel the less likely it will be a branded property, and more inclined to be an independent, family or white label run hotel. As of today there is no global brand that is specialized in spa hotels, except for few regional brands. This is especially true for spa hotels and resorts that feature natural resources such as thermal water or thalassotherapy.

It is important to emphasize that while the term spa refers to a physical space the more compelling well-being (or less so wellness) refers to a concept or to a specific value propositioning. Consumer data suggests that guests are more and more looking for valuable experiences, and want to know how that makes them feel, and less so for specific spaces.

We consider well-being referring to “A state of being or a feeling which is achieved by connections with family or community, with an emphasis upon making the best of life by self-contentment and less stress.”

 

This can be translated to the following domains:

• Work-life-balance

• Looking one’s best

• Financial stability

• Feeling one’s best

• Spirituality

• Happiness

• Fitness

Although this may appear very academic, the core motivation and demand of most guests may be related to these domains; Work-life Balance, Looking One’s Best, Spirituality, Fitness, Financial Stability, Feeling Good, Happiness. The only question is how any hotel or hotel brand can and will translate one or more of the domains into an actual value proposition, followed by services leading to operational success. This is when global hotel brand standards have difficulty translating and providing meaningful value propositions to their guests.

Hospitality real estate devoted to well-being therefore is not limited to the inside of a spa and has infinite possibilities. We have to echo that each property is unique and different – not only in their environs, but also as a property type and by guest demographic. In order to provide the correct well-being experience, one that allows the guest to unplug, relax, recharge or escape, they must be able to do so by incorporating the entire property, as a whole, not simply by addressing the singular spa space. How about a minibar with fresh fruits and juices and without alcohol as an option at no extra charge?

Hospitality developers as well as operators often think of a spa- or well-being space as something that is relevant only at a four star or higher level. When reviewing hospitality, spa or wellness events: the emphasis focuses on luxury and exclusivity, and we believe that this single-mindedness creates limitations on a variety of available opportunities. Current and more importantly future guests care far less about global brands or star ratings. They are looking for value, services and experiences that are relevant and meaningful to them. And such services do and will not always happen within the walls of the dedicated spa environment.

Any hotel development or even operation review therefore needs to answer the following questions.

1. What does the actual location suggest and what the guest mix will look for in terms of accommodation + well-being?

Any evaluation should calculate carefully whether a spa, fitness or any related facility are necessary in the first place. We understand that guests may value the availability of such services in a city or congress hotel, but the actual use conversion can be rather low. Can the spa provision add that much to ADR that can offset the costs of an underused space?

What we see happening a lot is that hospitality projects overdevelop spa space with extensive capex which then underperforms in terms of financial return (compared to the assumptions made in the feasibility study).

2. What Is The Role Of The Spa In The Hotel Value Propositioning?

The design of the spa, when done correctly while incorporating all relevant demographics and property opportunities, will drive the financial alignment with the rest of the hospitality assets. The bread and butter of the standard hotel spa comes from the maximized treatment room use. The key to creating all-inclusive and attractive well-being experiences and hotel spaces supporting such propositions is the opportunity to attract more room nights through repeat business and referrals as well as incremental F&B covers through offerings that are aligned with the well-being elements. The property, as a whole benefits from the overall revenues, not just spa revenue, driving better returns on investment.

The ‘wellness craze’ may suggest that everything is ‘well’ now .Experienced and savvy guests, however, care far less about labels and opt to pay more for an experience or a clear value proposition. Even if that service or space was not labelled as ‘wellness’. Just a note about the confusion: if a hotel labels some of its rooms as ‘well-rooms’ would not that automatically suggest that the rest of the rooms offer ‘unwell’ experiences?

Successful developments may incorporate other areas of the hotel as well-being components, by offering authentic experiences that bring the local flavor, environment and people into the property. For example, if a property is built at the foot of a sought after hiking mountain, why not incorporate Mother Nature’s fitness gym into the overall program? There are great opportunities for well-being hospitality that can be provided without grand spas and huge costs, when the project is studied carefully.

3. Who Are The Actual Guests Who Are Paying For The Services?

A healthy mix of guests to hotel spas, or more appropriately guests to well-being that are located and offered in an accommodation facility may need to consider multiple segments including hotel guests, walk-ins or membership based guests. Profitable operations may not build on hotel guests only. Certainly, to achieve the healthy guest-mix from the well-being’s perspective may cause challenges in terms of hotel branding, guest flows and use or access controls.

4. What Is The Operation Approach?

An outsourced spa/wellness operation may have limited impact on the hotel’s operational performance. Simultaneously, hotel management may not have the experience to run an entity; profitably and effectively in-house. Cross-referencing and sales may not happen as seamlessly as owners and operators can expect. The deeper inquiry would ask the questions such as: How would the performance of a resort hotel support the brand new million dollar spa when its services do not feature in the wedding packages, although this segment is one of the key demographic demands and expectations for the resort? How is this expense justified to the owner’s representative, and how/when does it satisfy anticipated ADR or ROI?

When well-being is incorporated throughout the operations vs. exclusively offered in the spa the overall impact is way more significant and encompassing. The TRevPAR is often overlooked especially in city destinations, suggesting that well-being spaces may not feature prominently in regards to either value propositioning or operations.

Hotel spas face competition from numerous directions. Standalone spas, wellness centers, gyms or fitness clubs already offer spa-type of services and treatments. Guests can enjoy spa services at their office buildings. Supermarkets offer spa-kits one can enjoy in his/her garden and home. The convergence of so many separate entities, i.e. fitness, spa, beauty may not be reversed.

In this market environmental hotel spas need to come up with something new which is valued by guests. With the market challenge from sharing economy especially in accommodation, hotels can regain their USP if the once spa-based services are reconsidered and remastered. The application of the well-being domains to hotel properties brings the much needed added value that will not only support hotel operations but will also improve the guests’ stays. Do not get carried away by great and expensive interior designs and grand-looking spa environments. The well-being concept can be applied to any hotel at any location. What you need is creative service development and careful service delivery.

 

This article was originally published on HotelExecutive.com. The original content can be found 

here

About Laszlo Puczko

Laszlo Puczko

László is an internationally acknowledged expert and visionary in the health, wellness and medical travel, hospitality and tourism arenas. As an economist specializing in tourism, he has led such benchmark research as “Medical Tourism

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