Up­date on Bangkok’s Lux­ury Spa In­dus­try

Thai-American Business (T-AB) Magazine - - Contents - Writ­ten by: Matthew Bren­nan and Bell Tany­atan­abom

In 2015, Bangkok re­al­ized year- overyear growth in its tourism in­dus­try. In 2016, the Min­istry of Tourism and Sports re­ported that Bangkok’s tourism in­dus­try grew by 10.9% in 2015, pri­mar­ily at­tribut­ing the growth to the in­creased num­ber of in­ter­na­tional ar­rivals to the cap­i­tal city. In 2015 and ac­cord­ing to the Min­istry of Tourism and Sports, a to­tal of 20.87 mil­lion for­eign­ers vis­ited Bangkok ( 15% growth), while their spend­ing grew by 35.4%. This trend con­tin­ued into the first quar­ter of 2016; Bangkok, in quar­ter 1, recorded 9.5% more in­ter­na­tional vis­i­tors than in the same pe­riod in 2015. Bangkok ho­tels are ben­e­fit­ing from more in­ter­na­tional ar­rivals, oc­cu­pancy in Bangkok in the first quar­ter was 82.9%, 2.86% higher than Q1 2015. Given the in­crease in in­ter­na­tional ar­rivals and higher ho­tel oc­cu­pan­cies, Hor­wath HTL Health and Well­ness set out to de­ter­mine if Bangkok’s lux­ury spa fa­cil­i­ties are also “cash­ing in.”

OVER­VIEW OF BANGKOK LUX­URY SPAS

For the pur­poses of our anal­y­sis, we di­vided Bangkok’s lux­ury Ho­tel and Day spa mar­ket­place into three ( 3) dif­fer­ent cat­e­gories in­clud­ing Down­town, River­side, and Sub­ur­ban Spas ( a “Spa Cat­e­gory”). Each class of spa cap­tures a dif­fer­ent type of con­sumer, op­er­ates dif­fer­ently, and is more or less prone to swings in Thailand’s and re­gional eco­nomic per­for­mance. Spa di­rec­tors and spa man­agers at a va­ri­ety of spas within the Spa Cat­e­gories were in­ter­viewed to ex­plore the cur­rent spa land­scape in Bangkok and to de­ter­mine if spas, in the cap­i­tal city, are cash­ing in.

GUEST PRO­FILES OF BANGKOK LUX­URY SPAS

Con­sumer types can be di­vided into four ( 4) cat­e­gories in­clud­ing for­eign leisure vis­i­tors, for­eign busi­ness vis­i­tors, fa­cil­ity mem­bers, and res­i­dents.

BANGKOK LUX­URY HO­TEL SPA GUESTS

As in­ter­na­tional ar­rivals his­tor­i­cally ac­count for more than 60% of Bangkok’s to­tal ar­rivals ac­cord­ing to the Tourism Author­ity of Thailand ( TAT) ho­tel spas cater to­wards a plethora of for­eign guests. Euro­pean and Amer­i­can guests once dom­i­nated the reser­va­tion sched­ule in ho­tel spas; how­ever, cur­rently, ho­tel spas are record­ing higher spa us­age from Asian vis­i­tors.

Amer­i­can and Euro­pean guests still dom­i­nate book­ings at River­side Spas and Sub­ur­ban Spas lo­cated near Su­varn­ab­humi In­ter­na­tional Air­port, ac­count­ing for 95% of to­tal in­ter­nal spa guests, re­ferred to as those stay­ing at the ho­tel. Mean­while, and pri­mar­ily due to the growth in the num­ber of ar­rivals from China ( up by more than 26% in 2015 ac­cord­ing to TAT), the per­cent­age of Chi­nese spa guests at Down­town and Sub­ur­ban Spas ( other than by the in­ter­na­tional air­port) cur­rently ac­count for 50% of to­tal in­ter­nal spa guests.

On av­er­age, be­tween 70% and 90% of to­tal spa guests are stay­ing at the ho­tel where the spa is lo­cated. Ex­ter­nal guests, de­fined as non­res­i­den­tial vis­i­tors to spa fa­cil­i­ties, typ­i­cally ac­count for 10% to 30% of to­tal spa guests, and these guests are Thai na­tion­als or for­eign ex­pats liv­ing in Bangkok. Due to the large num­ber of eas­ily ac­ces­si­ble day spas in Bangkok, ho­tel spas cap­ture lower lev­els of ex­ter­nal guests than ho­tel spas in other cap­i­tal cities in Asia and The Mid­dle East.

Leisure guests his­tor­i­cally ac­count for 70% to 80% of to­tal in­ter­nal spa guests. Due to the na­ture of the ho­tel prop­er­ties, River­side Spas cap­ture more leisure spa guests, whereas Down­town and Sub­ur­ban Spas cap­ture a higher per­cent­age of busi­ness spa guests. Bangkok’s Meet­ings, In­cen­tives, Con­fer­ences and Ex­hi­bi­tions ( MICE) mar­ket is im­prov­ing ( 4.5% growth in MICE ar­rivals in 2015) and this seg­ment, as it con­tin­ues to grow ( pend­ing no ex­ter­nal events in the city that de­ter and hin­der MICE book­ings) will of­fer ad­di­tional busi­ness op­por­tu­ni­ties for Bangkok spas.

Ac­cord­ing to in­ter­views, 70% to 75% of in­ter­nal leisure spa guests at River­side, Down­town, and Sub­ur­ban ho­tels’ leisure guests pre­fer oil, aro­matic, and Swedish mas­sage, while 40% to 50% of in­ter­nal busi­ness spa guests at River­side and Down­town Spas pre­fer par­tic­u­lar treat­ments for re­liev­ing their work stress ( e. g., Stress Re­lease Mas­sage and Aro­matic Re­lease).

The av­er­age treat­ment time for leisure spa guests, across all of the ho­tel spas that were in­ter­viewed, is cur­rently 90- min­utes, 30- min­utes longer than the av­er­age treat­ment time of busi­ness spa guests.

It is in­ter­est­ing to note that Thai mas­sage and Thai foot mas­sage treat­ments are not a pop­u­lar treat­ment type for River­side, Down­town, and Sub­ur­ban Ho­tel Spa guests.

BANGKOK LUX­URY DAY SPA GUESTS

Day spas in Down­town Bangkok typ­i­cally cap­ture 60% to 90% for­eign guests, whereas Day Spas in Sub­ur­ban Bangkok typ­i­cally cap­ture only 10% to 20% for­eign guests. Among the Day Spas in Down­town Bangkok that were in­ter­viewed, Chi­nese con­sumers cur­rently ac­count for 60% of to­tal guests. Sub­ur­ban Day Spas tend to cap­ture a higher pro­por­tion of Thai res­i­dents than Day Spas in other parts of Bangkok - 90% of their guests are Thai.

Lux­ury Day Spas sell a more di­verse se­lec­tion of spa treat­ments than Ho­tel spas. Ac­cord­ing to in­ter­views, 40% to 50% of for­eign guests pur­chas­ing treat­ments at Lux­ury Day Spas buy Thai Mas­sage and

Thai Foot Mas­sage treat­ments and 30% to 35% try ex­otic treat­ments that usu­ally re­quire spe­cial­ized treat­ment rooms and/ or spe­cial­ized equip­ment ( Ti­betan Sound or Quartz Stone).

At Lux­ury Day Spas, 70% to 80% of Thai guests pre­fer to pur­chase West­ern mas­sage and fa­cial treat­ments, such as aro­mather­apy and oil mas­sage, and hy­drat­ing fa­cials. Av­er­age treat­ment times are be­tween 90 and 150 min­utes for Thai guests, tend­ing to be longer than other types of con­sumers.

HOW WELL DO BANGKOK SPAS PER­FORM?

River­side, Down­town, and Sub­ur­ban Ho­tel Spas, on av­er­age, re­al­ize be­tween 5% and 10% rev­enue growth per year. On av­er­age, they gen­er­ate be­tween 3% and 5% of to­tal rev­enue through the sale of spa re­tail prod­ucts. Spas at the up­per- end of the lux­ury range gen­er­ate be­tween 8% and 10% of to­tal spa rev­enue through the sale of re­tail prod­ucts.

Be­tween 20% and 40% of guests ac­cess­ing River­side, Down­town, and Sub­ur­ban Ho­tel Spas ( in­clud­ing guests not stay­ing at the ho­tel) visit mul­ti­ple times. Al­though Bangkok has a plethora of spas, guests of Ho­tel Spas, in­ter­nal and ex­ter­nal, tend to demon­strate loy­alty.

Al­though Bangkok has wit­nessed an in­crease in for­eign vis­i­tors, the ma­jor­ity of its Lux­ury Ho­tel Spas’ guests re­main as West­ern guests, who tend to spend less on spa, and many Ho­tel Spas are fail­ing to cap­ture spa guests from emerg­ing mar­kets. Ho­tel Spas, there­fore, are not “cash­ing in” on the in­crease in for­eign ar­rivals to Bangkok. Ac­cord­ing to our in­ter­views, River­side, Down­town, and Sub­ur­ban Ho­tel Spas are op­er­at­ing to bud­get, any­where be­tween 5% and 8% above last year, sim­i­lar to the long- term rev­enue growth trend.

On the con­trary, Lux­ury Day Spas, pri­mar­ily Down­town Day Spas are “cash­ing in!” They cur­rently op­er­ate any­where be­tween 15% and 20% above their 2015 per­for­mance lev­els. These day spas are cater­ing more care­fully to changes in con­sumer pro­files and of­fer­ing treat­ments at lower prices, with sim­i­lar treat­ment qual­ity, de­sign, and over­all ex­pe­ri­ence.

CON­CLU­SION

The gap be­tween Lux­ury Day Spas and Ho­tel Spas in Bangkok is nar­row­ing. Lux­ury Day Spas are im­prov­ing as seen by: ( 1) the qual­ity of their fa­cil­i­ties; ( 2) their over­all in­te­rior de­sign; and, ( 3) their ser­vice stan­dards. Fur­ther­more, and by ac­tively con­tact­ing and work­ing with var­i­ous tour com­pa­nies, ev­i­dence sug­gests that tar­geted mar­ket­ing to East and North Asian tour groups is be­ing suc­cess­ful and prof­itable. Lux­ury Day Spas are demon­strat­ing higher lev­els of busi­ness acu­men and flex­i­bil­ity to their mar­kets than Ho­tel Spas.

As Bangkok’s spa mar­ket flat­tens, the win­ners in both Lux­ury Day Spas and Ho­tel Spas will be those who are more ag­gres­sive in their sales and mar­ket­ing ac­tiv­i­ties. For Ho­tel Spas to “cash in”, Spa Di­rec­tors must an­a­lyze their mar­ket and ac­tively work and en­gage with the Ho­tel’s sales team to drive free in­de­pen­dent trav­el­ers ( FIT) and group leisure busi­ness and MICE busi­ness to their spa and have a true un­der­stand­ing of the ho­tels’ chang­ing guest pro­files and coun­tries of ori­gin be­cause it is clear to see that spa spend­ing habits vary greatly.

Matthew Bren­nan is Di­rec­tor and Bell Tany­atan­abom is As­so­ci­ate Con­sul­tant at Hor­wath HTL Thailand - Health & Well­ness. They can be con­tacted at mbren­nan@ hor­wath­htl. com and bell@ hor­wath­htl. com re­spec­tively.

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