Ho­tel spas a win-win busi­ness op­por­tu­nity

Bangkok Post - - ASIA| FOCUS - By SCB Eco­nomic In­tel­li­gence Cen­ter (EIC)

Spas are among the ris­ing stars of the global well­ness in­dus­try, with a rapid growth rate that out­paces that of the sec­tor as a whole.

The Global Well­ness In­sti­tute (GWI) has fore­cast that the over­all mar­ket value of the spa in­dus­try world­wide would ex­pand by an av­er­age of 6% a year to US$1.69 tril­lion in 2020, from $1.29 in 2015. That com­pares with a 5% growth rate for the in­dus­try over­all, to $4.9 tril­lion in the same pe­riod.

Three main fac­tors un­der­lie the rapid growth rate of the spa in­dus­try:

The rise in the age­ing pop­u­la­tion: An anal­y­sis by the GWI based on data from the CIA World Fact­book shows that the 20 coun­tries with the high­est mar­ket value for the spa in­dus­try have a pop­u­la­tion me­dian age above 40 years old, high­light­ing the fact that de­mand for spa ser­vices rises along­side the grey­ing trend.

Ris­ing in­comes among mid­dle-class con­sumers world­wide, and the emer­gence of a huge new mid­dle class in de­vel­op­ing Asia in par­tic­u­lar, is lead­ing to an in­crease in spend­ing on per­sonal well-be­ing in ad­di­tion to daily needs.

The fast-paced life­style of mil­len­ni­als is rais­ing stress lev­els and creating more de­mand for places to re­lax and un­wind.

The in­for­ma­tion pro­vided by the GWI also shows that the over­all mar­ket value of the spa in­dus­try in Thai­land is grow­ing by as much as 8% an­nu­ally, from 30 bil­lion baht in 2013 to 35 bil­lion in 2015. This fig­ure puts Thai­land in 16th place in the world and fifth in Asia be­hind China, Ja­pan, South Korea and In­dia.

The main con­sumer group for Thai­land’s spa in­dus­try con­sists of in­ter­na­tional tourists, es­pe­cially those from East Asia in­clud­ing China, Tai­wan, Hong Kong, South Korea and Ja­pan, as well as tourists from the western coun­tries. Th­ese in­ter­na­tional con­sumers also make an im­por­tant con­tri­bu­tions to the growth in in­come for Thai­land’s well­ness tourism sec­tor over­all.

The anal­y­sis by GWI in­di­cates that the mar­ket value of global well­ness tourism is pro­jected to grow by 7% per year be­tween 2015 and 2020. The Thai spa in­dus­try is ex­pected to be a nat­u­ral ben­e­fi­ciary of this trend.

In Thai­land, there are three pop­u­lar types of spa:

Day spas are the most com­mon type, lo­cated in res­i­den­tial ar­eas, of­fices and shop­ping cen­tres. They fo­cus on pro­vid­ing treat­ments that last from 30 to 210 min­utes without an overnight stay.

Des­ti­na­tion spas pro­vide all-in­clu­sive pack­ages that in­clude ac­com­mo­da­tion, healthy di­ets and well­ness pro­grammes. Clients can cus­tomise their length of stay and the ser­vices that fit their well­ness goals, with op­tions rang­ing from three to 28 days. Most of th­ese spas are lo­cated in a tourism des­ti­na­tion with at­trac­tive nat­u­ral sur­round­ings

Ho­tel spas, lo­cated in a ho­tel and re­sort prop­er­ties, op­er­ate in a sim­i­lar man­ner to day spas.

Of the three cat­e­gories, ho­tel spas rep­re­sent the busi­ness op­por­tu­nity most worth watch­ing be­cause they pro­vide more ac­tiv­ity op­tions for tourists while con­tribut­ing to a ho­tel’s bot­tom line. The rise of ho­tel spas has helped Thai­land to be­come an in­clu­sive des­ti­na­tion for in­ter­na­tional tourism.

The ho­tel spa re­in­forces a ho­tel’s core of­fer­ings and this is re­flected in higher rev­enue per avail­able room (RevPAR), the key met­ric used in the in­dus­try. Es­tab­lish­ing a spa on the premises of a recog­nised ho­tel pro­vides a good busi­ness op­por­tu­nity for spa op­er­a­tors and re­lated providers such as those of­fer­ing “cos­me­ceu­ti­cal” treat­ment prod­ucts.

Ac­cord­ing to in­for­ma­tion from CBRE Ho­tels, ho­tels with spas in the United States tend to gen­er­ate a higher RevPAR than those without spas, by 27% for ur­ban ho­tels and 10% for re­sorts. This is at­trib­uted to the abil­ity of the ho­tel to charge a higher rate per room.

At the same time, a ho­tel with a spa can cre­ate ad­di­tional and re­cur­ring rev­enues from guests as well as lo­cal res­i­dents who sign up for spa mem­ber­ships. In ad­di­tion, a pop­u­lar and well-known spa can help by ad­ding value to the ho­tel through a pos­i­tive brand im­age.

Fur­ther­more, a ho­tel spa with a dis­tinc­tive sell­ing point can cre­ate a unique ex­pe­ri­ence for guests. For ex­am­ple, Zen Zone Spa, lo­cated in the five-star Gran Ho­tel La Florida in Barcelona, of­fers a unique ex­pe­ri­ence by pro­vid­ing re­lax­ing bub­ble pods con­tain­ing 99.5% oxy­gen to re­lieve stress un­der blue light and detox­ify the body. The K-Spa at K-West Ho­tel & Spa in Lon­don of­fers a sub-zero spa ex­pe­ri­ence along­side a sauna. This “hot and cold ther­apy” that orig­i­nated in Fin­land in­duces blood flow, re­duces cel­lulite and can help strengthen the im­mune sys­tem.

Th­ese ex­am­ples could pro­vide an in­spi­ra­tion to Thai spa op­er­a­tors to lever­age the op­por­tu­nity of a ho­tel lo­ca­tion to build a cus­tomer base by pro­vid­ing ser­vices to guests. This is a sig­nif­i­cant busi­ness op­por­tu­nity be­cause 4- and 5-star ho­tels are mostly sit­u­ated in prime ar­eas while their cus­tomers also pos­sess high pur­chas­ing power.

For Thai spa op­er­a­tors who spe­cialise in cos­me­ceu­ti­cal and aro­mather­apy prod­ucts, there is an ad­di­tional busi­ness op­por­tu­nity to ad­ver­tise and sell their prod­ucts while creating brand aware­ness through ac­tual prod­uct us­age among spa pa­trons, po­ten­tially lead­ing to a broader con­sumer base and higher sales.

EIC, a unit of Siam Com­mer­cial Bank Public Com­pany Lim­ited, of­fers in­depth macroe­co­nomic out­look and sec­toral im­pact analy­ses. For more in­for­ma­tion, visit www.scbeic.com or con­tact eic@scb.co.th

Es­tab­lish­ing a spa on the premises of a recog­nised ho­tel pro­vides a good busi­ness op­por­tu­nity for spa op­er­a­tors and re­lated providers, such as those of­fer­ing “cos­me­ceu­ti­cal” treat­ment prod­ucts

Tra­di­tional Thai mas­sage at the Four Sea­sons Re­sort Chi­ang Mai.

Ti­betan sound ther­apy is part of the El­e­ments of Life treat­ment at Rar­inJinda Well­ness Spa in Chi­ang Mai.

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