Hotel spas a win-win business opportunity
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