Spa and Wellness in the Hotel Industry

Those of us lucky enough to work in the spa and wellness industry experience the pleasure of helping people day in, day out. However, from an executive perspective, there is one very common complaint: the industry doesn’t get the respect it deserves.

There are times when it seems like the media and the investment industry only seem to care about the growth in the technology and biotechnology industries. What excites them is another gadget, an app, a new pill, or whatever other newfangled notion is “flavor of the month.” And yet the spa and wellness industry has also grown at a clip that most investors would give their right arm for—and its growth isn’t going to stop any time soon.

Spa Industry’s Growth

Let’s begin with some broader industry perspective: my comparison to the technology and biotechnology industries may appear unreasonable at first. After all, the spa industry doesn’t really have a Facebook or a Google, a company that has gone from being an idea to worth billions of dollars in the space of time it takes to earn an associate’s degree. So in order to counter that position, it’s worth thinking about just how much the spa and wellness industry has grown in the last couple of decades.

When I left the medical industry behind in the mid-1990s, the spa industry was still considered as little more than an expensive and very occasional indulgence, a pampering treat for “ladies who lunch” rather than an integral part of overall wellness for anyone who wants it. The wellness side of the business wasn’t even in its infancy. How times have changed.

Thanks to the explosive growth in the understanding of nutrition, the benefits of alternative medicine, and general maintenance of wellness through treatments like massage and facials, the industry has moved from the fringes to the mainstream. And more importantly, it has become profitable at almost every level.

The Appeal of Hotel Spas

Whereas hotel spas, in particular, were once considered a loss leader, fit for getting people through the door but not to make real money from, they are now an essential part of profit makeup at hotels, both large and small. Increasingly, hotel spa and wellness services are popping up in what was once the least likely of locations. Airport spas? Why not. Travelers are increasingly looking for something to help them arrive at their final destination in the best possible shape. Increasingly, hotels are also offering spa and wellness services as a customer incentive. Why not offer a free massage upon check-in? A great idea. After all, it’s not only air travelers that arrive tired and in need of a pick-me-up.

Of course, that kind of service can only be offered by a hotel that has the right facilities, and hotels without them will increasingly miss out on an important competitive edge.

Hotel executives have also began to understand the fact that guests who want spa and wellness facilities are also more likely to spend higher in restaurants, bars and other amenities. Someone who arrives at a hotel after a long journey might decide to spend a little extra on a massage and retail products, an impulse purchase brought about by the spa treatment. Even if a hotel is merely a stopping point on a longer journey rather than a destination in itself, the opportunity to indulge in spa and wellness services is a temptation many guests won’t resist.

Overall, hotel spa and wellness industry financial numbers are staggering and perhaps, more importantly, still moving in the right direction. At the moment, there are no signs of stagnation or plateauing of growth. According to the International SPA Association (ISPA) 2015 U.S. Spa Industry Study, the spa industry’s revenue in 2014 was $15.5 billion, and that’s up from $14.7 billion in 2013, that’s a 5.3 percent growth. In real business terms and in a virtually zero interest rate environment, those are mouthwatering numbers.

A Global Look

The world’s largest single spa market is Europe and perhaps it’s not surprising that European hotels blazed the spa and wellness trail first. The Romans loved their hot baths, and wherever they went, healing massage and steam baths were sure to follow. The fall of the Roman Empire might have taken place about 1,600 years ago, but Europeans never lost their love of the spa life. The rest of the world is doing everything it can to catch up.

While Europe has traditionally been the stronghold of the hotel spa industry, we have also seen the U.S. and Asian hotel spa and wellness markets grow exponentially over the last two decades. It’s unfair to suggest that the Asian market didn’t exist before—in fact, the Asian continent has always been at the forefront of traditional healing and wellness. The Asian hotel spa and wellness market has seen some particularly interesting and exciting developments over the last decade as more and more tourists seek an experience that is rewarding, both from a wellness and a cultural perspective. Increasingly, global travelers don’t want an experience that can be replicated just anywhere else. In fact, in an interview by Pulse magazine, the official trade publication of ISPA, Euromonitor International Travel & Tourism Manager Michelle Grant stressed the global travelers’ preference for a holistic approach to wellness and treatments that are authentic which incorporate the elements of the destination. While global travelers seek experiences that would educate them in the areas of nutrition, exercise and mind/body connection, they have also increasingly become environmentally conscious, demanding that resort and hotel spas embrace sustainable practices that have minimal impact to Mother Earth.

Looking Back

To the modern-day consumer, it may seem that resort and hotel spas are nothing new. However, if you look back 20 years ago, hotel and resort spas were few and far in between.

In the past, hotel developers and owners had good reason to be reluctant to offer guests spa and wellness facilities. Spas required significant upfront investment and were rarely seen as a potential profit center. Wellness, as a business concept, wasn’t even on the radar. Many owners wrongly thought that spa and wellness centers could only be part of destination hotels, which nobody was going to pay for what were considered luxury services in their home town or in a city or airport hotel.

And yet here we are, just a short time later, with spa and wellness an integral part of the hotel industry, in cities and towns, and everywhere in between. Spa and wellness centers are not just places that people use when they are on vacation—they have become a very important part of everyday life.

What has changed is not just the public perception of wellness and quality of life that spas can offer, although that has been crucial. The upfront investment required remains a very significant undertaking, but owners’ and developers’ attitudes about how a successful and attractive spa and wellness center can drive profits have gone through a 180-degree change. They now know that offering spa and wellness facilities is a key to a rapid return on their investment.

Shifting Perception

As it happens, this change in public perception has been reflected in my own career. I spent many years as a senior nurse in a traditional medical world. I would see the same patients, people who needed emergency treatment time and time again because they were not willing to alter their lives. They didn’t want to get better.

The spa and wellness industry caters to people who want to make long-term positive changes in their lives, people who have either already accepted the benefits of spa and wellness or are about to accept them. A spa and wellness guest is a repeat customer—no matter where that spa is.

The organization of which I am currently Immediate Past Chairman, the International SPA Association, conducts its own extensive annual research into our industry (available to members at www.experienceispa.com). The evidence is clear: while spas and wellness are not immune to the broader economic cycle, we can see that the overall growth trend remains extremely positive.

We have also noted a significant amount of growth in the hotel spa and wellness industry—but with the potential for much more. It’s almost incredible to think how much more potential hotel spas have— by our last count there were 1,780 resort/hotel spas in the U.S. A decent number, for sure. But still the tip of the iceberg.

Revenue Potential

Hotel executives have, to a great extent, embraced the growth in spa and wellness. That the concept is not only a valuable addition to a hotel’s facilities but a key ingredient to profit is no longer in doubt. Those who remain skeptical about the worth of spa and wellness facilities are an ever-decreasing minority. That doesn’t mean that the hotel industry can afford to sit back and wait for the profit to roll in, because offering innovative products and services is going to become increasingly important to differentiate the best spa and wellness hotels from the ordinary. Knowing what your guests want and need, hiring skilled staff, and offering retail products pitched at the right price point are and will remain key differentiators.

It’s time to give the hotel spa and wellness industry the respect it deserves. Rather than being an afterthought, something to fill an empty basement space or a loss leader to get guests to book a room, spa and wellness centers should be at the front and center of all hotels: the bottom line is that offering hotel spa and wellness services can drastically impact the bottom line.

A leader in the luxury hospitality, wellness, and spa industries, Michael G. Tompkins has led celebrated brands to success for 20+ years. He moved from healthcare to hospitality with Canyon Ranch Health Resorts . As Vice President of Hotels and Spas for Turning Stone Resort and Casino, he led their team to be the first property east of the Mississippi to have two Four Diamond AAA Hotels, garnering Best New US Spa for Skana Spa and earning New York State Hospitality Association’s Hotel Executive of the Year. From there he helped reposition Miraval Resorts in Tucson, AZ starting as General Manager then promoted to President/ CEO of Miraval Resorts. Mr. Tompkins can be contacted at 707-935-9760 or michael@hutchinsonconsulting.com

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