Are spas a healthy investment for hotels? How quick are the returns? Are there different approaches followed by day and resort spas? What are the inherent challenges? Punam Mohandas and Bindu Gopal Rao paddle their way through scented waters.
When the economy slows down, people speed up. We work more, and harder than ever before, to hit our financial goals, and as a result we get stressed quicker. All of which means the calming qualities of the wellness sector can still bring healthy returns.
The spa and wellness industry in India is estimated at Rs11,000 crores and growing at 25-35% annually, according to a 2009 Ernst and Young report for the Federation of Indian Chambers of Commerce and Industry (FICCI).
With those rather mindboggling numbers it is safe to say that the wellness industry in India is one segment bucking the recession trend. According to figures released at the 2008 Global Spa Summit in New York, the Indian spa market is valued at an estimated US$384 million (Rs1,820 crore).
But despite all this revenue, some claim spas are yet to be profitable ventures in their own right.
High staff numbers, who require specialist training and expensive equipment together with large space requirements, add up to high overheads, and unless the footfall matches that, profit will remain elusive. So how can you ensure you are getting the most out of your spa?
“If the business plan of the spa is made out properly, then the spa can be a profitable venture. However, it is also true that, profit or not, spas are an integral part of the hotel industry now,” says Vidur Talwar, director, Projects Nirman India.
His firm has recently created the spa interiors for Select Holiday Resort-Heritage Village, Manesar and The Rejuve Spa & Art Junction, The Lalit, New Delhi.
“If the hotel is not making a profit, then it means there is no proper marketing plan in place for the spa. The footfalls need to be increased, which can be done by bringing in outside clientele too, rather than relying solely on internal guests,” he adds.
Prajakta Paranjapye, managing director, Butic Spa, Fort Jadhavgadh, Pune, agrees that utilisation at spas in India is a problem. “Average utilisation and productivity rates are less than 50%, which will definitely affect the balance sheet,” she says.
“But with India’s growing executive class and with the increasing purchasing power, the response and growth potential of this business will result in increased margins.
Lots of international players have realised this potential, whch will, sooner or later, give way to day spas that are a mass revenue-generating opportunity. The daily treatment revenue per available treatment room recorded by day spas increased by 22% over the last year.”
India’s spiritual heritage combined with the spa concept does lend it an advantage, as some have discovered. The ‘Destination Spa’ concept in India did not exist before Ananda opened its doors to guests in 2000. Paranjapye says the spa industry is currently in its infancy and the main growth is being triggered by resort spas.
“The trend is picking up very well with corporate executives and wealthy business people,” adds Vinita Rashinkar, spa director, The Windflower Mysore & Coorg. Treatments such as Ayurveda need to be leveraged.
“Spa concept is the craze today. India is the only country in the world to have Ayurveda, a science so traditional and yet contemporary. The Ernst & Young figures give an idea of the reach of the wellness industry,” declares Dr Danny Devasy, manager, franchise development, Kairali Ayurvedic Group.
Tailoring treatments and packages for foreign guests who are more au fait with the spa concept, is also a must, according to Ashok Khanna, managing director, IHHR Hospitality (Ananda Group).
“For Ananda, our clientele is primarily foreigners for whom spa-going is an integral part of their routine, and not just a pampering session. It is incorporated in their wellness regimen and is an indispensable part of their lives,” he says.
While at one end there are destination spas, on the other are hotels that have spas as an add-on service. One view is that resort spas are more profitable than hotel spas because people have more time to spend, which translates into money.
“At hotels, typically, a guest stays for a short duration and may spend an hour or so at the spa, but resorts usually entail a longer, more leisurely stay. A hotel spa may also not offer the gamut of treatments and spa cuisine; it is akin to visiting a salon/day spa and is not a true spa experience,” says Rashinkar.
Others disagree. “Hotel spas specialise in a more holistic form of relaxation and rejuvenation as they offer specific treatment packages in an urban setting,” argues Talwar.
Tamir Kobrin, general manager, The Leela Palace Kempinski, Udaipur, says spas can have different strategic functions. The Leela has recently tied up with international spa chain ESPA.
“Hoteliers understand now that the spa is a motivating force behind driving occupancy rates, and the fundamental reason why guests will choose one hotel, or indeed one destination, over another.
Although there are many different financial models, the majority of spas should be financially viable.
Sometimes, the owner’s focus for the spa is to drive ADR, occupancy, and positioning, especially in smaller boutique sites where exclusivity is the key vision – this is a conscious decision made at the conceptual stage.
In leisure hotels for example, we know that the spa can extend the length of stay and drive the hotel occupancy in that way.
In a city environment, the model is very different and the expectations would be to maximise profitability where we can draw on hotel residents and the local external market, building a local clientele as well as maximising the day-spa market by drawing guests from other hotels in the city,” he says.
Shrikant Wakharkar, general manager, The Intercontinental The Lalit Goa Resort, is keen to get more Indians on board the spa bandwagon. “It is mainly foreign guests that use the spa; Indians do not use it as much and I would like that to change.
Indians need to be exposed to the luxury of treatments and massages; the secret of a good spa is to recommend suitable therapies to customers, while adding value. I think spas are absolutely necessary today, especially for a resort hotel like this, where guest want to relax after a long-haul flight.”
Certainly the consensus is that whether they make money immediately or not, spas cannot be overlooked in upper and upper upscale hotels.
“It is indeed a very profitable venture in addition to being a vital service expected; spas are becoming an integral part of hotel services, and it is not difficult to promote the concept,” says Padmaja Kumari Mewar, joint managing director, Historic Resorts Hotels, Eternal Mewar.
Their Gorbandh Palace property at Jaisalmer operates the Panghat spa using Forest Essential products, as do their properties at Shiv Niwas Palace, Jagmandir, and Fateh Bagh.
So exactly what kind of profit can a spa be expected to make today? Devasy clarifies: “To start up a day spa, the investment required would be between Rs10-12 lakhs for a two-room spa of between 1,200-1,500 square feet, which would include equipments, initial kit of products, and trained manpower support, including a doctor, but not covering interior or construction costs.
Return would be 10-25% on capital cost if the spa runs at an efficiency of 30-40% on a year-long basis. Of course, a resort model would cost much more,” he says.
Resort spas initially take a little time to establish their reputation but once that is accomplished, the returns come in faster than one could expect in regular hotels.
Khanna says there is an enormous difference between a destination spa, hotel spas and stand-alone day spas, with the whole orientation of a destination spa being to provide wellness through a spa regimen.
“At Ananda for instance, it is not just massage experiences. We offer mind, body, and spirit balance. We believed we could extend this as a facility to our business hotels too. Therefore, our Ista five-star hotels that cater to the business traveller have spas running under the aegis of Ananda, but tailored to the needs of a business executive,” he says.
“City spas are of course quite different to resort spas in the offering and experience they provide to the guest,” agrees Kobrin.
“The experiences would depend on identifying what the guest wants. For example, there are wellness retreat spas where medical elements are integrated with conventional spa practices, and focussed spiritual wellness retreats with holistic modalities.”
Uday Rao, hotel manager, Four Seasons Hotel Mumbai, feels that city hotel spas and resort spas have a different approach to a common goal, that is, to help their guests rejuvenate.
“While resort spas are mostly offering long-hour exotic treatments, hotel spas have to tailor their offers to a busier category of guest, with shorter, efficient treatments. There was a time when having meeting rooms, banqueting facilities, and an efficient business centre was enough for city hotels, but now it is expected that we have facilities that cater to the health, relaxation, and wellness of our guests too,” he says.
Setting up spas comes with sizeable investments for the actual facility, equipment, technology, management, and hiring and training of human resources. Capital costs comprise equipment, product, management and administrative cost, conveyance and other overheads like maintenance.
Thankfully, spa equipment is now easily available, with most major brands having local dealers in India, since most of the top-class equipment is manufactured abroad, in mostly the USA, France, and Italy.
“Opening any spa in a luxury hotel of an international standard requires a large amount of investment in the design and in bringing out the ambience. There is no end to how much money a hotel or resort can spend on building a spa; ultimately, it is built purely based on what the market demands of it.
The recruitment process has to be very precise and therapists have to go through trade tests and intense training to ensure they not only have the best hands, but also the required mind set. Teaching the technique is the easy part, but finding a therapist who is graceful and has the energy or ‘chi’ is not easy,” says Rao.
Adds Khanna: “A spa is not only about having adequate finances and real estate to get it going. It needs qualified people who understand the work in granular details and are passionate about it, for this is one business that needs a heart along with the head, otherwise the business may exist but will never make a mark.”
Says Rashinkar: “The challenge lies in setting up the spa/resort in the first place. There are not many trained professionals who are actually capable of conceptualising and setting up resort spas in India.
Spa staff who are suitably trained are hard to find, and are in great demand especially as they prefer overseas placements once they reach a level of expertise.
There is also the difficulty of managing day-to-day operations by keeping operational costs at a minimum. Marketing such places is a challenge because if you peg it too much as a destination spa, then the ordinary leisure traveller may be discouraged from visiting, and if the marketing takes on a leisure resort tone, the serious wellness traveller will look elsewhere.”
Rao goes on to state that spas are not just treated as service centres for hotels anymore; given the investments and design costs involved, they need to be competitive in the market they are located in, no different to any successful business model.
A requirement with destination spas is imposing guest restrictions like limited or no access to mobile phones, no television, and diet considerations.
Chiva Som Internaitonal Health Resorts, on the island of Hua Hin, Thailand, has created a brilliant reputation for itself in spite of these restrictions, on the basis of the treatments it offers, its inventive cuisine, and the sheer soothing ambience of the place.
There are no newspapers or television sets in the rooms, mobile phone usage is allowed only in the rooms and not elsewhere on the property, and yet, the spa, established in 1995 , is constantly voted as the top spa retreat by luxury and travel magazines.
Says Khanna: “Ananda is a destination spa, not a retreat that disallows luxuries. However yes, mobile phones are allowed only in the rooms as it can prove a disturbance to other guests in the public areas.”
Dr. Nina Pradhan, assistant medical director, Leo Juventa, Hyderabad says: “Making the guests understand the difference in standards or high-end quality that we offer is a challenge; unless and until a guest personally experiences the services we offer, he/she might not get fully convinced about the resort.”
Devasy says they promote vegetarianism, non alcoholism, and yoga and meditation at Kairali.
He says their clients come to the resort with a lot of focus and motivation and generally listen to what is recommended; “We don’t need to convince them for such things; I think the key challenges for spas are issues like lack of publicity, lack of government support, and lack of trained manpower,” he sums up.
Pictures courtesy IHHR Hospitality (Ananda Group), Chiva Som International Health Resorts, Leo Juventa, Hyderabad, and Kairali Ayurvedic Group.
What’s your pasand?
The Four Seasons Hotel Mumbai offers a signature treatment, combining the best of Swedish massage techniques with Ayurvedic healing traditions.
A full, deep tissue body massage using camphor oil which penetrates the skin and accords deep relaxation, is followed by Ayurvedic herbal poultices of medicinal herbs such as dried Triphaladi and Rasnadi Shurnam) powders, dipped in warm oil and massaged along the neck/shoulder area and the spine.
This helps the body detoxify and is ideal for those suffering from back pain and jet lag.
The dusitD2 baraquda in Pattaya, Thailand, uses deep sea water drawn 900 metres deep from Bora Bora, in its signature massage. In addition to its re-mineralising characteristics, the elixir is formulated with extracts of the Noni, Tiare flower, and lagoon seaweed, offering antioxidant and moisturising properties.
This deep sea massage uses gentle, rhythmic movements, which relaxes the muscles and totally de-stresses the body and mind, besides offering therapeutic benefits like improving the immune response, relieving water retention, and releasing body toxins.
Chiva-Som has introduced a new treatment called ‘Total Body Balancing’. Since we tend to be right or left-handed, we favour one side of the body over the other in our daily activities.
Consequently, while some muscles are more flexible and stronger, other parts not used as often, are not. The new therapy involves a complete body evaluation using the Tuina Principle, which incorporates body re-patterning, myo-fascial and spinal release, which relaxes the muscles, fascia, joints, and ligaments.
The techniques used are rhythmic compression along the energy channels of the body, and procedures that manipulate and lubricate the joints, along with kinesiology for arm and leg re-patterning, and gentle traction to relax tense joints.
Because it facilitates neuromuscular reorganisation and balances lines of tension in the body, the results are improved circulation, mobility, and flexibility, and nerve and energy flow.
Kairali’s signature treatment is the ‘Royal Makeover’, which starts with the Padaprakshalanam (traditional foot massage).
This is followed by Siro-abhyangam (traditional head massage using Kairoil), where you become even more relaxed as the nervous system starts activating to improve the blood flow to all parts of the body.
Then comes the Abhyangam, the famous synchronised massage with special medicated Kairoil which opens up all the lymphatic channels.
The body is then given a through herbal scrub called Twak Shodhanam to remove the dead cells from the skin, and covered with a cooling pack called Kaya Lepam.
While this dries, the Mukha-abhyangam (facial massage) with Kaircin facial oil and Nethradhara (special eye care treatment) with herbal decoction are carried out, followed by Shiro Lepanam (head pack) prepared from a paste of dry amla powder.
The treatment is rounded off by a steam bath and warm shower.
