Pampering for less

As spas re-think strategies to slash costs and increase profits, new mid-market models are emerging. Spa Manager asks experts how operators can cash in on mid-market spa trends

The global economic crisis has led many hotel companies to revise their outgoings to save on expenditure.

As a result, many spas have been forced to consider how to attract customers whose own budgets have been cut too.

“With the effect of the recession a number of clients that may have been high-end spa goers will move some of their treatments to a mid-market level,” assesses Kory Thompson, managing director of Mandara Spa Middle East and Indian Ocean.

Spatality managing director Ingo Schweder says mid-market spas are “all about value for money”.

“Treatments are usually delivered to a reasonably high standard as the spa relies heavily on repeat business and volume,” he says.

“Mid-market spas are also offering spa memberships and packages, which will offer loyalty incentives or reduced rates.”

Mandara’s Thompson cites “price and the feeling that they can be who they are” as two key factors that make mid-market spas appeal to customers.

He also notes that mid-market spas do not possess what he terms “the intimidation factor” of opulent hotels and spas.

Spatality’s Schweder adds: “The trend is to adopt a low-price strategy to capture the middle market ignored by high-end operators. Most spas today are foreign chains, which have set a high price, but if you offer a reasonable service with high standards, you can get more repeat customers.”

Standard divide

The differences between the varying standard levels of spa are rudimentary, explains Mandara’s Thompson.

“Much the same way as a three-star hotel differs to a one-star or a five-star hotel, it is about the quality and price of the physical product and the services and treatments offered,” he explains. “For example, I don’t see a reason to have a hammam in a mid-market spa or extensive water treatments — get to the basics of what the clients want and offer cheaper massages.”

According to Spatality’s Schweder, mid-market spas differ from high-market spas by offering traditional spa services such as therapeutic massages, facials and waxing at a price 40% less than traditional day spas, all in locations more convenient to the clientele.

“The most popular treatments are still massages, which allows mid-market spas to offer quality treatments that have a relatively low treatment cost. Service treatments like waxing are also popular as they are easy and quick to deliver,” explains Schweder.

“Margins are thinner, but profit comes from a bigger customer base.

“The spa market in the Middle East has a lot of room to grow and focusing on this market segment allows operators to build their spa businesses without relying entirely on hotel occupancy,” he adds.

Zynk Design managing director Stavros Theodoulou notes: “Mid-market spas can specialise their offering. They also appeal to both destination and transitional markets due to their location.

“They are also meeting a need; low-market spas don’t really offer a spa experience more a series of treatments.

“Mid-market spas can offer a full spa experience at an appropriate price and given location.”

Results from The Ernst & Young (EY) Spa Benchmark Survey, released earlier this year, confirmed that consumer propensity of going to spas is on the rise.

The number of treatments booked at spas in Dubai in June reflected a 39% increase since January. The survey did, however, demonstrate that the economic crisis has had an impact on the price sensitivity of patrons.

During the same period examined by the survey, treatment revenues increased by only 32%.

When considering the current economic climate and the results of the survey, the evidence would suggest that opening a mid-market, rather than a luxury spa, is the more sensible option, according to Spatality’s Schweder: “These figures suggest that a mid-market spa would definitely be a more sensible option in the current climate, however the challenge for any type of spa now is to function in a profitable way,” he says.

“Like every other business that wants to survive in the present slowdown, spas seriously need to examine every area of their business to remain relevant and provide value to their clients.”

Defined design

Zynk Design’s Theodoulou asserts that while mid-market spas can offer a specialised service, it is important to be clearly defined in respect to their design and purpose. He says mid-market spas should “know their target customers and define the proposition to appeal to them”.

“Have the ‘spa journey’ defined from the outset,” he advises. “This will maximise the guest experience and operational efficiency.”

Mandara’s Thompson agrees and points to the offering of Mandara’s own mid-market brand Chavana.

“It will have a menu of four massage treatments and one facial; there will also be a couple packages that offer a scrub,” he reveals.

Mandara has received a high amount of interest in its Chavana brand during the past six months, he claims, with five-star hotels even expressing an interest.

The reasons for the increased interest in mid-market spas are two-fold, explains Thompson: “The first is the cost factor — a mid-market spa requires less space due to limited facilities and the fit-out is more economical,” he points out.

“The second is that hotel owners are reviewing their business models and want to ensure that the spa is not just a necessity for their rating, but a revenue generating and profitable outlet.”

Thompson claims that hotels are currently looking for spa operators who can allow the hotel company to “focus on what they do best”.

“More and more owners will now be focused on getting a return on investment on a spa build more quickly than in the past and therefore every square metre will be scrutinised,” he notes.

Thompson points to the Dubai example, where a high number of high-end spas are all are fighting for the same market.

“When there is a great potential of this other market which is being tapped into now — the spas, owners and hotels need to look at their marketing and target this demographic, because the business is there just waiting,” he concludes.