Susan Harmsworth has had her finger on the pulse of the spa business for nearly 35 years — even before the term “spa” was commonly used. Harmsworth, who now deals exclusively with creating spas for five-star hotels through her company, Espa — and receives as many as 10 requests a day from those looking to get into the business — is still surprised by the industry she helped shape.
“Spas have actually overtaken golf as the number-one reason people choose to visit a resort,” she said.
The biggest growth area in the spa market is with five-star hotels. However, Harmsworth predicts many new players will learn that the spa industry is not one where you can make a quick buck.
“I think we’re going to come to a point very soon of sorting out the men from the boys, because a huge number of hotels go into spas without understanding why they’re doing it or what they’re trying to achieve,” Harmsworth said. “We’ll often see a $20 million to $30 million budget and somebody hasn’t thought through why they’re building a spa at all.”
Making spa operations even more difficult is the global customer who can remain anonymous. For example, some hotel spas within cities generate 50 percent of business outside of hotel guests, with 25 percent of that number using a gift voucher.
Harmsworth sees Europe, a mature market for most of the beauty industry, as one of her biggest growth opportunities, particularly since the revival of the spa market is being driven by the growth of the luxury sector as five-star hotels, such as the Four Seasons, Ritz Carlton and Mandarin Oriental, open up all over the continent.
Complete wellness retreats also are emerging as one of the major new areas of growth. A retreat in the Maldives recently completed by Harmsworth offers a life coach, Pilates, running in the sea, treatments and nutritional services.
Harmsworth said her spas are profitable, but she admitted that operating a spa within a hotel is much less challenging than a stand-alone unit, since a partnership affords a spa shared costs such as marketing, staff benefits and staff eating.
Staffing, she said, is the single most pressing issue in the spa industry, because it can sometimes account for as much as 75 percent of overall costs. And the problem is global. “People often think if you’re working in Asia or Eastern Europe, staff costs may be lower, but that’s not the case anymore. We just opened the Peninsula in Hong Kong, and because of the plethora of spas that have opened [there], costs have gone through the roof. Similarly, in Russia: The world is recruiting in Eastern Europe and Russia, taking the good people away, making salaries within those countries go up.”
While staffing is tough, training is key to success. Harmsworth believes the beauty industry could learn from the type of training spas give employees.
“I don’t think therapists can deal with people effectively unless they can understand themselves, understand energy, understand negative energy and how to block it, how to nonaggressively deal with their guests and their clients,” Harmsworth said.
What is similar between spas and the rest of the beauty industry is trends. The organic market is growing as people are more aware of toxicity issues. Organic food, rather than diet regimens, is becoming a primary issue. Longer treatments are a big growth area; people want to spend more time with one therapist. In turn, spas are training therapists to be multifunctional so they can stay with a guest all the way through their various treatments. Guests are also resisting gimmicks, and they don’t want complicated treatment menus.
“The marketing hype around treatments is ridiculous,” Harmsworth said, something that has the potential to alienate the guest who seeks honesty and treatments that deliver. “Less is more.”
In some cases, the spa industry is ahead of the rest of beauty. The male market — one that is still ripe to crack in mass and prestige — is very strong in the five-star spa market. In places where Harmsworth operates spas, men can be as much as 50 percent of the market.
And while retail areas in spas are growing, Harmsworth said, “At the end of the day, whatever people tell you, the majority of the profit comes from treatment, not from product.”
One of the biggest challenges for a spa is delivering a consistent standard. A great treatment one day and a bad one another day is an unclear message to guests. Contributing to a successful treatment is the soul of a spa. “It’s an intimate service. It’s not a widget business, it’s a people business. And if they lose their soul, they won’t succeed.”