Aim for a Home Run and Do Not Settle for Empty Pearl Shells

Sometime along the lifetime of any hospitality project development or property refurbishment the potential role and scope of some sort of health, wellness or spa component is discussed.

When to ask these questions and when to decide? How to choose? And, consequently, how to operate: as a satellite or as an integrated part? Familiar questions and decision-making points? Very likely so.

Sometimes developers look for an off-the-shelf solution, e.g. let’s call it a spa unit. A unit that can be moved around on the drawing board and eventually locate it where it causes the minimal disruption to hospitality operations. Alternatively, on the other end of the spectrum the hospitality offer could be decided and designed around the health/wellness/spa provision in its all entirety.

It is all great but how to navigate in these somewhat murky waters? HTWWLife’s navigation matrix highlights the key cornerstones. You may identify your property according to one of the four major approaches. Either of these approaches could bring success. The question is what the definition of success was: immediate cash, media coverage, number of new followers on TikTok, or asset value increase? Make sure you know how you will measure performance and success before you select either of the approaches.

The Decision Parameters

There are two considerations anyone should consider:

1. Time span of anticipated value contribution, and
2. The in/tangible nature of the components.

Short-Term Value Contribution

There is always a new trend to follow or a new equipment to buy. Industry sources, influencers advocate this ‘trend’ and properties as well as many customers fall for that. This new trend can be an equipment, e.g. for skincare, a component, e.g. crushed pearl in exfoliation or a whole ritual, e.g. singing bowls, or a new brand or product line. These fashionable services and products could bring the intended results quickly. Then, they quickly can get ‘tired’. If the hotel’s strategy was to ride the fashion wave whatever that might be either of these choices can mean success.

As in fashion, however, the success can be short lived. An even more ‘trendy’ item may require changes in operations, e.g. new layout and design, new equipment, replacing the supplier with new product lines and staff training, or replacing the white label operator, etc. None of these changes come cheap. Furthermore, the new ‘trend’ may come with new set of guests with different characteristics from what describe the existing market. The operator can call itself very lucky if the old and the new segments can live parallel harmoniously.

Long-Term Value Contribution

Unless in a retreat scenario where the required infrastructure investment is relatively moderate, hotels invest significant CAPEX to the spa, wellness, leisure provision. Owners and operators typically expect that whatever they invested in would provide positive contribution to the revenues, to the brand and to the profits for a good while. This expectation is rather normal. Hotel assets do not tend to yield as fast as many other forms of investments and investors understand the nature of the business. Most hotels consider wellness/spa/leisure components as either an amenity, a nice-to-have, or a fixed rental revenue source. This asset needs to contribute to the overall performance but room revenue and banqueting need to carry the weight.

In specialised properties, however, the wellness/spa/healthcare/leisure value proposition, e.g. longevity medicine, or holistic wellness is the torchbearer. In these cases, the whole property is designed and operated facilitating the specialised value proposition. TrevPAR is more of a relevant measure of performance than RevPAR. The long-term expectation is way stronger since the initial CAPEX, and potentially the OPEX figures are also higher than in other scenarios. Consequently, the yielding performance needs to be favourable on a long(er) period as well.

Tangible Assets

Many wellness, health and spa services are based on specific equipment, infrastructure or products from skincare technology, though sophisticated massage beds to immersive pods and massage robots. These are tangible assets with the following important characteristics:

• Inflexible or fixed, i.e. it is rather difficult to find alternative use for them, if at all. How can you repurpose a spa space located in the basement? Operators may be exclusively tied town to the manufacturer and that can mean limitations should the market show unexpected changes. Can also represent high CAPEX and in many cases high OPEX as well.
• Separatable, i.e. equipment, furniture could potentially be moved to another location since these tangible assets are not location specific. Guests are not likely to associate the location or the brand with such products. Still separability represents certain degree of flexibility should the need arise of relocation or sell.
• Lasting and durable, i.e. assets will be available and last for some time and may need major maintenance only at regular intervals. They can survive many users and serve the business well.
• Tendency to be uniform, i.e. except the high-end or upper scale spectrum where tangible wellness components tend to be custom-made, most tangible assets are mass-produced. These represent limited unique value proposition and may not be brand or story specific. Experienced wellness consumers soon recognize the generic nature and look for more meaningful propositions.

Tangible components are often seen as key to success. Developers spend a lot of money on the physical components, then they expect these spaces and equipment to perform. In the wellness/health world, however, such assets may underperform since not enough attention was paid to the complementing intangible components.

Intangible Assets

Intangible assets such as specific wellness and health knowledge and skills, signature guest journeys, creative combination of otherwise independent components, events, celebrations or rituals, all come with some rather specific characteristics as well:

• Flexible, i.e. most intangible approaches only use and not exclusively based on tangible components. The intangible components, e.g. technique, scent, colour, journey length, etc., can be changed, modified and adapted relatively easily. Being able to quickly response to market changes sure offers competitive advantage.
• Heterogenic, since it is flexible even the hyper personalisation of the services is possible. At the same time, however, without skilled and flexible staff heterogeneity remains to be only another missed opportunity.
• Perishable, i.e. there is no shelf-time. It is not possible to stock wellness rituals, whereas it is only matter of budget and storage space how much of certain skincare products are stored. The perishable nature makes intangible wellness services or experiences similar to how guests perceive festivals and major events, i.e. they need to take the opportunity otherwise they may miss it altogether. Pools are always around, whereas a special a session with the jogging concierge or tonight’s bath butler is very perishable.
• Inseparable, i.e. it is not possible to separate the consumption from the production. A 45-min massage is performed in-situ and requires a therapist. If the therapist was fully booked, then the guest missed her/his chances for the day. Unless the wellness centre invested in a massage robot. The healing power of the human touch cannot be overestimated.

The two variables define the map of health and wellness in hospitality with four major quadrants.

Pearl Shells

The design and the architecture are amazing, the location is breathtaking. Everybody has fantastic time at the resort. More often than one thinks, the attention and the budget ends with the architectural and interior design. The soft intangible elements are often overlooked or forgotten. The stunning property feels like a beautiful shell without the pearl in it. The property is a success but for short period of time. Then another stunning location receives all the attention (and business). Wellness is not (only) about appearance. It has several pillars (upto 8). Success is only short lived if only one of those were taken into consideration. Without a wellness-DNA any beautiful hotel is only an empty shell in the wellness market.

Markers

Health and wellness are not static. There is a constant development in the field with new approaches, techniques, products and rituals. It is perfectly OK to plan for short term only. A certain type of treatment or ingredient, a fusion approach merging Eastern and Western techniques, a visiting therapist, a new meditation ritual may have a relatively short shelf-life. Nothing is wrong about that: as long as such short life-span was accepted from day one. Intangible approaches can leave their marks on the business or on the brand even during a short period of time. Developers need to make informed decisions should they opt for a marker style wellness offer. Such marks can represent the wellness DNA of the property or the brand accordingly.

Good Crafts

Well-crafted tangible assets can bring long-term success without doubt. A well-designed wet circuit combining tangible assets with intangible approaches can yield for many years. The saunas or the pools may be used for different rituals, celebrations, the treatment spaces only if these were designed with flexibility and adaptability in mind, the immersive panels can support several different atmospheres, etc. A well-crafted wellness space, however, needs more than just an architect, an interior designer and the spa manager. The conceptualisation necessitates the involvement of a wellness experience designer as well. Good craftsmanship is always appreciated even if this was not a pioneering approach.

Home Runners

The ultimate success tends to be based on intangible approaches. The most successful health and wellness hospitality providers base their portfolio on intangible components supported by certain tangible assets. Guest journeys, signature treatments and therapies, branded methods are all indications of how critical the tangible components are. The intangible nature makes these properties flexible in their core propositions. The core concepts can evolve since these are not locked into a defined space but focus on creativity and knowledge.

It may seem that this matrix is relevant to wellness only. The contrary. The four development quadrantsw are relevant to almost any health and/or wellbeing development including not only spa and recreation, but also the healthcare and medical arenas as well. Hospitals and clinics can also go down the tangible/short term route by purchasing the latest, rather pricey equipment. Still, the ROI on such investment may be underwhelming since they did not invest into the specialists who actually can make the most of the new ‘toy’.

There are many rather successful hotels and resorts, and lately new fusion properties merging healthcare and hospitality. Locating these on this map confirms the defining role of intangible assets: these are the keys to their highly acclaimed market position and performance. In very special cases the combination of tangible and intangible assets, e.g. building on natural healing assets and the healthcare/wellness knowledge of the specially skilled professionals specialised in the use of these natural assets ensures market success.

Either of the four quadrants can ensure success to the property or brand, being either an urban hotel or a resort. Build a pearl shell or being a master in baseball: either can go. The only trick is to be make informed decisions and plan accordingly.

Reprinted from the Hotel Business Review with permission from www.HotelExecutive.com.