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The revenue opportunities of including memberships and fitness services within the SPA model – Cre

12 August 2009
The revenue opportunities of including memberships and fitness services within the SPA model – Creating value in the economic downturn
Tony Payne: Sales & Marketing Director, Technogym South AfricaThe Wellness Trend
Featured in Les Nouvelles Esthetiques Issue 37
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The wellness trend identified in the early 1990’s has been ever growing and  evolving but perhaps even more importantly has shown to be resistant in some ways to the global recession and economic downturn.  According to the IHRSA Global Report 2009, the Fitness Industry revenues grew by 10.7% to $68.2 Billion in 2008, and memberships grew equally at 10% to 117,500,000 members worldwide.

The secret however to beating the recession lies in increasing the value of the wellness offering  to the consumer and focusing on essential issues of health, and stress reduction, and seeing an even stronger shift in  the move from just pampering, and looking good, to the more fundamental human value of health, wellbeing, and feeling good.

As early as 2002, the Hartman group who researches for ISPA identified that consumers would be evolving at an accelerated rate in line with the faster pace of life and the choices available. The result of this acceleration would not necessarily equate to "more and faster" but perhaps "less and slower" - quality vs. quantity. As a progressive and essential industry, trends in the health and wellness market would echo larger cultural changes taking place in consumer perceptions and behaviour.

In terms of this trend, the Hartman group identified a re-prioritization of values; consumers are being pushed to redefine essential and non-essential needs, such as whether or not a person may need yet another designer outfit when they already have an entire cupboard full.  Emotional and or spiritual needs that are amplified in these difficult economic times may include the need to: simplify, feel in control, take responsibility, feel connected, feel healthy, feel informed and to be themselves - authenticity, individuality.

Now, with the advent of the global economic recession and the continued strain on the economy, consumers' quest for wellness takes on a new significance.

How Consumers Live

As consumers refocus their work/life priorities, we will see a greater significance on family and community, which will manifest itself in mealtime activities with family and friends, as well as community involvement and participation. A pressure on the hours worked each week will lead to more focus on finding and making time for "what really matters."

There will be more emphasis on the economy than the environment. As the economy continues to struggle, people place less emphasis on environmental concerns and move their efforts to more practical issues such as financial matters. Successful environmental initiatives will focus on individual health and community concerns. Included in this will be the return to core values and the need to seek out activities that both counter stress and rebalance the individual, as well as activities which energise and vitalise the individual. The social interaction in the fitness area also lets people feel more connected.

Increased focus on prevention continues, as we see people turn more to food and exercise as medicine and therapy. There will be increased demand for healthy comfort foods replacing more extravagant gourmet items.

In terms of this we see a trend from luxury to necessity, from pampering to health, and currently as testimony to this we are seeing in health clubs an increase in membership visits.  People are looking for value and will seek out the activities and investments that deliver this, and also deliver according to the new core values.

Opportunities for the SPA as Wellness Centre

Focusing on a health based holistic wellness approach means SPAs may no longer be seen as luxuries. For an aging and stressed population, wellness SPAs provide a way to stay young and healthy. Some of the new visitors to SPAs are teenagers and men, these groups have additional goals and requirements from a wellness centre.

The key is to increase the value to the customer and aim to create repetitive spend and loyalty.  With additional time pressures, consumers are looking for a place to fulfil all of their wellness goals, from de-stressing, Health and Fitness, and socialization.

Consumers are cutting back on areas of excess, this includes holiday homes, oversees holidays and even eating out. However trends show consumers still require an environment to find balance and recreate the energy they require to keep them optimal through these tough times. Refocusing of priorities and spend may even allow for increased disposable income for activities that deliver in an affordable way the key values and health priorities. Once your customer experiences it and realizes the benefit of having a treatment or wellness activity, it rejuvenates and puts them back in balance, it really becomes a necessity instead of a luxury.

Elizabeth Lacy, of the Holistica Hawaii Preventative Medicine Centre noted, "A lot of people have said exercise and the SPA is a gift you give yourself. The trend I see is more and more people, instead of feeling guilty about having a massage or facial, are seeing it as a way to be healthy, and it hadn't been viewed that way before." 
 

Increasing the Value Offer

The SPA market has been continuously evolving and now we see incredible facilities all over the country that offer a range of services and facilities. These include therapist based and non therapist based activities. It has always been a challenge for full service SPAs to find ways to cover the costs of the additional services that consumers demand.  The combination of a fitness offering allows SPAs to introduce a membership model that can potentially not only cover the costs of the additional amenities but the operating costs of the SPA and staff as well.  This ultimately can increase the SPA service offering by creating overlaps of certain key amenities that can be funded by the fitness centre, i.e. showers, steam and sauna, plunge pools and relaxation zones.

The addition of fitness and other amenities into the SPA package means that the client can stay longer at the SPA, and as a result perceive more value from the total offering.  The total package gives the SPA operator the opportunity to sell “bundles” or packages to suit the needs and budget of more customers.


Increase in Customer Visit Frequency
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By incorporating a bundle of services that consumers are seeking to use in the everyday activity, SPA owners can bring the benefits of SPA visits into consumer’s daily lives. ISPA President Lynne Walker McNees has said three years ago “The attention that’s being paid to the benefits of the total SPA experience is helping consumers incorporate SPA activities into their everyday lives.

SPA treatments range from personal maintenance to relaxation, and in general, see clients visit the SPA from once a week, to once every 2 to 3 months.  Fitness training on the other hand has a frequency of attendance of 2 – 5 times per week.  This additional attendance at your facility gives you the opportunity to cross sell and up sell the additional facilities, services and even products in your SPA.  Opportunities with this increased contact with your client, include additional product sales that your customers can use at home.

Important to take into consideration is that SPA-Goers have become SPA "Goal-ers" and people are now often looking for a broad lifestyle result for their time.  People now go to SPAs to quit smoking, recover from grief, achieve spiritual awareness, improve sexual health, or for detoxing (which is shaping up to be an extremely popular SPA pursuit in our toxic times). Men go for physical therapy and pain reduction treatments. They also discover that SPA-grooming treatments have a positive impact on their business and personal life.

Increase Retention

Fitness memberships generally range from 1 – 3 years. SPA fitness memberships may be slightly different but even selling programmes with specific outcomes can see memberships of 2-3 months at a time.  If a significant impression is made in this period then these programme based memberships can be rolled over into long term contracts.  By selling bundles of services clients can enjoy more of the total SPA wellness experience and therefore see more value in the total offering.  These bundles can make the whole experience more affordable, and therefore easier to justify.


Attracting New Members

The wellness trend has created an opportunity to attract new members into the SPA environment and a good market in this case would be to look at the ladies only training market or even the executive market, which can help bring more men into using SPA treatments.

According to SPA Finder magazine, men now make up to 20 percent of day SPA clients, with that number on the increase.  Women want to be pampered.  Men, however, want to see the results. SPA Finder’s Susie Ellis told me “Men want the massage, to truly feel better.  They want to lower their cholesterol or lower their blood pressure.” “Getting men to the SPA is still a bit of a hurdle, but once they have the experience they are sold.”  The fitness angle really helps to get men into the SPA environment; from there they can be introduced to the most basic treatment like sports massage, and then remaining services added once trust is gained.

When adding a fitness component to the SPA offering, it is important to take into consideration which market segment you will be targeting i.e. executive, exclusive, ladies only, religious conservatism, body consciousness, medical, or weight loss. This will help in deciding what type of facility and services to offer. You will then need to also consider how to differentiate your offering including which products and membership type i.e. personal training, group personal training, an exclusive membership / training environment, programmes; results orientated or specific outcomes based. 

Depending on the fitness offer, you may need to employ additional staff, group training instructors, and or Personal trainers.  These can however be employed as salaried employees or as tenant trainers who pay you a rental to use your facilities to train their client, who in addition, pay you a fee to use your facility and possibly also the additional SPA services.


Selling Bundled Services to Increase Revenue and Cross Selling.


In the SPA Fitness / Wellness environment it appears that the selling of bundled services offerings seems to be the best model.  They range from fitness only, to a hybrid membership where clients received attractive discounts on SPA treatments, to full service bundles where clients get unlimited access to facilities, personal training and SPA treatments, at a price of course.

One Wellness, under the Directorship of Rob Cowling have established themselves as the leaders in the area of full service wellness SPA’s, and according to Izak de Bruyn at the One Wellness SPA at the Radisson hotel in Cape Town, offer three specific SPA Wellness Membership bundles.  The entry point is the “Fitness” bundle, which gives a client access to the exclusive club facilities and SPA amenities like the Fitness Centre, Sauna and Steam rooms and pool. They also receive a 20% discount on SPA treatments and personal training, booked before 4 pm and a 10% discount on treatments after 4pm.  This membership costs R750 per month and includes a fitness assessment and consultation with a SPA consultant. The second bundle offered by the One Wellness SPA is “Club “ and costs R995 per month and on top of the “Fitness” bundle includes a session with a personal trainer as well as 40% discount on SPA Treatments and personal training sessions booked before 4pm and 20% discounts on treatments thereafter. Lastly the “Platinum Wellness” membership offers a full wellness package of unlimited access to the facility, Personal Training and SPA Treatments.  The plan is guided by a consultant session with a therapist to ensure the activities chosen are safe and not overdone by the client in terms of being healthy.  The Platinum Wellness membership costs R5000 per month, and is limited to 20 memberships.  Discounted rates on each package are offered for corporate or group memberships over 5 people and for extended contract periods. According to Izak, most of the members on the Fitness and Club memberships will also incorporate SPA treatments into their routines 2- 4 times a month, and even buy products for their home use.  As an additional benefit of being located at an hotel, the One Wellness SPA gets the opportunity to sell SPA treatments to the many hotel guests who need to walk through the SPA reception to reach the workout room, which is also the gym for hotel guests

New Technology and Equipment Bridges the Gap Between SPA and Fitness

Developments have been made in fitness equipment design, to address this new market trend towards wellness and to offer solutions in training to the specific requirements and differences of this segment.

We have seen an incredible growth in the last decade of Mind Body activities like Yoga & Pilates, and these activities have seemed the natural cross over between SPA & Fitness.  However companies like Technogym are taking this concept further and have created an entire suite of products around the wellness concept including, Kinesis, Easyline, Element, Excite and the Wellness System.

In closing, the word SPA means Sanus per Aquam or “health through water”. Most SPAs however are still offering limited wet treatments and even fewer offer non therapist based SPA facilities due to the cost of installing these.  Without a decent membership model these additional facilities are difficult to justify.  Combining and exercise model with the SPA can assist in creating such a model and generate much needed annuity income for the business.  Adding an exercise component can however have its challenges.  It is recommended that the SPA operator wishing to embark on such a venture, consult thoroughly with professionals who have experience in this market. Special attention will need to be applied to the understanding of the segment of the market being targeted, equipment choice, facility layout and design, the marketing and sales approach, and last but not least, the professional fitness staff working in the facility.   
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