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overbuilding

Can the spa industry continue to justify building large and expensive facilities? Or has the time come to downsize?

By Katie Barnes | Published in Spa Business 2012 issue 2


In the early decades of the spa industry, large, opulent facilities – often costing millions – were built and launched with much fanfare and pride.

Owners, architects and designers competed to be the best and got swept up in the buzz. The bigger the spa the better, with operators vying to showcase more facilities, equipment, experiences and space than before.

However, in some cases, more attention was paid to design than budget and overbuilt spas struggled to break even on operating costs, let alone paying back capital or then going to make a true profit.

When the credit crunch struck, many struggled, and as spas are costed on a per square metre (sq m) or square foot (sq ft) basis, the bigger a spa, the more revenue it has to generate to hit target.

With operators facing increasing pressure to make figures stack up, many are starting to ask whether the building of such big facilities is justifiable or wise.

Pivotal to the question is the size and number of treatment rooms – the main revenue generating areas of spas. Large treatment rooms will limit the number which can be accommodated. And big echoing spaces don’t necessarily create the best experience – they can leave guests feeling intimidated and uncomfortable.

On the other hand, can operators charge more for treatments delivered in larger rooms? Does the size contribute to a superior experience and justify higher rates? Spa suites for more than one person with showers, heat experiences and whirlpools – which are suitable for use when delivering packages and longer, signature treatments – are example of this category of room.

What’s the optimum size for a treatment room? What’s too big and what’s the smallest space operators can get away with?

Is it possible to build a future-proof spa – one with a flexible design, where the size and number of treatment rooms can be easily reconfigured to accommodate demand? And is there a quick-fix solution for existing facilities that were built too big? We ask the experts.



Simon Shepherdson Managing director International Leisure Consultants


 

Simon Shepherdson
 

The debate on spa sizing is between the marketing men – “give me a large spa so I can get a great hero shot, good PR and boost the hotel’s profile” and the accountant – “does the spa give me a good return on investment?”

Currently, the accountant holds greater sway and chains such as Shangri-La are down-playing the luxurious CHI, The Spa their in newer properties. Meanwhile, Mandarin Oriental no longer looks to have a minimum 15,000sq ft (1,394sq m) allocated to the spa and its new spas now fit the size of the property being developed.

But this doesn’t apply to all and individual hotel owners often think of the spa as a status symbol and that ‘biggest is best’.

An 80-bedroom Starwood hotel planned in western China has 12 treatment rooms; while a new Luxury Collection hotel in Shanghai includes a 1,000sq ft (93sq m) VIP spa suite. You could ask if this is practical or sustainable, but what if the owners are using these facilities for business entertaining, as they increasingly do, and conclude a us$30m deal this way?

Generally, the size of a hotel spa can be linked to the number of bedrooms and the potential capture rate – 5-8 per cent in city hotels and 10-15 per cent in resorts. In resorts, spa treatment rooms tend to be bigger – 400-500sq ft (37-46sq m) – to give a greater sense of escape, while 150-200sq ft (14-16 sq m) is adequate for a city location.

Do these different sizes create equal revenues? Smaller rooms, without showers and toilets but with a minimum size of 120sq ft (11sq m) for comfort, are suited to shorter, straightforward treatments so can generate greater revenues with quicker turnover. Yet double rooms, with a 180sq ft (17sq m) minimum, are increasingly important with spas being visited more often by couples, friends and business associates. Treatment rooms over 500sq ft (46sq m), however, are too large to allow for an intimate experience.

Good design can make treatment rooms seem larger and also to appear more lavish and it helps when spas are taken out of the basement to allow for natural light.

It’s difficult to reconfigure treatment rooms because of sinks and showers. But allowing additional space in the design gives some flexibility – an extra relaxation lounge planned early on can be turned into treatment rooms as demand grows. And if your rooms are already too big? Work with your marketing team to sell the size and create packages to promote this feature.

Don’t let the accountants win. A spa can be a good return on investment – though small (120sq ft) to medium (180sq ft) size treatment rooms are the most efficient.


A spa can be a good return on investment –
though small (120sq ft) to medium (180 sq ft) size treatment rooms are the most efficient


Shepherdson set up ILC, which specialises in spa and club design across Asia, 15 years ago.
Details: www.ilc-world.com



Andrew Gibson
Group director of spa Mandarin Oriental

 

Andrew Gibson
 

There are few standards for how much space should be allocated to spas and what components they should have. This can result in costly design faults ranging from overbuilding to under-sizing. Common errors include lack of consideration being given to operational flow and back of house space (see sb08/1 p76), the omission of facilities that would enhance the experience and incorrectly sized treatment rooms.

The size of treatment rooms varies considerably – I’ve seen rooms larger than 100sq m (1,076sq ft) and as small as 6sq m (66sq ft). The larger rooms are more often in resorts where there’s less premium on cost per square metre. In my opinion, there’s no doubt that guests appreciate space in a treatment room, but once it exceeds a certain size satisfaction diminishes. In a single treatment room for example 12-16sq m (129-172sq ft) with a shower could be considered adequate. Our minimum is 20sq m (215sq ft) because we also allow for a seating area.

Frequently, however, the operator is not the one deciding the size and layout of the spa. Yet they’re left with working out how to generate sufficient revenue from the space.

Ideally, a rough treatment menu should be in place before allocating size. In this scenario, the operator will be able to include features such as a shower, steam shower, toilet and seating, enabling them to create treatments and packages that are sold at a premium. Spa suites – with such features – are suitable for multiple types of treatments and therefore present more revenue opportunities. They also enable operators to sell couples treatments (which are becoming very popular around the globe), or a premium service for individuals and couples, as well as an upgrade opportunity to regular guests. If there’s enough space, they can also be hired by groups on a time basis.

The optimum size of a treatment room is subjective as it needs to fit the concept of the spa. At Mandarin Oriental, for example, we give designers a very detailed specification of what services we need to provide in the room and how big it should be.

That said, the size of the room is only one consideration when it comes to luxury. The overall impression, attention to detail, placement of controls, lighting and safety features all add to the guest experience.

There’s no magic formula for calculating the number of treatment rooms. We’ve used equations that focus on the number of hotel bedrooms, urban versus resort location, average length of stay and leisure versus business guests – but they’re guidelines at best. As a very loose rule of thumb, I would suggest one treatment room for 15-20 guestrooms. Then the anticipated hotel occupancy divided by 10 will give the number of treatments from in-house guests per day. Using both of these figures, you can roughly determine the number of treatment rooms.


Gibson oversees the operations of 22 spas worldwide in his role at Mandarin Oriental.

Details: www.mandarinoriental.com



Dan shackleton-Jones

President/partner Niki Bryan Inc

 

Dan shackleton-Jones
 

There are certainly more overbuilt spas than effective builds, especially in resorts and hotels where they know customers have the means to pay for that experience and luxury space.

This is changing though, as overbuilt spas become a burden on the books. Over the past year, we’ve seen resorts/hotels questioning the cost of support and upkeep of a spa, or even the need for one going forward.

I’m not convinced that larger treatment rooms command more money – while the novelty of something grandiose may work in the short-term, it’s not a sustainable approach. And imagine telling your guest that, that was the reason why you’re charging more: I doubt it would win them over.

In my experience, you can only charge more money if you offer an exceptional, exclusive or tailored experience. Yet as the majority of what the guest considers the paid-for experience happens in treatment rooms, if you miss the mark on sizing you stand to miss the mark on aligning with the guest expectation. Brands are commonly articulated through a series of expressions and it’s this environment that defines the experience and its delivery. Too small is the room that will not enable you to do this.

But too big is the room you cannot pay for. Space has an operating cost and a need to capture revenue to offset this. Do you want a massage room 24 x 24ft (7 x 7m) averaging us$130 per services hour or two rooms 12 x 12ft (3.5 x 3.5m) averaging us$260 an hour total? The cost of the space is almost the same, yet the limit on revenue can be very different for the oversized room.

Over 28 years, I’ve found that 12 x 12ft is ideal for profitability and our guest brand experience in mainstream body and skin services. It’s functional, provides storage, has enough room for therapist movement and is intimate enough to make the guest feel comfortable. What makes it profitable is the ability to consistently book and charge an appropriate service rate that will pay for all operating costs associated with the space while protecting the guest experience and ensuring a strong margin.

There are multiple formulas with variations on calculating the appropriate number of treatment rooms. And these depend on guest occupancy, average length of stay, number of bedrooms and capture rate. I’d suggest looking at existing properties in the immediate market that provide KPIs for you to consider. And above all, know your guest demographic and what services they demand. That way you won’t get drawn into offering fad treatments or services that have little or no demand from your customers.


Over the past year, we’ve seen resorts/hotels
questioning the cost of support and upkeep of a spa,
or even the need for one going forward


Approaching 30 years in business, Niki Bryan is a leading US spa consultancy and management company which has a number of
clients, including Disney.

Details: www.relaxedyet.com.



Susan Harmsworth Founder and CEO ESPA International

 

Susan Harmsworth
 

A big bug bear of mine is that owners and operators are being ill-advised by consultants – typically ex spa directors who’ve set up on their own – who have no idea how to design a spa. I’ve picked up at least eight projects recently where the design is a complete mess for this reason. As an industry, we should have some kind of governing body for this.

Do I think spas are being overbuilt and aren’t seeing a good return on investment? Yes is the short answer. But it depends entirely on how the owners are looking at yield – is the spa a complete standalone facility, or is it sharing expenses with the hotel? Do they take into account that the spa can boost hotel revenues at off peak times and out of high season? If not, spas probably won’t achieve the figures they want and we’ll be going back to spas with just treatment and changing rooms.

Do I think spas have too many treatment rooms? That’s very difficult to answer, because I can give examples of where we might have included too many. On several occasions, clients have requested big spas to cope with group business (sometimes renting out the whole hotel) to boost numbers in the off-peak season – in one case a client wanted 20 treatment rooms to cope with group business but was prepared to run only 12-14 for the rest of the time. Also, if spas are going to boost occupancy by 20 per cent at the weekend, then they might be able to justify having rooms empty in the week.

I’d say that a good size for a single treatment room for massage would be 14-16sq m (151-172sq ft), although that is on the luxury level because we build in storage for all equipment, products and linen. Anything bigger than that, then the client won’t be comfortable, you’ll be looking at high energy costs and you’ll also need to increase the revenue generated.

As 60 per cent of our business globally is massage, we’ve started to reduce the number of multi-functional treatment rooms we include due to energy costs and space. Also as the standard of therapists has decreased, we’ve found they’re no longer able to perform treatments and that they specialise in just one or two services such as massage or facials, or personal grooming/beauty. It’s really important to design a spa with the treatment menu in mind at the start, but you do also need to think about the availability of practitioners. If you can’t find suitably-trained staff for those treatments in the region, for example, then that will impact on design too.

For operators who already have too many treatment rooms, they could consider renting some out to high-end specialists – this has worked well for us in the past.


Spa management and skincare company ESPA was founded by Harmsworth over 35 years ago. It has a portfolio of 250-plus spas in 55 countries. Details www.espaonline.com
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For Gabriella Francia, co-founder of bbspa_Group and training manager, the powerful touch of a massage is the stand-out element that makes a spa experience truly unique. [more...]
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COMPANY PROFILES
Terres d' Afrique

Dr Stephan Helary created the company 10 years ago. He is committed to demonstrating the power of p [more...]
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The ultimate spa and wellness resource, Universal Companies is an international distributor of produ [more...]
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+ More catalogues  

DIRECTORY
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DIARY

 

22-22 Jun 2024

World Bathing Day

Worldwide,
22-24 Jun 2024

IECSC Las Vegas

Las Vegas Convention Center, Las Vegas, United States
+ More diary  
 
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©Cybertrek 2024
Uniting the world of spa & wellness
Get Spa Business and Spa Business insider digital magazines FREE
Sign up here ▸
News   Products   Magazine   Subscribe
Ask an expert...
overbuilding

Can the spa industry continue to justify building large and expensive facilities? Or has the time come to downsize?

By Katie Barnes | Published in Spa Business 2012 issue 2


In the early decades of the spa industry, large, opulent facilities – often costing millions – were built and launched with much fanfare and pride.

Owners, architects and designers competed to be the best and got swept up in the buzz. The bigger the spa the better, with operators vying to showcase more facilities, equipment, experiences and space than before.

However, in some cases, more attention was paid to design than budget and overbuilt spas struggled to break even on operating costs, let alone paying back capital or then going to make a true profit.

When the credit crunch struck, many struggled, and as spas are costed on a per square metre (sq m) or square foot (sq ft) basis, the bigger a spa, the more revenue it has to generate to hit target.

With operators facing increasing pressure to make figures stack up, many are starting to ask whether the building of such big facilities is justifiable or wise.

Pivotal to the question is the size and number of treatment rooms – the main revenue generating areas of spas. Large treatment rooms will limit the number which can be accommodated. And big echoing spaces don’t necessarily create the best experience – they can leave guests feeling intimidated and uncomfortable.

On the other hand, can operators charge more for treatments delivered in larger rooms? Does the size contribute to a superior experience and justify higher rates? Spa suites for more than one person with showers, heat experiences and whirlpools – which are suitable for use when delivering packages and longer, signature treatments – are example of this category of room.

What’s the optimum size for a treatment room? What’s too big and what’s the smallest space operators can get away with?

Is it possible to build a future-proof spa – one with a flexible design, where the size and number of treatment rooms can be easily reconfigured to accommodate demand? And is there a quick-fix solution for existing facilities that were built too big? We ask the experts.



Simon Shepherdson Managing director International Leisure Consultants


 

Simon Shepherdson
 

The debate on spa sizing is between the marketing men – “give me a large spa so I can get a great hero shot, good PR and boost the hotel’s profile” and the accountant – “does the spa give me a good return on investment?”

Currently, the accountant holds greater sway and chains such as Shangri-La are down-playing the luxurious CHI, The Spa their in newer properties. Meanwhile, Mandarin Oriental no longer looks to have a minimum 15,000sq ft (1,394sq m) allocated to the spa and its new spas now fit the size of the property being developed.

But this doesn’t apply to all and individual hotel owners often think of the spa as a status symbol and that ‘biggest is best’.

An 80-bedroom Starwood hotel planned in western China has 12 treatment rooms; while a new Luxury Collection hotel in Shanghai includes a 1,000sq ft (93sq m) VIP spa suite. You could ask if this is practical or sustainable, but what if the owners are using these facilities for business entertaining, as they increasingly do, and conclude a us$30m deal this way?

Generally, the size of a hotel spa can be linked to the number of bedrooms and the potential capture rate – 5-8 per cent in city hotels and 10-15 per cent in resorts. In resorts, spa treatment rooms tend to be bigger – 400-500sq ft (37-46sq m) – to give a greater sense of escape, while 150-200sq ft (14-16 sq m) is adequate for a city location.

Do these different sizes create equal revenues? Smaller rooms, without showers and toilets but with a minimum size of 120sq ft (11sq m) for comfort, are suited to shorter, straightforward treatments so can generate greater revenues with quicker turnover. Yet double rooms, with a 180sq ft (17sq m) minimum, are increasingly important with spas being visited more often by couples, friends and business associates. Treatment rooms over 500sq ft (46sq m), however, are too large to allow for an intimate experience.

Good design can make treatment rooms seem larger and also to appear more lavish and it helps when spas are taken out of the basement to allow for natural light.

It’s difficult to reconfigure treatment rooms because of sinks and showers. But allowing additional space in the design gives some flexibility – an extra relaxation lounge planned early on can be turned into treatment rooms as demand grows. And if your rooms are already too big? Work with your marketing team to sell the size and create packages to promote this feature.

Don’t let the accountants win. A spa can be a good return on investment – though small (120sq ft) to medium (180sq ft) size treatment rooms are the most efficient.


A spa can be a good return on investment –
though small (120sq ft) to medium (180 sq ft) size treatment rooms are the most efficient


Shepherdson set up ILC, which specialises in spa and club design across Asia, 15 years ago.
Details: www.ilc-world.com



Andrew Gibson
Group director of spa Mandarin Oriental

 

Andrew Gibson
 

There are few standards for how much space should be allocated to spas and what components they should have. This can result in costly design faults ranging from overbuilding to under-sizing. Common errors include lack of consideration being given to operational flow and back of house space (see sb08/1 p76), the omission of facilities that would enhance the experience and incorrectly sized treatment rooms.

The size of treatment rooms varies considerably – I’ve seen rooms larger than 100sq m (1,076sq ft) and as small as 6sq m (66sq ft). The larger rooms are more often in resorts where there’s less premium on cost per square metre. In my opinion, there’s no doubt that guests appreciate space in a treatment room, but once it exceeds a certain size satisfaction diminishes. In a single treatment room for example 12-16sq m (129-172sq ft) with a shower could be considered adequate. Our minimum is 20sq m (215sq ft) because we also allow for a seating area.

Frequently, however, the operator is not the one deciding the size and layout of the spa. Yet they’re left with working out how to generate sufficient revenue from the space.

Ideally, a rough treatment menu should be in place before allocating size. In this scenario, the operator will be able to include features such as a shower, steam shower, toilet and seating, enabling them to create treatments and packages that are sold at a premium. Spa suites – with such features – are suitable for multiple types of treatments and therefore present more revenue opportunities. They also enable operators to sell couples treatments (which are becoming very popular around the globe), or a premium service for individuals and couples, as well as an upgrade opportunity to regular guests. If there’s enough space, they can also be hired by groups on a time basis.

The optimum size of a treatment room is subjective as it needs to fit the concept of the spa. At Mandarin Oriental, for example, we give designers a very detailed specification of what services we need to provide in the room and how big it should be.

That said, the size of the room is only one consideration when it comes to luxury. The overall impression, attention to detail, placement of controls, lighting and safety features all add to the guest experience.

There’s no magic formula for calculating the number of treatment rooms. We’ve used equations that focus on the number of hotel bedrooms, urban versus resort location, average length of stay and leisure versus business guests – but they’re guidelines at best. As a very loose rule of thumb, I would suggest one treatment room for 15-20 guestrooms. Then the anticipated hotel occupancy divided by 10 will give the number of treatments from in-house guests per day. Using both of these figures, you can roughly determine the number of treatment rooms.


Gibson oversees the operations of 22 spas worldwide in his role at Mandarin Oriental.

Details: www.mandarinoriental.com



Dan shackleton-Jones

President/partner Niki Bryan Inc

 

Dan shackleton-Jones
 

There are certainly more overbuilt spas than effective builds, especially in resorts and hotels where they know customers have the means to pay for that experience and luxury space.

This is changing though, as overbuilt spas become a burden on the books. Over the past year, we’ve seen resorts/hotels questioning the cost of support and upkeep of a spa, or even the need for one going forward.

I’m not convinced that larger treatment rooms command more money – while the novelty of something grandiose may work in the short-term, it’s not a sustainable approach. And imagine telling your guest that, that was the reason why you’re charging more: I doubt it would win them over.

In my experience, you can only charge more money if you offer an exceptional, exclusive or tailored experience. Yet as the majority of what the guest considers the paid-for experience happens in treatment rooms, if you miss the mark on sizing you stand to miss the mark on aligning with the guest expectation. Brands are commonly articulated through a series of expressions and it’s this environment that defines the experience and its delivery. Too small is the room that will not enable you to do this.

But too big is the room you cannot pay for. Space has an operating cost and a need to capture revenue to offset this. Do you want a massage room 24 x 24ft (7 x 7m) averaging us$130 per services hour or two rooms 12 x 12ft (3.5 x 3.5m) averaging us$260 an hour total? The cost of the space is almost the same, yet the limit on revenue can be very different for the oversized room.

Over 28 years, I’ve found that 12 x 12ft is ideal for profitability and our guest brand experience in mainstream body and skin services. It’s functional, provides storage, has enough room for therapist movement and is intimate enough to make the guest feel comfortable. What makes it profitable is the ability to consistently book and charge an appropriate service rate that will pay for all operating costs associated with the space while protecting the guest experience and ensuring a strong margin.

There are multiple formulas with variations on calculating the appropriate number of treatment rooms. And these depend on guest occupancy, average length of stay, number of bedrooms and capture rate. I’d suggest looking at existing properties in the immediate market that provide KPIs for you to consider. And above all, know your guest demographic and what services they demand. That way you won’t get drawn into offering fad treatments or services that have little or no demand from your customers.


Over the past year, we’ve seen resorts/hotels
questioning the cost of support and upkeep of a spa,
or even the need for one going forward


Approaching 30 years in business, Niki Bryan is a leading US spa consultancy and management company which has a number of
clients, including Disney.

Details: www.relaxedyet.com.



Susan Harmsworth Founder and CEO ESPA International

 

Susan Harmsworth
 

A big bug bear of mine is that owners and operators are being ill-advised by consultants – typically ex spa directors who’ve set up on their own – who have no idea how to design a spa. I’ve picked up at least eight projects recently where the design is a complete mess for this reason. As an industry, we should have some kind of governing body for this.

Do I think spas are being overbuilt and aren’t seeing a good return on investment? Yes is the short answer. But it depends entirely on how the owners are looking at yield – is the spa a complete standalone facility, or is it sharing expenses with the hotel? Do they take into account that the spa can boost hotel revenues at off peak times and out of high season? If not, spas probably won’t achieve the figures they want and we’ll be going back to spas with just treatment and changing rooms.

Do I think spas have too many treatment rooms? That’s very difficult to answer, because I can give examples of where we might have included too many. On several occasions, clients have requested big spas to cope with group business (sometimes renting out the whole hotel) to boost numbers in the off-peak season – in one case a client wanted 20 treatment rooms to cope with group business but was prepared to run only 12-14 for the rest of the time. Also, if spas are going to boost occupancy by 20 per cent at the weekend, then they might be able to justify having rooms empty in the week.

I’d say that a good size for a single treatment room for massage would be 14-16sq m (151-172sq ft), although that is on the luxury level because we build in storage for all equipment, products and linen. Anything bigger than that, then the client won’t be comfortable, you’ll be looking at high energy costs and you’ll also need to increase the revenue generated.

As 60 per cent of our business globally is massage, we’ve started to reduce the number of multi-functional treatment rooms we include due to energy costs and space. Also as the standard of therapists has decreased, we’ve found they’re no longer able to perform treatments and that they specialise in just one or two services such as massage or facials, or personal grooming/beauty. It’s really important to design a spa with the treatment menu in mind at the start, but you do also need to think about the availability of practitioners. If you can’t find suitably-trained staff for those treatments in the region, for example, then that will impact on design too.

For operators who already have too many treatment rooms, they could consider renting some out to high-end specialists – this has worked well for us in the past.


Spa management and skincare company ESPA was founded by Harmsworth over 35 years ago. It has a portfolio of 250-plus spas in 55 countries. Details www.espaonline.com
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COMPANY PROFILES
Terres d' Afrique

Dr Stephan Helary created the company 10 years ago. He is committed to demonstrating the power of p [more...]
+ More profiles  
CATALOGUE GALLERY
+ More catalogues  

DIRECTORY
+ More directory  
DIARY

 

22-22 Jun 2024

World Bathing Day

Worldwide,
22-24 Jun 2024

IECSC Las Vegas

Las Vegas Convention Center, Las Vegas, United States
+ More diary  
 


ADVERTISE . CONTACT US

Leisure Media
Tel: +44 (0)1462 431385

©Cybertrek 2024

ABOUT LEISURE MEDIA
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