India stands at the forefront of today’s global spa and wellness market, alluring domestic and global visitors alike with the time-honored traditions of Ayurveda and yoga and high quality, affordable medical tourism.
Now poised to become the fifth largest consumer market globally by 2020, according to a PricewaterhouseCoopers report titled “Winds of change: Retail reforms in India,” the country demonstrates all the demographic advantages of an ideal market for leading global spa and wellness brands.
The country boasts a 350-million strong middle class, a large youth population (50% of which are under the age of 25), rising levels of disposable income and associated increases in overall aspiration and experimentation, according to the report.
These factors suggest demand for all things wellness and spa is expected to grow in the coming years.
Consumer trends
The idea of wellness increasingly has become ingrained in conventional notions of what constitutes a healthy lifestyle, complementing existing scientific and medical approaches.
Against the backdrop of a deeply ingrained traditional wellness culture, the preferences and attitudes of modern Indian spa consumers are now evolving. They are savvier about the quality and value of products and services they purchase and are more open to experimenting with new and different offerings. Not only do they visit spas for hair maintenance, nail grooming, skin care and beauty treatments, but, with greater societal awareness about stress, obesity and other serious health issues, guests are looking to spas for evidence-based, results-driven solutions.
The Indian government has assumed a supportive role in the health and wellness movement by promoting the domestic sale of health and wellness food and approving the Participatory Guarantee System for Organic Farming, which has resulted in a flood of organic products now available in the country.
In a separate report titled “Winds of change: The wellness consumer,” PwC defined the modern Indian wellness consumer as belonging to one of four distinct segments:
1. Passives total more than 700 million individuals, do not follow health and wellness trends and are largely financially restricted from partaking in them.
2. Beginners constitute 150 million to 200 million individuals and demonstrate initial steps toward preventative care and improvement of appearance.
3. Actives make up a segment of 15 million to 25 million people who are known to follow health and wellness information, will pay premium dollar for products that claim benefits and typically exhibit some brand loyalty.
4. Believers total 1 million to 2 million early adopters who demonstrate extensive awareness on the subject and demand results-driven solutions.
Believers and actives represent the fastest growing segment of the market. However, beginners and passives, totaling nearly 98% of the population, comprise the largest volume opportunity.
Global health and wellness tourists, particularly from the Middle East, are flocking to India in record numbers. Growing 24% in 2011 and attracting nearly 45% of the world’s medical tourists on an annual basis, the country’s medical tourism industry is thriving under the conditions of strong government support, low costs, advanced equipment, skilled practitioners and large private investments, according to a Euromonitor International report titled “Passport: Health and wellness tourism in India.”
Euromonitor forecasts that health and wellness tourism is expected to experience a constant value compound annual growth rate of 22% by 2016, with medical tourism seeing a CAGR of 25% in constant value terms over the same period. During this time, the spa market is predicted to consistently assume more than 50% of total health and wellness sales in the country.
While females accounted for 70% of total demand in 2011, according to Euromonitor, there is a demonstrated increase in male consumers utilizing spa treatments and professional grooming products, thus demonstrating a significant opportunity for growth in this segment.
The opportunity
Both domestic and global visitation trends in India have demonstrated relatively steady growth during the past 10 years, with domestic visits surpassing one billion and foreign visits reaching 21 million in 2012, according to India’s Ministry of Tourism.
One of the major contributors to this industry is the wellness and spa market. PwC valued India’s total wellness market at 590 billion Indian rupees ($9.6 billion) in 2011 and forecasted that it would surpass 1 trillion Indian rupees ($16.3 billion) during the next four years.
This projection presents extensive opportunities for the wellness and spa market to imagine facilities that will not only serve existing customers but also capture new segments by going beyond traditional spa services with more innovative, exclusive and distinctive offerings, such as comprehensive female salons, male grooming ateliers and medico cosmetic services.
Additionally, India’s travel and tourism sector is anticipated to demonstrate further growth as the country continues to host globally marketed events, such as the 2011 Formula One Indian Grand Prix, and initiate government-led campaigns targeting tourists from select countries, according to Euromonitor.
Hotel spas
There is a strong opportunity to develop globally benchmarked hotel spas, as well as destination and day spas, that offer a full range of amenities similar to those in spa-mature markets in the region, such as Hong Kong and Singapore. Thermal bathing, advanced beauty treatments, medispa services and male grooming are becoming popular around the world. However, India has yet to fully explore application of these trends within its own spa and wellness market.
For example, in a recent case study of hotel spas in Mumbai, Horwath Health and Wellness found there was standardization across luxury facilities within the city. Five-star hotel spas had five to six treatment rooms and offered 21 different massage, body, facial and hydrotherapy treatments on average. Most offered similar pricing structures and treatment menus, commonly including Ayurvedic treatments, aromatherapy massages, body scrubs and facials. These spas were generally profitable, and membership played a substantial role in revenue generation, often comprising up to 50% of total earnings.
However, it is worth noting that, given the size and density of Mumbai, understanding and accounting for the immediate demographic surroundings of a property is absolutely critical when developing all aspects of the spa facility.
In striving to differentiate oneself in a market with so many new entrants, hotel owners would do well to ensure their spas are not merely “add-on” features but rather independently managed profit centers on their own.
Hilton Hotels & Resorts recently commissioned a survey in which 45% of respondents indicated the existence of a spa attracted them to a particular hotel, and 69% expressed that there was a good chance they would use the spa during their stay.
This opportunity is especially significant as there were approximately 114,000 hotel rooms spread across India’s various hotel categories in 2012, which was an estimated 150,000 rooms short of what was required at that time, according to a PwC report titled “Hospitality insights: From the Indian CEOs’ desk.” There is huge potential for owners to capitalize on the development pipeline by designing full-service spa facilities in tandem with anticipated hotel growth and demand.
A number of luxury hotel brands already have made heavy investments along these lines.
Taj Hotels Resorts & Palaces developed its own spa brand, Jiva Spa, in which the various Taj properties offer differing amenities and standards. The Leela Palaces Hotels and Resorts has outsourced its spa to a U.K.-based product company. The Oberoi Group’s spas are only accessible to in-house guests. Six Senses Hotels Resorts Spas is developing a day spa at Trump Towers Pune, and Mandara Spa, with various properties across India, boasts one of the largest spas in all of Asia. Additionally, GOCO Hospitality is becoming an active player in the Indian hotel spa market, with projects with MGM, Bellagio and Ritz-Carlton under development, among others.
Destination spas
Financial opportunities exist beyond luxury hotel spas in India. The fact that Ananda in the Himalayas, located in Narendra Nagar, Uttarakhand, is India’s only operational destination spa of global repute clearly demonstrates room for growth in this market segment.
Foreseeing this trend, a number of destination spas are in planning and development stages across the country. For example, in the Himalayan region, Max Venture Private Limited is constructing Vana Retreats, a wellness retreat on the outskirts of Dehradun, Uttarakhand. GOCO Hospitality is in the process of creating a destination spa in Dharamshala, Himachal Pradesh. In Kerala, destination spa packages are marketed to visitors year round in an effort to compensate for low (monsoon) season occupancy.
Challenges
Beyond the requisite marketing, branding, conceptualization and design of a spa, it is of equal importance that robust operational structures are put in place. Owners and operators must understand their target market and implement marketing strategies that effectively capture that market as intended.
For example, domestic and global spa guests should be treated as two distinct market segments, due to differences in preferences, behaviors, values, cultures and the like. Hence, spa owners and operators need to objectively analyze the impact of, say, the geographic location and surrounding infrastructure on both segments.
Of additional importance is the fact that Indian consumers are highly brand conscious, making it essential for spas to choose products that have global reach and pulling power.
There are significant opportunities to serve well-traveled Indian consumers who have been introduced to diverse spa experiences across the globe. However, spa owners and operators must understand these guests can be especially demanding and particular when visiting domestic spas. For example, spa goers often request several treatments be performed simultaneously, such as a manicure with a facial or a cosmetic treatment with a foot massage. If spas are able to tailor their service offerings in order to accommodate these personalized requests, they will be rewarded with a win-win proposition: increased guest satisfaction and spa profitability.
Finally, a surge in the spa and wellness industry will result in a predictable shortage of skilled therapists and spa managers. There is already a limited supply of qualified staff and management within the industry and a noticeable dearth of investment in related training schools and programs. This issue needs to be addressed immediately in order to ensure the future supply of skilled staff matches the growing demand for spa services.
Additionally, it is imperative that staff receive globally benchmarked professional training of the highest standard. For example, many Ayurvedic practitioners are not trained to meet the needs and expectations of international spa goers, thereby representing a significant and impending staffing challenge.
Conclusion
India’s rapidly evolving economy, maturing population, broadened consumerism and strong Bollywood influence on image and status present limitless opportunities for spa developers, owners and operators to breathe innovation and inspiration into the local wellness market. This combination of factors makes India ideal for the development and promotion of an overall expanded definition of health, relaxation and luxury beyond traditional notions of Ayurveda and yoga.
However, growth must not be limited to Kerala or the Himalayas when considerable opportunity and strong demand exist for the development of spa and wellness oases both within and near urban centers. Given the finding that membership revenue often comprised up to 50% of total hotel spa revenue in those properties surveyed by Horwath Health and Wellness, a significant opportunity for the development of membership-based leisure facilities in urban areas that offer spa and treatment services; swimming pools and specialty bathing; fitness and sport; and relaxation spaces in an exclusive, potentially luxury environment—provided the facilities have the correct brand positioning and global partnerships.
Difficulties developing hotels in urban areas across India signify the possibility that greater financial opportunities could exist in the development of standalone day spas (versus hotel spas). Again, brand positioning and partnerships will determine the future success of such facilities and, therefore, must be carefully considered.
Matthew Brennan, a co-founder and director of Horwath HTL Health and Wellness, directs the market research team who author the market research and feasibility studies prepared for spas, wellness centers, bathhouses and wellness-centric hotels and resorts, and leads other administrative functions of the business. Since receiving his BSBA in Finance from The University of Denver in Colorado, USA, Matt has worked in a consulting role in four different continents including Asia, Europe, Africa and North America for private property developers, institutional investors and the world's leading hospitality management companies. Matt co-authored the chapter, "Spa Feasibility - Steps and Processes" included in the first spa management textbook titled “Understanding The Global Spa Industry: Spa Management,” published by Oxford University Press and routinely contributes to other industry publications. Matt has been in Asia for five years and enjoys golfing during his free time.
As a manager of Horwath HTL Health and Wellness, Jennifer Wilson plays an instrumental role in the research and development of individualized wellness-centric hotel and spa market research studies and focused industry reports. Prior to joining Horwath Health and Wellness, Jennifer worked within the nonprofit sector as a Master’s-level social worker in the field of mental health. During this time she served in research roles with both the University of Denver and United Nations, as well as developed her capacities in grant-making, advocacy and enterprise development. She then returned to University of Denver, Colorado, USA to pursue an International MBA with the intention of contributing more globally to the field of health and wellness. Jennifer brings multidisciplinary experience as a researcher and editor to her work. Half American, half Korean, Jennifer truly understands the necessity to balance the sensibilities and diverse cultures of the East and West in a world that is becoming ever more globalized, and where consumer preferences are merging.
The opinions expressed in this column do not necessarily reflect the opinions of Hotel News Now or its parent company, STR and its affiliated companies. Bloggers published on this site are given the freedom to express views that may be controversial, but our goal is to provoke thought and constructive discussion within our reader community. Please feel free to comment or contact an editor with any questions or concerns.
Sources
Euromonitor International (2012), Passport: Health and Wellness in India.
Euromonitor International (2012), Passport: Health and Wellness Tourism in India.
Hilton Hotels & Resorts (2012), Blue Paper: Emerging Global Spa Trends.
Ministry of Tourism, Government of India (2012), India Tourism Statistics 2012.
PricewaterhouseCoopers (2012), Hospitality Insights from the Indian CEO’s Desk.
PricewaterhouseCoopers (2012), Winds of Change: Retail Reforms in India.
PricewaterhouseCoopers (2012), Winds of Change: The Wellness Consumer.