Hotel and Resort Spa Feasibility - Why We Need it?
By Peter Anderson Founder, Anderson & Associates | October 28, 2008
Spas are sleek, sexy and expensive amenities that may add to your development costs between $200 - $700 per square foot, depending on plumbing, heating, water, drainage, weight, electrical and ventilation requirements. Additional layers of expense can be created when architects/owners/designers envision high-end custom amenities and spectacular levels of finishes. In many cases these costs can be justified based on their ability to generate revenue, enhance current operations and make owners and operators feel as they are exercising their perceived competitive responsibility to "keep-up-with-the-Jones." However from a cost/benefit analysis, each expense or investment must be weighed against its revenue potential. A market study and feasibility analysis gives the operator the ability to:
Significant capital investment used without market intelligence to back it up is money very poorly spent. The following paragraphs outline some of the anomalies related to spa feasibility and underscore it importance.
Rapid Expansion of Supply and Demand - A Fast Dance
Unlike the lodging environment where the basic product is relatively standard, spa environments are far from standard, and depending on the market, spas can cater to both the local population as well as the hotel and resort guest. Currently the spa market is in rapid expansion mode, with supply being created to keep up with ever evolving demand. Demand interestingly, is increasing in both scope (gender, age group and other demographics) and depth (wellness versus luxury amenity). However, it is impossible for every new spa to over-penetrate the market, so if capital is going to be deployed to develop or enhance a hotel or resort, the allocation should be used to surpass the competition. In this world, demand supports supply development, and innovative supply whets demand's appetite for "the next better mousetrap". It is not only a fast dance, but also a marathon. In the spa world, today's cutting edge modality may be tomorrow's norm.
Keeping it Simple
While pushing the envelope in terms of treatments and service delivery is important, this should not be done at the expense of providing fluff in place of substance. Ironically, some of the best spas keep their menu very simple, which makes service selection easy for the spa client and in many ways service delivery easier for the spa. A spa menu with a few well-thought-out items can be a tacit statement of confidence and quality by the operator. A focused menu approach is best supported with ability to customize treatments based on clients' preferences.