How the East and West Work Together to Expand the Hotel Spa Market
By Michael G. Tompkins Executive Recruiter, Hutchinson Consulting | July 16, 2017
In the last decade, we have seen an increased willingness of hospitality and spa companies to cross geographical and cultural divides and move into markets outside of their traditional regions. It is really a function of and a result of globalization, which is impacting all business sectors. One geographical jump that seems to be getting a lot of attention these days is the Asian hospitality market. Big investors in the East are diving head-first into the Western wellness boom by buying landmark spa properties in the United States, recruiting top executive talent to lead their spa divisions in Asia, and integrating their traditional spa modalities with modern wellness culture.
This influx of Asian investors isn't necessarily seeking greenfield projects or new resorts to enter into the destination hotel market; they're choosing iconic properties that already have a foothold on the market. For example, Two Bunch Palms, the oldest hot mineral springs resort in the country and the first carbon neutral resort in America sold to CCL Holdings in 2015.
Also, Lansdowne Resort and Spa, a historic property in Leesburg, Virginia, recently sold this past April to Dejia LLC, a first-time U.S. hotel investor based in Hong Kong. Typically, Asian investments are focused on the West Coast (for obvious geographical reasons), but Lansdowne is significant because it is one of the first east coast properties acquired by an Asian investor. Also, it is important to note that one of the investor's main draws to Landsdowne was its wellness-oriented amenities, including the 12,000-square-foot spa. No doubt Dejia investors saw the opportunity to jump aboard the wellness tourism boom with an already established iconic brand.
Furthermore, last year Glen Ivy Hot Springs was purchased by Thailand-based GOCO Hospitality. GOCO plans to add a comprehensive wellness center, a Medi-Spa, organic farm and retail village, hiking trails, additional hot springs bathing zones, an education center for holistic medicine and a real estate component with 125 residential units-all while continuing to operate the iconic hot springs and spa.
So why are these Asian investors interested in iconic U.S. properties? First, Chinese tourism to the U.S. is at an all-time high. According to the latest United Nations World Tourism Organization World Tourism Barometer, Chinese tourist spent US$ 261 billion traveling abroad in 2016, a huge chunk of which was in North America. Asian investors are aware of this boom and wish to capitalize on it, and because the Chinese real estate bubble has Asian investors seeking alternative places to put their money, they're looking to the United States. The combination of tourism influx and the wellness boom in the United States makes this an attractive market for these investors. They know the people are coming and want to be there when they do.
Outbound Chinese tourism aside, the ever-growing wellness industry, when paired with spa, continues to see upward trends in growth. According to International SPA Association (ISPA) Industry Studies from the past ten years, the U.S. spa industry has been on a steady incline of 5 percent increase in revenue year after year. ISPA spa revenue statistics show the U.S. spa industry topping US$16 billion. Hoteliers are no longer seeing spas as amenities positioned in the basement, but as full-fledged resources to drive guest numbers and increase hotel revenue. With lifestyle and experiential travel at the height of baby boomer and millennial minds, hotels are looking to spa as differentiators and drivers to room nights.
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