|October 2006 - In the realm of mixed-use developments, spas
can be magnets for attracting hotel guests, meeting and conference groups,
residents, retail consumers and local day spa patrons.
More than “just another amenity,” spas offer developers an opportunity to differentiate their mixed-use properties. In some cases, adding a spa is a necessary response to local or regional competition. Either way, a spa—if operated and promoted correctly—can add an extremely profitable revenue stream to a mixed-use project.
While there are many similarities between spa and hotel operations—such as high fixed costs, laundry requirements, extensive staffing needs and reservation procedures—spas will typically retain a higher percentage of revenue income earned than will the hotel.
Should you add a spa?
How should a developer decide whether to add a spa? What size and scope represents the most viable financial and operational model? It all starts with the planning process! Including an experienced spa consultant or operator in the planning process from the beginning will prepare the spa or leisure complex for operational and financial success.
Whether developers are in the planning stage or are already building their hotel, resort or mixed-use development, a “needs analysis study” will provide valuable information that will help the developer evaluate the viability of a spa. The report should afford the owner a market study, competitive analysis, recommended space allocation and a preliminary operating pro forma, complete with financial assumptions.
Gone are the days when a “spa” described facilities that consisted of a few small treatment rooms with a limited selection of services in a cavernous or inaccessible area of the hotel. Driven by consumer demand, both spa design and the diversity of treatments and services have improved and grown exponentially in the past five years.
Because a spa is marketed as more than a service—it is an “experience”—design aesthetics will play an all-important role in the consumer’s choice of spas, and hence how the spa will eventually perform from a financial and operational perspective. Before the design process has begun, it is crucial to develop a concept or “theme” for the spa upon which the design will ultimately be based.
Remember that a successful spa appeals first and foremost to the senses.
That said, each property must consider potential challenges such as upper floor (or below grade) site locations, remote locales with difficult access, the effect of inclement weather, and other such factors. Developers will need to understand issues such as cost differentials for union labor, the availability and costs to procure exotic materials, and the build-out and fit-out costs (and the accompanying debt service). Before any details are finalized, the value engineering decisions relative to finishes, space use and related issues must be clearly defined and addressed.
Treatment rooms are the heart of any spa facility. A basic treatment room is typically 120 to 140 square feet in size and includes appropriate lighting, hand sink, countertop and storage cabinets. All treatment room walls should be constructed to minimize the impact of sound, vibration, and odor from neighboring spaces.
The basic construction cost of a massage treatment room ranges from
$40 to $55 per square foot (excluding the specialized furniture, fixtures
and equipment). Wet rooms are more expensive. Massage rooms will be the
most numerous since this treatment, in all its forms, normally accounts
for about 55% to 65% of the services given. An FF&E (furniture, fixtures
and equipment) package costing between $2,500 and $3,500 should be sufficient
to make a treatment room suitable for massage.
Services such as herbal wraps, mud treatment, and hydrotherapy are more expensive as they require floor drains, ceramic tile floors and walls, and more extensive plumbing. Construction costs for these rooms approximate those of restrooms and locker rooms—roughly $90 to $110 per square foot. Equipment packages for wraps, mud, and other body treatments can cost from $3,000 to $4,500, depending upon what specific treatments the spa offers. Hydrotherapy equipment packages are the most costly. An equipment package that includes a tub (with pumps and a water purification system), Vichy showers, and a Scots hose can cost $20,000 to $30,000.
Manicures and pedicures are frequently offered in spas and require a dedicated space. Depending upon the number of manicure and pedicure stations, the nail center can range in size from 300 to 500 square feet. (A manicure station occupies about 30 square feet and a pedicure station about 50 square feet.) Typical equipment packages for these services range from about $2,000 to $3,500.
Hair services are a variable that should be considered carefully as a part of the spa’s strategic business planning. Seldom will a hotel or resort patron utilize a hair stylist for much more than styling services. Two to four stations for shampoo, blow-drying, and make-up re-application should be sufficient for most hotel or resort spas.
However, spas that plan to seek recurring business from the local population should recognize the potential profits that salon services can generate. Those salons should plan several styling stations at 35 to 45 square feet each, and associated construction and equipment costs of $50 to $60 per square foot and about $4,500 per station, respectively.
Locker rooms with changing areas, toilet facilities and showers are also important spa components. Although hotel guests or residents may not be far from their own rooms, a spa treatment usually leaves patrons with little desire to travel any appreciable distance before they have had a chance to recuperate and clean up a bit. A comfortable locker room with a lounge, quiet area, and ample bathing facilities will be necessary to complete the “spa experience” for patrons. Such areas usually cost between $85 and $100 per square foot to build (including fixtures) but can cost significantly more if high-end finishes (e.g. marble, water features) and lavish furnishings are chosen.
Other critical factors
Other critical factors that impact the overall success of a spa include the quality and experience of the spa staff, training methodology, product selection and display, promotion and marketing, maintenance, financial and inventory controls, and the consistency of the customer service. (Each of these areas deserves further discussion, but that is another article).
There are many variables to consider in the design, construction and equipping of a spa. The capital investment must be justified by the projected financial performance of the facility and by the more “intangible impact” that the spa will have on occupancy levels, RevPar, ADRs, and the property’s competitive space in the marketplace.
Appropriate planning and design, conceptual development, the experiential
components and consistency in the delivery are crucial to the success of
a hotel or mixed-use development spa. An aesthetically pleasing spa that
delivers a relaxing, memorable experience can attract a loyal, high-end
clientele while offering the developer an opportunity to delineate the
property from competitors.
Gary Henkin is President of WTS International, Inc. Based in Rockville, MD, WTS is one of the world's foremost spa, fitness and leisure consulting and management firms. He can be contacted at 301.622.7800 or at email@example.com. His company Web site is www.wtsinternational.com.
Copyright © 2006 Jeffer, Mangels, Butler & Marmaro LLP (JMBM). All rights reserved. Global Hospitality Advisor® and Ask the Hotel Lawyer™ are trademarks/service marks of JMBM. The Global Hospitality Advisor® is published four times a year for the clients and friends of JMBM.
Jeffer Mangels Butler & Marmaro LLP
1900 Avenue of the Stars, 7th Floor
Los Angeles, CA 90067-4308
Attn: Jim Butler
310.201.3526 • 310.203.0567 fax
The premier hospitality practice
in a full-service law firm
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|Outlook 2006: GHA Hospitality Roundtable / JMBM / December 2005|
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