Hotel Chains Recharge with Spas

Global lodging outfits and boutique hotels alike are discovering the restorative properties of spas to help build and extend their brands

When the Sofitel (AC) Los Angeles was renovated last year to the tune of $40 million, the hotel was updated to include a new, signature element of Sofitel properties around the world: a spa. Since 2005 the chain has been opening beauty and wellness centers with the LeSpa name—the first was in Sofitel's Marrakech (Morocco) location.

Today, 40 Sofitels around the world, or 20% of the hotel chain's entire global inventory, have a LeSpa. This year the new Beijing and Paris Sofitels will feature LeSpas—part of a growing trend for hotels to offer guests more than a place to rest their weary heads.

But this isn't simply a trendy way to lure in upscale travelers looking for luxurious amenities. On the business side, spas are increasingly becoming a key point in the brand-building and brand-extension strategies for both global lodging chains (such as Accor, the $9 billion parent company of Sofitel) and chic boutique hotels (such as the Marqués de Riscal Rioja Hotel-Spa in Elciego, Spain, which was designed by "starchitect" Frank Gehry and opened in fall, 2006). Spas are also a smart way to provide additional income, especially during slow travel months, by drawing in local nonguests to the facilities for treatments and through the sale of upscale beauty products.

At the L.A. Sofitel, for example, site of the first U.S. LeSpa, the spa is being marketed to corporate party planners as well as local Californians organizing bridal showers and birthday parties. In the four months that the spa has been open, several corporations, including FedEx (FDX) and Verizon (VZ), have taken over the entire 5,000-square-foot space for retreat-style staff events, according to LeSpa's L.A. director, Maureen Schumacher.

The cost of renting the space ranges from $500 (for three morning hours on an off-day such as a Tuesday) to $5,000 for several hours on a Saturday. Individual treatments, such as a $40 manicure or a $280 anti-aging facial, cost extra.

Replacing the Health Club

The spa also allows for co-branding opportunities for Sofitel. In the L.A. LeSpa, only Decléor and Carita products are sold.

Although Sofitel won't disclose exact sales figures, since the spa opened in December, 2006, 12% of the total revenue for the L.A. branch has come from the sale of these products alone, a healthy boost for business for all concerned. In the soon-to-open Beijing and Paris LeSpas, Sofitel will sell Lancôme products.

"In modern, state-of-the art hotels of all sizes and scales, we see hoteliers dedicating space for spas, and not necessarily for gyms or health clubs—not long ago a popular amenity," says Scott Berman, who heads the U.S. hospitality and lodgings practice at accounting and consulting firm PricewaterhouseCoopers. "The spa is quickly becoming a focal point and a brand signature of many hotel assets. It's becoming an expectation for all classes of travelers."

In the past, a gym with weight-training and cardio equipment and a sauna—the classic health club—was a popular amenity for health-conscious travelers. Today hotels are concentrating on pampering by adding serene treatment rooms and luxurious treatments, such as body wraps.

According to the trade organization International Spa Assn., North American spas, including those located within hotels and resorts, have seen an average annual growth rate of 16% between April, 2004, and August, 2006. U.S. spas drew $9.7 billion in revenue in 2005 (the latest annual statistics available). The growing wellness industry and the "masstige," or mass-market luxury, phenomenon have helped increase the popularity of spa treatments.

Casinos Rolling the Dice

Sofitel isn't alone in banking on spas to raise revenues. Other big-brand hotel chains are adding "spa" to the names and list of amenities.

The Newport Beach Marriott (MAR) in Southern California, for instance, was rechristened the Newport Beach Marriott & Spa after a $70 million renovation was completed in December, 2005. Its new name emphasizes the spa, which features private cabanas for massages and other treatments.

The trend even extends to casino-hotels looking to broaden their audiences in vacation and convention destinations such as Las Vegas and Atlantic City. When the new Harrah's (HET) casino and hotel in Atlantic City opens on Memorial Day weekend—after a $550 million expansion and renovation—it will include a spa.

Harrah's Atlantic City has gone with a well-recognized brand, Red Door Spa, owned by cosmetics company Elizabeth Arden (RDEN). Harrah's proposed the partnership, but Red Door wasn't slow to realize the potential to build loyalty for its own brand among well-heeled consumers traveling to Atlantic City.

"Red Door Spa is a recognized luxury brand with a reputation for delivering superior service," writes R. Scott Barber, senior vice-president and general manager of Harrah's Atlantic City, in an e-mail. "Today's travelers have come to expect that there will be a spa at every top property. With the opening of the Red Door Spa at Harrah's Atlantic City, we are expanding our lifestyle options for guests and becoming a comprehensive destination resort. This allows us to expand our reach, our customer base, and our revenue."

Spas Are Here to Stay

Of course, the hotel-spa concept is not entirely new. Elegant and exclusive hotels such as the 50,000 square-foot, 16-year-old Grand Wailea Resort in Maui, Hawaii included spa facilities, considered a luxe amenity on par with a private golf course for high-income guests. But as the trend explodes, it's also becoming the norm for even those who aren't jet-setters.

At the other end of the spectrum, some hip new hotel brands catering to time-pressed young business travelers in their 20s and 30s are opting to offer their own take on the trend, with sleek private bathrooms featuring a spa-like feel and upscale beauty and body-care products. Starwood's (HOT) forthcoming aloft hotels, for instance, will feature Bliss products in its minimalist bathrooms when the first hotels open in 2008. (The Bliss brand, developed by the Bliss spa in New York, is now owned by the hotel company.)

"The hotel spa phenomenon is certainly surviving a long run. It won't go the way of the revolving restaurant. The spa's clearly a trend and not a fad for hotels," says Jim Anhut, senior vice-president for brand development at InterContinental Hotel Group (IHG).

For Anhut, the key is to understand a hotel's clientele. "A spa really has to be aligned with a particular brand. Our Indigo brand [of boutique-style hotels] is about short-term stays. So we don't have spas, which are better for destination-type hotels." In other words, busy guests staying only one evening during a hectic business trip might not have time to visit a spa but still want to feel spoiled by their hotel experience.

Still, both aloft and Indigo hotels feature elements that nod to young business travelers' awareness and expectations of a spa experience and their need for high quality bathroom products. No generic shampoo with a hotel logo slapped on here. These fresh new hotel brands offer spa-themed bath products and sleek design details that take their cues from chic spas. The spa is clearly a draw, for both hoteliers and guests alike.

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