New York Spa Alliance Symposium Wrap-Up

new york spa alliance symposiumImage Courtesy of Lisa Starr

On May 17, the annual New York Spa Alliance symposium took place at the Cornell Club, New York City, and brought out a stellar crowd of spa owners, developers, entrepreneurs and product companies. It was organized by Cornell Professor Mary Tabacchi and the NYSPA board, who put together a program of presentations and panels on a variety of spa and wellness industry topics.

Major themes of the day were:

Consolidation in the Hotel Spa Sector

A panel of advisors from CBRE Hotels, Julie Surago, Mark Van Stekelenburg and Jenna Finkelstein, shared their research data showing that spas in hotels saw net profits rise 11 percent from 2015 to 2016, and gross profits were up 4 percent. More hotels are jumping on the wellness lifestyle bandwagon, but the effect of this can be difficult to measure, as wellness features move out of the four walls of the spa and into the rest of the property. Many hotels are collaborating with third-party spa management for leases in urban areas where labor costs can make it challenging for spas to show a profit.

The recent acquisition of Miraval by Hyatt illustrates that big brands see growth opportunities in wellness, but it is quicker and easier to acquire an already successful brand than to start your own and wait through the learning curve. Marriott will also utilize the wellness trend to grow or highlight some of its 30 brands, comprising 5,700 properties in 110 countries.

The Financial Impact of Wellness

Representing the investment banking community, L Catterton vice president Tehmina Haider and Moelis & Co. senior vice president Aarti Kapoor discussed increasing investments in spas and wellness businesses. Haider shared that L Catterton, already owners of Bliss, Elemis & Peloton, are looking to invest in “great consumer brands” that are authentic and have a solid financial profile and strength with consumers. L Catterton typically plans on a 3- to 5- year investment window to work with agile businesses that can evolve from the original vision if that is what the market requires. Kapoor noted that companies are especially interested in businesses with a recurring element; yoga and cycling have been popular as they are attractive across age and gender segments, and clients typically participate over the long term.

A second financially oriented panel was moderated by Tanu Purl of Elizabeth Arden and featured Brigitte King, deputy general manager of strategy & acquisitions for L’Oréal, and Elana Drell-Szyfer, CEO of Laura Geller Beauty. With the retail landscape changing, and consumers going into stores less often, the experience becomes a key part of bringing them back. As a product-centric company, L’Oréal sees less delineation between beauty and wellness, and is looking at stores and brands that provide new services and experiences. Acquisition by L’Oréal provides resources like capital and access to science and innovation, at a fast pace and large scale. Drell-Szyfer spoke from the private equity perspective, and shared that earlier stage investors appreciate the augmentative element of both service and product; service alone can be too risky, and product alone not distinctive enough. Elements that go together double the opportunity with the consumer. These financial professionals reiterated the earlier panel in that the important components they consider are authenticity, a “fundamental kernel” to the brand, and the level of engagement of consumers with your brand. Drell-Szyfer added that, when valuing an acquisition target, these deals are “never without emotion, and some level of a leap of faith. Passion drives the valuation north.”

A third panel on mergers and acquisitions featured business owners Barbara Close of Naturopathica, Annbeth Eschbach of Exhale, Nicolas Ronco of Yelo and Denise Dubois of Complexions Spa. Each has a clear vision when they began their companies, but have to continually fine-tune to stay current. Eschbach says that we are at a tipping point; “What is happening in the hospitality space is an enormous opportunity for everyone. Consumers are prioritizing wellness and wellbeing, so hotel properties need concepts that are not just spa or fitness, but are positioned to deliver both classes and healing.”

The Role of Beauty Within Wellness

The final panel of the day featured Tom Klein, COO of Canyon Ranch, Susie Ellis, CEO of the Global Wellness Institute, Eschbach and Mark Wuttke, president of Babor, debating the Definition of Wellness. Eschbach feels that wellness is the new mecca; the current popular trends­, including yoga, fitness, massage, mindfulness, juicing and detox all have their roots in wellness. Wellbeing is the outcome for consumers who want to better themselves, and the stage is infinite, wellness can happen anywhere. Ellis recalled a similar debate about the meaning of the word “spa” a decade ago; what resulted was that it was defined generally, with a variety of subcategories, which worked fine. Ellis says that consumers don’t care what the specific definition is, as long as they can identify it when presented with it. Klein contributes that happiness is a byproduct of wellness; over the last 12 months at Canyon Ranch, he has talked with many guests about the transformation they have experienced, and is happy about the lives that have been saved through a blended scientific and practical approach. Prof. Tabacchi closed by commenting that boomers aren’t going to go where their grandmother went; we have to change the model.

In addition to these compelling discussions, additional presentations were given by Nancy Davis of the Global Wellness Institute; Samer Hamedah of Zeel; Rachel Hogancamp of Rasa Spa in Ithaca, New York, and Sue Edinger from Inns of Aurora in New York; Allie Hope of Virgin Hotels, Thomas Klein of Canyon Ranch, David Gutstadt of Equinox Hotels, and Rika Lisslö of Dream Hotels. As usual, we all wished we could have had a few more hours, and left feeling inspired by the potential of the moment.

–By Lisa Starr

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