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Leisure Handbook - Rising Stars


Rising Stars

Vera Kiss from global foresight firm The Futures Company identifies trends and opportunities in emerging markets which hold the most potential for spa operators

Vera Kiss, Futures Company
China is now a growing market for spa and wellness tourism Photo: © SHANGRI-LA, NINGBO, CHINA
Leela Kempinski in New Delhi
Leela Kempinski in New Delhi
Branded spas, like those by InterContinental, are favoured in emerging markets. The company has developed the Hualuxe brand for China
The higher appeal of luxury and premium products is most notable in many key emerging markets such as Brazil (Lapinha spa in picture) and India

The changing demographic of spa tourism
Spa tourism is by no means new to the emerging markets, as spa resorts have long attracted millions of tourists in search of holistic relaxation.

Spa Tourism is big business in the Asia Pacific region and as holistic approaches to wellbeing become mainstream and there is growing openness to eastern approaches to health in western markets, spas will maintain their momentum among international visitors who are resilient to current economic troubles.

Thailand is the world’s most popular spa destination, with China. Vietnam and Indonesia emerging as key spa tourism markets.Nevertheless, spa operators should not overlook the rising potential in catering for domestic and regional visitors, as emerging economies expand. According to the Deloitte report Hospitality 2015: Tourism, Hospitality, and Leisure Trends, domestic tourism in China grew by 30 per cent from 2005 to 2007 and in India domestic travel increased by 15.5 per cent in 2009. Partly driven by rising domestic demand, the Spa Association of India says that the country’s spa industry has seen rapid growth in recent years, with over 2,300 spas operating in 2010, generating revenues around US$400m (E306m, £256m) annually.

Moreover, as noted by The Futures Company’s Golf 2020 Vision report, recent years have seen the rising popularity of golf and country club culture in both India and China, with rising uptake of golf in second-tier Indian cities and the number of golf courses in China more than tripling between 2004 and 2011 to over 600, which signals healthy prospects for other aspirational health and wellbeing activities. Accordingly, there will be growing opportunities for operators both at the high and medium spectrum of the industry.

The drivers behind consumer demand
Alongside growing incomes, local spa tourism will be driven by rising health awareness and the growth of lifestyle diseases, such as obesity and diabetes which are increasing in emerging markets.

According to The Futures Company’s Global MONITOR survey, in many fast growing markets, consumers struggle to have control over their health. Between 2009 and 2012 in China, those who felt they had control over their health dropped from 64 per cent to 55 per cent, in India from 72 per cent to 63 per cent, and in Brazil from 41 per cent to 30 per cent.

Moreover, as stressful urban lifestyles become the norm for many newly affluent professionals, there are more opportunities for services that provide relaxing solutions for wellbeing. As a result of growing stress, levels of emotional wellbeing have also been dropping in key markets. Between 2009 and 2012, reported levels of satisfaction with emotional wellbeing have decreased from 63 per cent to 55 per cent in Brazil, 72 per cent to 64 per cent in China and from 70 per cent to 57 per cent in India. Against a global average of 26 per cent, 44 per cent of Chinese, 43 per cent of Mexican and 34 per cent of Indian Global MONITOR respondents are also more likely to buy products or services in the next 12 months that will enhance their sense of emotional wellbeing and relaxation. The MasterCard Worldwide 2011 Index of Consumer Purchasing Resilience survey also shows that 69 per cent of Vietnamese consumers surveyed said they would prioritise fitness and wellness spending. As a result, it will be increasingly important for operators to understand local consumer needs as well as locally anchored approaches to personal health and wellbeing.

How to build the appeal of spa experience
Brands hold much stronger resonance with consumers in emerging markets, with 62 per cent of Russian, 59 per cent of Chinese and 52 per cent of Indian Global MONITOR respondents considering it best to buy famous brands because you can rely on their quality, compared with a global average of 35 per cent. As a result, branded spa and leisure facilities will hold stronger appeal for many local consumers.

However, this does not mean that future consumers will exclusively or even primarily respond to western brand propositions. For example, South Korean brands and cultural exports are very popular in many other Asian markets, like Vietnam. As recently noted by the Financial Times, western brands will increasingly face competition from local and regional brands, including in the premium and luxury space.

This also results in the blending of eastern and western concepts in products as recently demonstrated by Osiao, Estée Lauder’s new beauty brand for Chinese consumers. Osiao (www.osiao.com) was designed as a hybrid east-meets-west skincare brand. The brand’s aspirational English language labelling is combined with a product formula tested with East Asian consumers, catering to local expectations such as clarity and luminosity, and it incorporates Chinese medicinal plant extracts.

Accordingly, successful branding will be able to tap into the quality associated with western products but also cater to local needs and tastes. In most markets spa tourism and membership is likely to remain aspirational. In this context it’s important to note the higher appeal of premium and luxury products in many emerging markets. According to Global MONITOR, 32 per cent of Indian, 29 per cent of Chinese and 27 per cent of Brazilian consumers report they are more likely to purchase premium products or services in the next 12 months, against a global average of 15 per cent.

Luxury is especially important for Indian consumers, with 59 per cent of Global MONITOR respondents considering it important to purchase luxury products against a global average of 30 per cent. As upper classes expand in markets like India, China and Russia the demand for high-end spa experiences is set to grow.

The importance of tailored offerings
It’s essential to understand the services that are most likely to resonate with local spa visitors. The public bathing culture traditionally associated with European spas will clash with notions of modesty held by consumers in some Asian markets. However, there are positive prospects for attracting consumers with beauty treatments such as skincare.

In China the beauty market is worth roughly US$21bn (¤16bn, £13.5bn). A SpaFinder Wellness’ Top Ten Spa Trends for 2012 report predicts Brazil, Russia, China and India will contribute over half of the total US$43bn (¤32.9bn, £27.7bn) growth for the global beauty industry by 2014. Smaller markets like Vietnam have also seen market expansion of beauty – an article in a 2010 McKinsey Quarterly said “The Vietnam Ministry of Industry and Trade forecasts the market for beauty products will grow 15 per cent a year for the foreseeable future.”

In addition to locally relevant service offerings, spa operators will also benefit from integrating local approaches to health and wellbeing. This is likely to attract international as well as local customers. As recently noted by an Indian commentator from The Futures Company’s Global Streetscape network: “People are embracing modernity but they also preserve old beliefs. Blindly adopting western customs is not considered cool and belief in traditional systems of knowledge such as ayurveda, and vedic astrology is growing.” Many Indian spa operators include ayurvedic therapies in their offering, to attract both foreign and domestic visitors who know their benefits, or want to try local therapies.

As the world becomes more multipolar both in its economic and its cultural exchanges, understanding the needs, aspirations and tastes of new consumer groups will increasingly be a differentiator for the spa business as well.

About the Futures Company
The Futures Company is a strategic insight and innovation consultancy, with expertise in futures and foresight work. The company has teams in the US, Mexico, Brazil, the UK and Argentina and partnerships in China, India and Poland. It was formed in 2008 by the merger of two businesses – Europe’s Henley Centre HeadlightVision and US-based Yankelovich. It’s a division of Kantar, the insight arm of WPP. By exploring the future needs, motivations and behaviours of consumers, and the broader dynamics shaping the marketplace, the company unlocks new sources of growth for its clients.

Web: www.thefuturescompany.com Twitter: @FuturesCo

Vera Kiss is an analyst at The Futures Company. She has a strong interest in how people engage with their health in diverse markets. She’s a member of The Futures Company’s Health and Wellness knowledge venturing team that publishes thought leadership on health, wellness and nutrition trends.

EMAIL: vera.kiss@thefuturescompany.com

From Spa Business Handbook 2013

Originally published in Leisure Handbook 2014 edition

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