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Are spas a healthy investment for hotels? How quick are the returns? Are there different approaches followed by day and resort spas? What are the inherent challenges? Punam Mohandas and Bindu Gopal Rao paddle their way through scented waters.

When the economy slows down, people speed up. We work more, and harder than ever before, to hit our financial goals, and as a result we get stressed quicker. All of which means the calming qualities of the wellness sector can still bring healthy returns.

The spa and wellness industry in India is estimated at Rs11,000 crores and growing at 25-35% annually, according to a 2009 Ernst and Young report for the Federation of Indian Chambers of Commerce and Industry (FICCI).

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With those rather mindboggling numbers it is safe to say that the wellness industry in India is one segment bucking the recession trend. According to figures released at the 2008 Global Spa Summit in New York, the Indian spa market is valued at an estimated US$384 million (Rs1,820 crore).

But despite all this revenue, some claim spas are yet to be profitable ventures in their own right.

High staff numbers, who require specialist training and expensive equipment together with large space requirements, add up to high overheads, and unless the footfall matches that, profit will remain elusive. So how can you ensure you are getting the most out of your spa?

“If the business plan of the spa is made out properly, then the spa can be a profitable venture. However, it is also true that, profit or not, spas are an integral part of the hotel industry now,” says Vidur Talwar, director, Projects Nirman India.

His firm has recently created the spa interiors for Select Holiday Resort-Heritage Village, Manesar and The Rejuve Spa & Art Junction, The Lalit, New Delhi.

“If the hotel is not making a profit, then it means there is no proper marketing plan in place for the spa. The footfalls need to be increased, which can be done by bringing in outside clientele too, rather than relying solely on internal guests,” he adds.

Prajakta Paranjapye, managing director, Butic Spa, Fort Jadhavgadh, Pune, agrees that utilisation at spas in India is a problem. “Average utilisation and productivity rates are less than 50%, which will definitely affect the balance sheet,” she says.

“But with India’s growing executive class and with the increasing purchasing power, the response and growth potential of this business will result in increased margins.
 

Lots of international players have realised this potential, whch will, sooner or later, give way to day spas that are a mass revenue-generating opportunity. The daily treatment revenue per available treatment room recorded by day spas increased by 22% over the last year.”