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. Thailand is the world’s most popular spa destination with nearly 4 million international visitors arriving for spa holidays in 2009. China and Indonesia are also key spa tourism markets, with 3.3 million and 2.5 million international spa visitors respectively in 2009, according to a 2011 EuroMonitor blog, Spa Tourism is Big Business in Asia Pacific. 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.
Nevertheless, spa operators should not overlook the rising potential in catering for domestic and regional visitors as emerging economies expand. According to the 2011 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 (¤306m, £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 as lifestyle diseases, such as obesity and diabetes are set to increase 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 for 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 health and wellbeing.
How to build the appeal of spa experiences
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 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 key 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 new upper classes expand in markets like India, China and Russia the demand for increasingly high-end spa experiences is also set to grow.
The Importance of tailored offerings
It is also essential to understand the types of services that are most likely to resonate with local spa visitors. The public bathing culture that has traditionally been associated with European spas is likely to clash with notions around modesty held by consumers in some Asian markets. On the other hand, there are positive prospects for attracting consumers with beauty treatment offerings, 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 are expected to 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 journal stated that “The Vietnam Ministry of Industry and Trade forecasts that 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 or lifestyle 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 both to attract foreign visitors and domestic visitors who know their benefits, or want to try local therapies for the first time.
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.
