Developers Ask – Which Comes First, Hotel or Spa?

Over the years, I have had many conversations with investors and developers working on new hotel projects. As with most hotels these days, their project will feature a spa and so they reach out to me for some advice on how best to conceive and implement this component of their project. Before I can answer their questions, I usually have a few of my own…

The first question I ask is whether or not the hotel operator has been appointed. Many hotel brands have their own ideas about what a hotel spa should be. Indeed, a number of hotel brands even have their own spa brands and concepts. In these situations, the hotel will at the very least want to ensure they have input into the spa development. In the case where they have their own spa brands, they will probably want to operate it themselves too.

Assuming the developer has yet to appoint either a hotel operator or a spa operator, my next question is which one more important to the project. In some projects, the spa is the most critical component, even more so than the hotel. The spa is not just a USP but is infact the core product. This would be true in a destination spa / wellness project. However, more often than not, it is the hotel operator which is the most important appointment to be made. If this is the case, my advice to the developer is to make the hotel appointment first, before the spa operator or consultant. Otherwise, everything that has been put in place could be thrown out the window when the hotel operator is appointed, because their respective visions didn’t align.

There’s another good reason for appointing the hotel operator first. As a spa operator, I want to know who’s running the hotel before I commit to the spa. I want to be sure it’s an internationally known brand with a solid reputation. The main attraction of operating a spa inside a hotel is the captive audience of hotel guests. If the hotel is not of a good standard, it follows that the guests won’t be great for the spa either. And whilst there may be potential to also attract spa guests from outside the hotel, these guests are usually more difficult and expensive to acquire than those from the hotel itself.

There are also a number of operational issues that often require a close working relationship between the spa operator and the hotel operator. If the two parties can not work together effectively, the spa business and the guest experience will suffer. In many cases, the spa operator will have a revenue or profit share with the hotel, in lieu of rent. Even if the arrangement is a pure rental agreement, hotel guests usually want to be able to charge their spa treatment to their room account, rather than having to pay separately. This means the hotel is receiving the payment from the guest. So now the spa operator needs to invoice the hotel for their share of that guest payment. If the relationship is not good, then all sorts of issues can arise. From first-hand experience, I can tell you this situation can often lead to a lot of angst between hotel and spa operators.

If neither a hotel management company or a spa management company has been appointed, owners and developers will often turn to spa consultants in the early stages of a project. Whilst this certainly a better option than having nobody overseeing the spa development, it can sometimes make things more complicated once the eventual spa operator joins the project. Most established spa operators will have their own preferred systems and processes and this extends to everything from design to facilities to OE, etc. So, the more of these things that have been confirmed prior to their involvement, the more potential there is for a disconnect. Another key consideration is that much of the work the spa consultant would do for the project for a fee, would be done by the spa operator at no cost.

Thus, as a general rule, my advice to developers would be to decide on the hotel management first, then the spa management. Then, if it’s decided to appoint a 3rd party to manage the spa, I would strongly advise appointing that spa operator as soon as possible, rather than hiring a separate spa consultant.

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