INTERVIEW: RICH WEISSMANN
I think there’s a
misconception that spas don’t make money... We don’t make excuses. We ask why hasn’t it been
[profitable] and what can we do to make it so?
While residential villas have worked well at Miraval, spa real estate is not a priority for KSL
natural profit centres. “I think there’s a misconception that spas don’t make money,” he says, citing two causes for this: one, the spa operators who make excuses, blaming the hotel for adding the spa as an afterthought and not giving it enough focus; and two, the hotel owners who refuse to believe spas can turn a profit. “Part of [the challenge of] running
a successful spa operation is scale,” he admits. “That’s what we focus on. We don’t make excuses: it hasn’t been profitable, therefore it can’t be. We ask, why hasn’t it been and what can we do to make it so? And we’ve been very successful at that.”
Fool’s errand A key element of the resort at Tucson, alongside its 118 rooms and suites, are 16 privately owned villas, which are rented out whenever the owners are not in residence. But although it has proven successful in this context, further spa real estate is not something KSL will be rushing into, following lessons learned from Miraval Living in New York City, a residential building with which the brand parted ways in 2010 following a disagreement with the developer. “We don’t predicate our investment on
residential,” says Weissmann. “It was a fool’s errand during the last upswing, so we predicate our investment on being able to make the resort itself successful. We think there is an ongoing opportunity to create a Miraval Living concept – it [spa real estate]
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has been done successfully at Tucson and elsewhere and I think people are looking to incorporate wellness into their lifestyle, but it’s got to be done thoughtfully.” But creating standalone residential
communities is another matter, he feels. “If you lived in a Miraval community, you might take a fitness class but you’re not going to have a facial or massage every day. In a resort, your guest is only there for a short period, so is more likely to try those services. The model is very difficult at the pure residential level as opposed to residential and resort combined. First and foremost, it has to be a successful resort.”
Global plans Further to its plans to roll out Miraval at home in the US, Miraval is also looking at global opportunities for the brand. “We think the name would translate well internationally,” says Weissmann.. “[We also believe] the international
traveller is looking for the same type of spa and wellness experiences as our domestic traveller, so we think it will work. The question is how do we do it and where do we go? I think the very first one outside the US has to be very thoughtful.” The first site, he adds, is likely to be in
Europe – the Denver-based firm has an office in London, and at present its only non-US investments – including The Belfry Hotel & Resort, the Hotel du Vin and Malmaison hotel chains and Village Urban Resorts – are in the UK.
Looking ahead to the future,
Weissmann sees the biggest challenge for the spa industry as “discipline, and being able to deliver a relevant product on a cost-effective basis for both the operator and the consumer.” Part of rising to that challenge, he
adds, will be creating spa and wellness opportunities that are meaningful not only for the current generation of core spa consumers – those who are aged 45 and over – but also the millennial generation coming up behind them. Weissmann is confident, however,
that the spa sector – and indeed leisure and travel in general – will continue to be attractive to investors, even in these uncertain economic times. “While [travel and leisure spending] is
discretionary, given the extent of global travel today, recession in one place doesn’t necessarily mean your business is going to suffer a significant decline. “We’ve invested through good cycles
and bad cycles and been successful at it. I think that just reflects having an eye for what is relevant to the consumer and being able to offer value.” l
Rhianon Howells is a business journalist and the consulting editor of Spa Business magazine Email: rhianonhowells@
spabusiness.com
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