Saturation Nation: The Spa Market Matures

Does anybody do market research any more?

I hate to be a party pooper--especially with a consulting business that serves appetizers to the party goers. (Spa Startup Workshop, anyone? Take two, they're small.)

But really, people!

Market research is not asking your friends if they'd like for you to open a spa.

Market research is not visiting every resort spa in the hemisphere and deciding that the local market is sorely lacking in 400 square foot treatment rooms with ensuite Swiss showers, heated floors, saltwater aquariums, fireplaces and butler service.

The high end of the spa market is saturated. Yes, there are pockets of opportunity here and there. But saturation is a hard reality. The high net worth individual has an abundance of choices when considering where to spend their spa dollars. And increasingly, they're spreading the love around.

The problem with would-be spa owners is that, all too often, they're hard core spa goers. I know, that sounds like a Good Thing. We wouldn't want to buy wine from a winemaker who wasn't a wine drinker. We wouldn't want to eat an elegant dinner at a restaurant run by someone who only eats fast food.

But the spa goer-turned-spa entrepreneur--sort of like restauranteurs and winemakers--are often inspired by a deeply personal vision. That vision sometimes borders on obsession. These are the clients that start the conversation with the spa consultant by discussing in breathless detail the water feature they're planning for the entryway. (They've even got the Malaysian stone mason they've imported to do the work living in their guest room for three months while it's been constructed.)

If you're extremely lucky, your personal vision will prove compelling to lots of potential customers. If you're not so lucky, you'll blow a couple of million dollars on a spa that you simply can't afford to operate. And because you're such a spa geek, it will be impossible for you to believe that your marketplace just isn't ready for the Organic Tibetan Yak Milk baths, and worse still, doesn't even appreciate the heated, tumbled marble mosaic tile floors. The Philistines!

I know this sounds silly. But the people getting caught in this "if we build it, they will come" trap are not lacking in brains or even business education. There are plenty of MBAs freaking out over their spa's P & L tonight.

So if market saturation is nigh, why aren't more spas going out of business? Surely
we should be witnessing a shakeout. That's what happens in an industry that's saturated.

As usual, the answer is that spas are Special. Because they inspire irrational passion, there is usually someone waiting in the wings to catch a swooning spa. That entrepreneur may be paying pennies on the dollar for the facility, or may simply be walking into a lease--sometimes on a fully equipped spa. So their odds of success are better than the original operator's.

If you're considering the best way to enter the spa market, look for a customer group or market that's not being served. (Note that I say "customer group." You're not a group. It's likely that you are even an anomaly.)

One of my consulting clients literally searched the entire United States for the community with the perfect demographics and psychographics for her startup spa. When she found it, she moved there and opened a spa. She is successful because she listened to the market and she built her venture--and her life--around the needs of her customers. Her motto could easily be, "If we build it, it's because they're already here."

One area of the spa industry in which opportunity still looms large is spa management. Relative to the number of spas out there, there are very few spa managers. Experienced managers are being wooed by everyone from big hospitality organizations to day spas.

This is also a great place to start for an aspiring spa owner. If your principal experience with spa operations is being a spa client, you owe it to yourself to get a reality check. Go behind the curtain and see what's really happening while you're dozing under your Blueberry Antioxidant mask.

Spas always need smart, motivated people to man their front desks. Be frank about your ultimate aspirations; not everyone wants to play Spa University for you. But I know the best way to prevent another new competitor from entering my market is to give them a front row seat to the phenomenon of Spa Saturation!