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Health and Wellness

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Issue 1 - INDIA

Special Market Report

HORWATH HTL HEALTH AND WELLNESS

Horwath HTL Health and Wellnessis the newly conceived division ofHorwath HTL, specializing in thedevelopment of destination retreats,lifestyle and wellness centers,bathhouses, resort, hotel, medical,and day spas, and health and fitnessclubs globally.

Founded by Ingo Schweder, Horwath HTL Health &Wellness provides a range of wellness focused projectconsulting, including market research and feasibilitystudies, brand and concept development, andexecutive recruitment.

GOCO Hospitality, also founded by Ingo Schweder,is a specialty management company concentratedon similar types of health and wellness facilities,including mixed-use wellness communities, resorts,and hotel spas, with over 20 projects in countriesacross the globe.

Horwath HTL Health and Wellness Issue 1 - INDIA

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INTRODUCTIONIndia stands at the forefront of today’s global spa andwellness market, alluring domestic and internationalvisitors alike with the time-honored traditions ofAyurveda and yoga and high quality, affordablemedical tourism.

Now poised to become the fifth largest consumermarket globally by 2020, India demonstrates allthe demographic advantages of an ideal marketfor leading international spa and wellness brands.

At present, the country boasts a 350-million strongmiddle class, a notably large youth population(50% of which are under the age of 25), risinglevels of disposable income, and associated increasesin overall aspiration and experimentation, as wellas obesity, related health issues, and healthconsciousness (PricewaterhouseCoopers, 2012)

These factors, in conjunction with a growing numberof low-cost domestic airlines, like SpiceJet and IndiGo,suggest that demand for all things wellness and spa isexpected to grow in the coming years.

PricewaterhouseCoopers (2012) defined themodern Indian wellness consumer as belongingto one of four distinct segments.

Forming the base is a substantial mass of individualsknown as “passives” who total over 700 million,do not follow health and wellness trends, and arelargely financially restricted from partaking in them.

“Beginners” constitute 150 to 200 million individualsand demonstrate initial steps towards preventativecare and improvement of appearance.

“Actives” make up a segment of 15-25 million, areknown to follow health and wellness information, willpay premium dollar for products that claim benefits,and typically exhibit some brand loyalty.

Finally, the smallest segment, known as “believers”and totaling one to two million self-selectedindividuals, are early adopters who demonstrateextensive awareness on the subject and demandresults-driven solutions.

Believers and actives represent the fastest growingsegment of the market; however, beginners andpassives, totaling nearly 98% of the population,comprise the largest volume opportunity.

Unique growth opportunities exist for all fourconsumer segments; however, offerings must beunambiguously tailored and marketed to the individualneeds and demands of each.

International health and wellness tourists, particularlyfrom the Middle East, are flocking to India in recordnumbers. Growing 24% in 2011 and attracting nearly45% of the world’s medical tourists on an annual basis,the country’s medical tourism industry is thriving underthe conditions of strong government support, lowcosts, advanced equipment, skilled practitioners, andlarge private investments.



CONSUMER TRENDSThe idea of ‘wellness’ has become increasinglyingrained in conventional notions of what constitutesa healthy lifestyle, complementing existing scientificand medical approaches to health. Thus, the globalspa industry has responded by innovating a broadspectrum of offerings that can fulfill increasinglysavvy consumer demands. In India, the concept of‘wellness’ has been interwoven into various aspectsof local culture through the traditions and practiceof Ayurveda and yoga, which originated in the foothillsof the Himalayas.

Today, domestic and international tourists flock tothe southwestern region of Kerala for specializedAyurvedic treatments. Interestingly, yoga remainsrelatively uncommercialized in India, as comparedto other popular yoga destinations such as HongKong, Shanghai, Tokyo, and Singapore, which haveseen new studios open in abundance.

Against the backdrop of a deeply ingrained traditionalwellness culture, the preferences and attitudes ofmodern Indian spa consumers are now evolving.They are savvier about the quality and value ofproducts and services they purchase and more opento experimenting with new and different offerings.

Not only do they visit spas for hair maintenance, nailgrooming, skin care, and beauty treatments, but, withgreater societal awareness about stress, obesity, andother serious health issues, guests are looking to spasfor evidence-based, results-driven solutions.

The Indian government has even assumed a supportiverole in the health and wellness movement bypromoting the domestic sale of health and wellnessfood and approving the Participatory GuaranteeSystem (PGS) for Organic Farming, which has resultedin a flood of organic products now available in thecountry.

Euromonitor International forecasts that health andwellness tourism is expected to experience a constantvalue CAGR of 22% from 2011 to 2016, with medicaltourism seeing a CAGR of 25% in constant value termsover the same period. During this time, the spa marketis predicted to consistently assume over 50% of totalhealth and wellness sales in the country.

While females accounted for 70% of total demand in2011, there is a demonstrated increase in maleconsumers utilizing spa treatments and professionalgrooming products, thus, demonstrating a significantopportunity for growth in this segment (EuromonitorInternational, 2012).

THE OPPORTUNITYBoth domestic and international visitation trends inIndia have demonstrated relatively steady growth overthe past 10 years, with domestic visits to all states andunion territories of India reaching one billion andforeign visits reaching 21 million in 2012 (Ministry ofTourism, Government of India, 2012).

Given these statistics, domestic tourism significantlydominates India’s travel and tourism industry,capturing 98% of the total volume in 2012. One ofthe major contributors to this industry is currentlythe wellness and spa market.

PricewaterhouseCoopers (2012) valued India’s totalwellness market at USD $11 billion in 2011 andforecasted that it would surpass USD $18 billion(INR 1 trillion) in the next four years. This projectionpresents extensive opportunities for the wellness andspa market to imagine facilities that will not only serveexisting customers but also capture new segmentsby going beyond traditional spa services with moreinnovative, exclusive, and distinctive offerings, suchas comprehensive female salons, male groomingateliers, and medical cosmetic services.

Additionally, India’s travel and tourism sector isanticipated to demonstrate further growth as thecountry continues to host internationally-marketedevents, such as the 2011 Formula One IndianGrand Prix, and initiate government-led campaignstargeting tourists from select countries (EuromonitorInternational, 2012).



HOTEL SPASHorwath HTL Health and Wellness believes that thereis a strong opportunity to develop internationally-benchmarked hotel spas, as well as destination andday spas, that offer a full range of amenities similarto those in spa-mature markets in the region, suchas Hong Kong and Singapore. Thermal bathing,advanced beauty treatments, medispa services, andmale grooming are becoming increasingly populararound the world. However, India has yet to fullyexplore application of these trends within its ownspa and wellness market.

For example, in a recent case study of hotel spas inMumbai, Horwath HTL Health and Wellness foundthat there was standardization across luxury facilitieswithin the city. Five-star hotel spas had five to sixtreatment rooms and offered 21 different massage,body, facial, and hydrotherapy treatments, on average.Most offered similar pricing structures and treatmentmenus, commonly including Ayurvedic treatments,aromatherapy massages, body scrubs, and facials.These spas were generally profitable and membershipplayed a substantial role in revenue generation,often comprised up to 50% of total earnings.

However, it is worth noting that, given the size anddensity of Mumbai, understanding and accounting

for the immediate demographic surroundings of aproperty is absolutely critical when developing allaspects of the spa facility. In striving to differentiateoneself in a market with so many new entrants, savvyhotel owners would do well to ensure that their spa isnot merely an “add-on” feature but rather anindependently managed profit center on its own.

Hilton Hotels & Resorts (2012) recently commissioneda survey in which 45% of respondents indicated thatthe existence of a spa attracted them to a particularhotel, and 69% expressed that there was a goodchance that they would use the spa during their stay.

This opportunity is especially significant asPricewaterhouseCoopers (2012) reports that therewere approximately 114,000 hotel rooms spreadacross India’s various hotel categories in 2012,which was an estimated 150,000 rooms short ofwhat was required at that time. Thus, there ishuge potential for owners to capitalize on thedevelopment pipeline by designing full service spafacilities in tandem with anticipated hotel growthand demand. A number of luxury hotel brands havealready made heavy investments along these lines;however, the full potential of this space has yet tobe realized.



Several major international brands havedemonstrated both unique and effectiveapproaches to the establishment of spasacross India.

• TAJ Hotels Resorts and Palaces developed its ownspa brand, JIVA spa, in which the various TAJproperties offer differing amenities and standards.

• The Leela Palaces, Hotels and Resorts hasoutsourced its spa to a UK-based product company.

• The Oberoi Group’s spas are only accessible toin-house guests.

• Six Senses Hotels Resorts Spas is developinga day spa at Trump Towers Pune

• Mandara Spa, with various properties across India,boasts one of the largest spas in all of Asia.

• GOCO Hospitality is becoming an active playerin the Indian hotel spa market, with projectswith MGM, Bellagio, and Ritz Carltonunder development, amongst others.

DESTINATION SPASHorwath HTL Health and Wellness strongly believesthat, in India, financial opportunities exist beyondluxury hotel spas.

The fact that Ananda in the Himalayas, located inNarendra Nagar, Uttarakhand, is India’s only currentlyoperational destination spa of global repute clearlydemonstrates room for growth in this market segment.

Foreseeing this trend, a number of destination spasare currently in planning and development stagesacross the country.

For example, in the Himalayan region, Max VenturePvt. Ltd is constructing Vana Retreats, a wellness retreaton the outskirts of Dehradun, Uttarakhand.

GOCO Hospitality is in the process of creating adestination spa in Dharamshala, Himachal Pradesh.

In Kerala, destination spa packages are marketedto visitors year round in an effort to compensatefor low (monsoon) season occupancy.



CHALLENGESBeyond the requisite marketing, branding,conceptualization, and design of a spa, it is of equalimportance that robust operational structures areput in place. Owners and operators must understandtheir target market and implement marketing strategiesthat effectively capture that market as intended.

For example, domestic and international spa guestsshould be treated as two distinct market segments,due to differences in preferences, behaviors, values,cultures, and the like. Hence, spa owners and operatorsneed to objectively analyze the impact of, say, thegeographic location and surrounding infrastructure onboth segments. Of additional importance is the factthat Indian consumers are highly brand conscious,making it essential for spas to choose products thathave global reach and pulling power.

There are significant opportunities to serve well-travelled Indian consumers who have been introducedto diverse spa experiences across the globe. However,spa owners and operators must understand that theseguests can be especially demanding and particularwhen visiting domestic spas.

For example, spa goers often request that severaltreatments be performed simultaneously, such as amanicure with a facial or a cosmetic treatment witha foot massage. If spas are able to tailor their serviceofferings in order to accommodate these personalizedrequests, they will be rewarded with a win-winproposition: increased guest satisfaction and spaprofitability.

Finally, a surge in the spa and wellness industry willresult in a predictable shortage of skilled therapistsand spa managers. There is already a limited supplyof qualified staff and management within the industryand a noticeable dearth of investment in relatedtraining schools and programs.

Horwath HTL Health and Wellness believes this issueneeds to be addressed immediately in order to ensurethat the future supply of skilled staff matches thegrowing demand for spa services. Additionally, it isimperative that staff receive internationally-benchmarked professional training of the higheststandard. For example, many Ayurvedic practitionersare not trained to meet the needs and expectations ofinternational spa goers, thereby representing asignificant and impending staffing challenge.





CONCLUSIONIndia’s rapidly evolving economy, maturing population,broadened consumerism, and strong Bollywoodinfluence on image and status present limitlessopportunities for spa developers, owners, andoperators to breathe innovation and inspiration intothe local wellness market.

This combination of factors makes India ideal for thedevelopment and promotion of an overall expandeddefinition of health, relaxation, and luxury beyondtraditional notions of Ayurveda and yoga. However,growth must not be limited to Kerala or the Himalayaswhen considerable opportunity and strong demandexist for the development of spa and wellness oasesboth within and near urban centers.

Given the finding that membership revenue oftencomprised up to 50% of total hotel spa revenue inthose properties surveyed by Horwath HTL Health andWellness, we believe that this indicates a significantopportunity for the development of membership-based leisure facilities in urban areas that offer spaand treatment services, swimming pools and specialtybathing, fitness and sport, and relaxation spaces inan exclusive, potentially luxury environment, providedthat the facilities have the correct brand positioningand international partnerships.

Additionally, it is worth noting that difficultiesdeveloping hotels in urban areas across India signifythe possibility that greater financial opportunitiescould exist in the development of standalone dayspas (versus hotel spas).

Again, brand positioning and partnerships willdetermine the future success of such facilities and,therefore, must be carefully considered.

SOURCESEuromonitor International (2012), Passport:Health and Wellness in India.Euromonitor International (2012), Passport:Health and Wellness Tourism in India.Hilton Hotels & Resorts (2012), Blue Paper:Emerging Global Spa Trends.Ministry of Tourism, Government of India (2012),India Tourism Statistics 2012.PricewaterhouseCoopers (2012),Hospitality Insights from the Indian CEO’s Desk.PricewaterhouseCoopers (2012),Winds of Change: Retail Reforms in India.PricewaterhouseCoopers (2012), Winds of Change:The Wellness Consumer.

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