Investors not relaxed enough to put money in spas

Just two months ago, the largest spa in Romania, Cocor Spa, was launched inside the Cocor Hotel in the Neptun Olimp seaside resort. This destination spa, which covers a surface of 3,000 sqm, was opened following an investment of EUR 6 million. Cocor Spa became a member of the International Spa Association in February.
However, this does not cover the shortage of such relaxation oases in Romania.
“The lack of spas with international renown is the main reason,” explains Oliver Petcu, managing director of CPP Management Consultants Ltd. Once such a spa exists, he is convinced that values will be established and mentalities change.
The lack of local or international investors who are willing to put their money in opening a spa could be explained by the fact that it requires a large initial investment and the break even only comes four or five years later in the case of top spas under franchise, says Petcu.
On the other hand, Liliana Paraipan, general manager of Eden Spa and also general manager of Mondo (a spa business management and consulting company), thinks it is a matter of supply and demand.
“The spa concept is relatively new in the world, and I think Romania is making quick strides in catching up with the worldwide trends. As more and more Romanians start to feel the effects that their extremely fast-paced and stressful lifestyle has on them, more will look for services that offer them the escape, re-balance and relaxation of the spa. At the moment new locations are being opened, investments exist, and the market will increase proportionally, both in terms of supply and demand,” says Paraipan.
The Czech Republic is by far the country with the highest number of spas, located in Prague and Karlovy Vary. A distant second is Hungary with spas in Budapest. Over 60 percent of the clients who come to spas in these two countries are foreigners.
“Neighboring countries have a greater number of spas which also started to develop some time ago, and those markets are mainly growing in quality. The concept of a spa isfamiliar to inhabitants of these countries but most such facilities attract foreign clients as they are located in resorts or hotels,” says Paraipan.
Currently, the local market is estimated by CPP Management Consultants at EUR 40 million. At the moment, two projects have been announced: E'SPA at Radisson Poiana Brasov, which is on hold, and Shiseido at Stejarii, a project of Tiriac Imobiliare, which is going “according to plan, according to our information,” says Petcu.
“Among the brands that have confirmed their interest in Romania to CPP are Molton Brown, Givenchy, L'Occitane and Caudalie,” he adds.
“For now I cannot make an estimation regarding the value of the market, taking into account that only a few spas have been open for more than a year, and the
market is only now beginning to take shape. I would say we will find a relevant figure for this market at the end of this year or the beginning of the next,” says Paraipan.
Research by CPP Management Consultants has found that spa customers work mainly in middle and top management in multinational companies (80 percent of this category are women), especially in pharma and banking; others are entrepreneurs (of whom 60 percent are women) and have businesses directly or indirectly connected to luxury. The segment of celebrities (artists) is insignificant.
Paraipan expands this profile of the spa customer. They are generally young (56 percent aged between 26 and 35 years old; 23 percent aged between 36 and 50 years old and 12 percent aged between 18 and 25 years old), 80 percent of them have superior education and work in a stressful environment in middle and top management.
Most are health-conscious (67 percent are non-smokers and 66 percent drink at least one-two liters of natural mineral water a day).
There is also one peculiarity: 75 percent of spa goers – though they may sleep from six to eight hours a day and do not suffer from insomnia – complain they do not enjoy restful sleep.
A sizeable majority (75 percent) of regular spa users seek relaxation, toning and detoxification. Last but not least, 41 percent also work out regularly and need an escape from the hectic pace of daily life.
“These are people who invest time and money in anti-stress rituals and therapies, to the tune of RON 150-1200 a month. Most clients who come to Eden Spa have a sedentary lifestyle and are affected by long periods of sitting down. They want to escape and spend time being spoiled, to smell appealing aromas and leave their worries at the door. The most popular services are relaxing massages with volcanic rocks, rituals and wraps,” says Paraipan. Prices range from RON 140 for a 50-minute massage to RON 300-400 for a relaxation ritual lasting two hours.
The daily Eden Spa center in Bucharest welcomed approximately 3,000 clients between
May 2008 and May 2009, of whom 1,200 were new clients. Of these, most were women and only 20 percent men but this category is also developing. “We mainly target Bucharesters but 15 percent of our customers are expats
who live in the capital,” says Paraipan.
“Last year Eden Spa posted a turnover of around EUR 225,000 but for 2009 we think it will fall, taking into account that sales to companies have substantially reduced,” says Paraipan.
Eden Spa is also in charge of the operational management of The Spa Hilton Sibiu. In the first five months since it opened, 1,000 new clients went to The Spa, with an average of 600 therapies given a month. Romanians make up 85 percent of the total clientele and foreign customers 15 percent.
The investment that hotel owner Nicolae Minea put in The Spa amounts to EUR 4 million. “According to estimations, the aim is to recover the investment within three-four years of the opening,” says Paraipan.
“The Spa Hilton Sibiu opened in December 2008, in the midst of the financial crisis. We cannot make a comparison with what was before the crisis,” says Paraipan.
The cost of a two-hour ritual ranges between RON 200 and 250, a 50-minute massage is RON 90 as is an anti-stress bath.
“Since we address both hotel guests and local residents, we have combined the characteristics of a destination spa with more complex packages that are offered during a longer stay and packages of therapies that can only be applied in one day. The Spa offers a wide range of water therapies, various types of massages adapted to the therapeutic and relaxation needs of the customers, corporal therapies such as exfoliation and wraps with various aims in mind such as intense hydration, reducing the effects of old age, reducing rheumatic aches and detoxification. The Spa also offers more extensive rituals of relaxation and detoxification.
VIP packages are offered to those who opt for one of the following: the Cleopatra ritual (a bath in milk and honey, literally, followed by a royal massage), HoneyMoon Ritual for couples on their honeymoon, the Rose
Ceremony for a young and delicate skin and the Wine Spirit of the Spa, a care ritual based on grapes and wine exclusively for men.

By Otilia Haraga
otilia.haraga@business-review.ro