Posted on Mon, Apr. 17, 2006

BY DOUGLAS HANKS III
dhanks@MiamiHerald.com

Forget myrrh-scented aromatics, caviar-infused facial creams and bamboo body polish.
Even the poshest of hotels find they need a decidely un-exotic ingredient to make their spas successful: local customers.

Consider:
• At South Beach's Setai, where a two-hour Asian spa ''ritual'' costs $325, roughly a third of spa business comes from the Miami area.
• As part of a major upgrade of the Bonaventure Resort in Weston, new owner Thomas Ireland has tapped Elizabeth Arden's Red Door to operate his new $14 million spa.

But even with 404 hotel rooms, Ireland predicts as much as 40 percent of the spa's business will come from the Weston area when it opens this June.

• Hotel guests are actually the minority at the Biltmore's new $3 million spa. The venerable 280-room hotel in Coral Gables used to get by with some no-frills massage tables off its basement gym.

But in recent years it was losing too many conferences to rival hotels with modern spas. Almost a year after it opened, the new 12-room spa with a walkway suspended over an indoor pond counts on local customers for about 60 percent of its business.

''It's my primary focus,'' spa director Martina Perko said of her local clientele. ``We want them to be aware we're here for them.''

With South Florida's lodging industry in the midst of a spa construction spree, local customers are bound to find themselves (and their indulgent budgets) more coveted than ever.

In South Beach, the Delano has purchased a shuttered building across the street from its famous oceanfront location and plans to move its spa into an expanded facility there, the spa director said. (A spokeswoman for the Delano's parent company, Morgans Hotel Group, later said plans for the building aren't final.)

Down the street, the Loews is spending $11 million on a new Elemis spa set to open next year.

On the other end of town, trendy hotelier André Balazs recently opened his Standard resort and boasts the spa facilities take up more square footage than the 105 rooms. With a co-ed Turkish hamam sauna, open-air mud baths and a bayfront yoga dock, the Standard hopes to create a communal ''bathing culture'' where locals stop in on a daily basis to rejuvenate.

''Our business model is critically based on a very local active membership,'' said Balazs, who expects 60 percent of the Standard's spa customers to be local. ``We were interested in more of a Roman kind of spa. The spa becomes integral to your daily life.''

The proliferation of hotel spas underscores what a crucial amenity they've become in the lodging industry. Between 2000 and 2004, hotel spas more than doubled to 1,662 facilities, easily making them the fastest-growing segment in the $11 billion U.S. spa industry, according to the International Spa Association.

And with profit margins between 15 percent and 25 percent, hotels increasingly see spas as serene cash cows. Especially since, unlike tennis courts and golf courses, spas have potential customers who do not need special skills -- or even energy.

''It's becoming more mainstream,'' said Andrea Foster, a hospitality analyst and vice president at PKF Consulting. 'People are saying `I want to try this.' ''

REASONS TO SPLURGE

How have spas become so big? Experts cite everything from baby boomers resisting the aging process to nerves rattled by 9/11 to the general drift toward pampering and luxury.

Though spas now rank high on travelers' to-do lists, many hotels find they can't count on guests to keep the facilities profitable. The typical ''capture'' rate for hotel spas is 12 percent, meaning more than 80 percent of guests never set foot in the facility.

Even so, hoteliers said they noticed a significant shift in the past four or five years from a key travel constituency: meeting planners. The executives charged with organizing lucrative conferences and association gatherings increasingly refused to consider hotels without ample spa facilities.

''It's an absolute necessity for high-end corporate meetings,'' said Walter Banks, owner of Fort Lauderdale's Lago Mar Resort. The 204-room hotel opened its spa in 2002 and expanded it two years later. ``The spa is like the swimming pool was years ago.''

Even so, some hoteliers say group attendees often are the hardest to lure down to the spa because of their packed schedules. ''Most of the time they are in conferences and they have very little leisure time,'' said Perko, the Biltmore spa director.

STAYING COMPETITIVE

Don Shula's Hotel in Miami Lakes opened its spa a year ago partly to stay competitive in the meetings industry, spa director Barbara Cambia said. So far, though, spa revenues from guests have fallen short of expectations. Locals make up 60 percent of the spa's customers.

''We're working diligently to increase the usage of hotel guests in the spa,'' she said. ``A lot of people don't use the spa. But they want to know you have a spa.''

To boost revenues, hotel spas turn to a number of tactics to lure local customers their way, including:

• Encouraging repeat business.
From selling memberships to discounting prices for a ''series'' of treatments spanning multiple visits, hotels see local customers as providing revenues for the long haul. At Miami's tony Mandarin Oriental, where locals account for 40 percent of the spa business, the hotel tracks customer spending and sends out special offers to its 100 ''top producers,'' marketing director Jill DeMone said.

• Discounting prices during slow times.
As part of a Tuesday promotion for local customers, the Shore Club in South Beach will drop the cost of a $102 mini massage to $65 and pour spa goers free mojitos. The Harbor Beach Marriott in Fort Lauderdale will target local companies this summer with 20 percent discounts on Mondays, Tuesdays and Wednesdays.

The Setai gives Florida residents 20 percent discounts all summer, and another 5 percent off for bringing a friend.
Cambia hopes to organize a special end-of-summer promotion among all the hotel spas that would be modeled after Miami Spice, when Miami-Dade restaurants discount menus in August and September to compensate for the seasonal tourism slowdown.

• Offering hotel services.
Spas will dangle special menus from the hotel restaurant, gym workouts or free time at the resort as added perks for local customers. The Biltmore, for example, gives out all-day pool passes for its local spa customers.

But locals also can make spas work harder for profits. Vacationers tend to be more indulgent when it comes to pampering themselves, spa directors said. That makes them more likely to splurge on ''signature'' (read: pricey) treatments that spas create to boost profit margins.

VACATIONERS INDULGE

''A hotel guest is more likely to try something, while a local may just want a facial,'' said Terry Prager, director of the Delano's rooftop Agua spa, which offers an hour of ''guided meditation'' for $120.

And local customers can be reluctant to buy skin and beauty products, a key revenue source.

As Steiner Leisure, parent company of Elemis spas, lamented in its most recent annual report: ``repeat customers are less likely to purchase our products than new customers.''

What's more, local customers -- with dozens of hotel options within driving distance -- can be much pickier than tourists determined to have a relaxing getaway.

LOCALS ARE DEMANDING

''Local guests are difficult to please,'' Perko said. Hotel guests 'come here for vacation, so they don't have any worries. `Let's spend money in the spa and have fun.' ''

Not all resorts massage profits with local business. A publicist for Canyon Ranch, the 150-room health resort set to open in Miami Beach next year, said spa services will be limited to hotel guests and condominium owners there.

Competing with traditional day spas -- not to mention hair salons offering massages and pedicures on the side -- can be a challenge, since hotels generally charge between 10 and 50 percent more for their treatments, said Judith Singer, president of the Health Fitness Dynamics spa consultancy in Pompano Beach.

Hotels rarely offer convenient parking, forcing customers to wait (and often pay for) valet service.

FIGHT FOR PRIME TIME

And with hotels eager to keep guests happy, locals need to scramble to land prime weekend or evening appointments. ''From 9 to 4, I want every single person in the community coming to my spa,'' Singer said. ``By four o'clock, I don't want to see any of them.''

But with their built-in captive market of guests, hotels generally can afford more spacious and elaborate facilities, Singer said. And they can offer local customers the privacy and sense of escape that often comes with a trip to a hotel, even if it's nearby.

''I live in Coral Gables, so for me, it's a little vacation,'' said fashion designer Rene Ruiz, who has poolside massages at the Delano about twice a month. ``It's like getting away without going away.''

Source Miami Herald