A C O M P R E H E N S I V E R E V I E W :

S T A T S , C O N S U M E R P R O F I L E & T R E N D S

C A M I L L E H O H E B M . S . , H E A L T H C A R E A D M I N I S T R A T I O N

B U S I N E S S A D V I S O R & S P A T R A V E L W R I T E R W W W . G L O B A L S P A A N D W E L L N E S S . C O M

Spas of North America

consulting

Industry Highlights: Spa Composition in the U.S. (2010)

Day spas: 16,300 /79.0% Slight decline - 79.5% in 2009 Resort/hotel spas: 1,810/8.8% Medical Spas 1,790/ (8.7%), marginally below the # of resort/hotel spas. Other :club, mineral springs & destination Source: ISPA 2010 US Spa Industry Report

Treatment Retail

•  4 service categories account for 78% total revenue • Massage/bodywork • Skin care • Hair Nails •  1:10 spas - fitness or sports services •  Wellness – offered by 17% of spas

!  Retail accounts for 12% of spa revenue

!  Skin & hair care products account for the majority of spending typically.

Highlights: Revenue Composition & Visits

143 million client visits in 2009

Source: ISPA 2010 US Spa Industry Report

Primary “New Trend”

!  143 million client visits in 2009

Primary Treatments !  Massage services (86%) !  Salon services (68%) !  Skincare - facials, scrubs

and wraps (9%)

Wellness Programs !  Wellness programs,

including weight management and healthy eating, are offered by 17% of spas;

!  1:10 spas offer fitness or sports services.

Industry Highlights: Services & Products

Employee/Staff Consumer

!  The spa industry employed more than 330,000 people during the spring of 2010

!  89% of spas provide a range of benefits to employees.

!  1:4 -been to a spa !  32 million active spa-goers !  Mostly female clientele !  Average age - 44 !  Actively seeking to diversify

client base !  45% targeted men !  Customers spent an average

of $75 a service

Highlights: People

Source: ISPA 2010 US Spa Industry Report

Where & How Much How Space is Used

!  The largest concentration of spas are in the Northeast (24%) and Southwest (23%).

!  76 million-square-feet of indoor space

!  2:3 have massage-only treatment rooms

!  71% contain skin care-only rooms

!  4:10 spas contain hair styling stations

!  1:2 contain makeup stations

!  Mani/pedi stations in 85% of resort/hotel spas & 65% of day spas.

Highlights: Location & Square Footage

Source: ISPA 2010 US Spa Industry Report

“Big Five” Indicators

1.  Revenue

2.  Visits

3.  Locations

4.  Square footage

5.  Staff

US Spas Managed the Recession by: Reshaped their workforce: !  Less hours, independent

contractors, rental space, etc Identifying new ways to remain

competitive: !  75% introduced shorter

treatments (30 minutes or less) to provide a less expensive option for clients with busy schedules.

!  Adding wellness services

Source: ISPA 2010 US Spa Industry Report

The Worst Economic Downturn since 1930’s…

Impact of the Recession

Annual revenues fell by 15 % Stark contrast to double digit growth the 10 yrs prior US Spa market worth $16bn Will remain stagnant until 2012 (Source: Diagonal Reports)

5% Prevention

95% Treatment of

Disease

US- Healthcare Model

“Alternative Medicine is Mainstream", Wall Street Journal, Jan 2009

US $2 Trillion

75% of America’s healthcare costs result from chronic conditions that can be prevented or controlled

Condition Lost Productivity

Cardiovascular disease & stroke

$143 billion

Smoking $80 billion

Obesity $56 billion

Diabetes $40 billion

Source: Kaiser Permanent Thrive 2009

What is Wellness? Harmony in mental,

physical, spiritual health with a desire

to live a healthy lifestyle and actively

protecting one’s health

_________

The ability to perform family, work and community roles

and ability to deal with social, biological ,

psychological stress WHO, 1984

Wellness Institute

More Interpretations of Wellness

Wellness is a dynamic concept comprised of an interrelated set of dimensions including emotional, environmental, financial, intellectual, occupational, physical, social, and

spiritual factors. Wellness is an active, lifelong process that involves expanding knowledge, skills, values, practices, and supportive environments that increase one’s ability

to enjoy a balanced and fulfilling life.! University of California at San Diego

A Shift and Re-orientation to Wellness

Current Conventional Healthcare To solve Problems •  Disease-oriented •  Reactive •  Sporadic •  Find it & Fix it

Integrative Health To Improve the Quality of Life •  Proactive •  Health-oriented •  Whole person

approach •  Identify Risk &

Minimize it •  Partnership –based •  Lifelong planning

Workplace Wellness To Improve Morale, Productivity, Reduce Claims & Work Injuries

American Culture & Lifestyle

!  The affluent are leaders in extreme exercise.

!  12% of Americans who exercise do so 5 x’s/wk

!  44% earn over US$75,000 Source: NIH survey/ 2008.

!  Interest in adventure

racing has grown significantly.

!  2009 - 194 races, up from 11 in 1998

Source: US Adventure Racing Association.

!  The importance of exercise & the obesity epidemic are seen in popularity of fitness television shows and health oriented shows, such as !  The Biggest Loser !  Dr. Oz !  Jamie Oliver’s Food

Revolution !  The Biggest Race

What We Want

Marketing Wellness to Baby-boomers

•  Consumer Expectations •  Authentic healing traditions •  Natural, indigenous ingredients •  Social responsibility •  Support of ecology/

sustainability •  More savvy •  Demand high quality

experience •  Spas are returning to historical

origin

Baby-boomers: •  6:10 will manage 1+ chronic

condition •  By 2030 half of Americans will

be 50+ •  Projected 8x more knee

replacements by the year 2030 Men: 2010 9% of cosmetic procedures Nose reshaping, eyelid surgery & lipo Botox, laser hair & microderm Motivation – divorce/dating

What We Need

Prime market

What Changes Have You Made in the Past 5 Years in Response to the Wellness Trend?

Source: SRI –GSS 2010

Current Models Convergence & Transitions

!  Day spas w/ wellness !  Medical aesthetic spas !  Hotels w/wellness & medical !  Destination resorts w/medical

programs !  Destination resorts w/wellness !  Hospital w/spa services !  & Hotel Spa Alliances !  Anti-aging spas !  Medical, Health, Wellness &

Spa Tourism !  Wellness Communities

!  From sick care to optimal wellness

!  Hybrids, lifestyle mgmt & integrative health

!  Demand for nurturing, healing environments

!  New approach to architectural design

!  Interest in cultural, traditional, indigenous healing

Spa, Health and Wellness Models

Hotels w/ Medical Resorts w/ Medical

Spa, Health & Wellness Integration Models

Marketing to the Younger Population

Infertility Sleep Stress

Weight Loss

Life Balance Cosmetic

US Spas Response to Wellness

1.  Adding services that address specific health concerns 2.  Alignment opportunities: providers & causes 3.  Partner with med, health & wellness tourism industry 4.  Using clinical studies to market 5.  Delivering exec. health services & workplace wellness 6.  Importing healing traditions 7.  Expanding scope of service and market reach

Cumulative Effect Growing role of spas in day to day well-being

Partnering with medical providers

• Deliver continuity of care & integrated healing. •  i.e., Cancer patients, Fertility, Addiction Med

•  Spa/beauty treatments for ill patients. •  Subcontracting, Feeder to spa facility

Supporting associations and causes

Alignment Opportunities

2 Heart Spa Project

Involvement in research studies

Massage

Reflexology

Reiki

Cranio-sacral

Acupressure

Lymphatic

Meditation

Beth Israel Medical Center Continuum Center for Health & Healing Mind Body Medical Institute of Harvard Univ. Center for Women’s Health Hackensack University Medical Center Beyond Day Spa

Aligning with med, health & wellness tourism

•  Create complementary services: •  Pre-op •  Post-op •  Recovery phases

•  Companion travel

3

Individuals want greater control over health and medical care.

High-deductible plans, & higher co-pays prompt patients to act more like consumers. Employers, health plans and policy-makers recognize the importance of patient engagement to reduce healthcare costs . Health plans – offering resources & incentives for patients to take a more active role in their care to reduce cost, help engage patients in their own heath decisions. Internet -information about conditions, diagnostic results, and treatment options.

US Consumer Choices & Medical Tourism

Factors Fueling Wellness Tourism

!  Escape from work, stress & every day life !  Increase in work hours leading to isolation !  Breakdown of social interaction vs. virtual

communities !  Need, desire, interest to improve one’s self !  Specific, goal-oriented programs !  Travel to beautiful places to rest !  Spiritual guidance, counseling or quest

“Canada – Keep Exploring” Unique Experiences

!  Canadian Tourism Commission !  Spas best aligned to the

national tourism brand. !  Sought to integrate spa assets !  domestic & global marketing

efforts. !  57 spas selected, in 8 of 10

provinces.

!  Indigenous ingredients !  Rosehip oil - British Columbia !  Maple syrup - Ontario &

Quebec !  Sea salts mined in

Saskatchewan !  Glacial clay, seaweed wraps

&lavender from the Pacific west coast

!  Vino-therapy: grape products - Niagara

Spa Tourism – Canada Uniquely Canadian Wellness Experiences

Source: Spas of America

All aboard! Take a seat on the ‘Route to Well-being’ Spa hop on VIA Rail’s Ontario-area train with 18 pampering stops

Videos: Ancient Cedars Spa at Wickaninnish Inn http://www.youtube.com/watch?v=VGXH6NKsnVM Rest & Relaxation http://www.youtube.com/watch?v=xfHHn60E5_M

Spa Tourism Canada Uniquely Canadian Wellness Experiences

Canada – “Keep Exploring”

!  Canadian Tourism Commission !  Sought to integrate spa

assets !  Domestic/International !  “Best in class” – aligned

with national tourism brand

!  Selected 57 spas: 8/10 provinces

Indigenous Ingredients

!  Canadian specific !  Rosehip oil – British

Columbia !  Maple syrup – Quebec !  Sea salt mined in

Sasktachewan !  Glacial clay, seaweed wraps

& lavender from Pacific west coast

!  Vino-therapy: grapes from Niagra

New Trend…

Spurning luxury & excess

Pushing to the extreme.

Want challenging, results-oriented experiences to improve well-being

Extreme fitness junkies & biz execs

Wellness Tourism in America Stressed out consumers seeking boot camps,

hiking, adventure…

Example: The Ranch at Live Oak

Malibu (www.theranchmalibu.com) !  US$5,600 per week !  Targets exes, celebrities & moms !  10 hours of daily exercise, including

hiking, yoga & weight training. !  Guests are attracted by the ability to

shed 5% of their body fat

Predictions on “Deprivation” Holidays

Increase in tough fitness programs -seekers of physically and mentally transformative experiences. Opportunity for harsh climates & rugged terrain to develop into unusual destinations. Potential for strong niche globally -consumers driven rising healthcare costs & obesity. Growing interest in fitness is expected to develop philanthropic and green Consumers want to improve themselves and the environment.

Source: Global Trends Report - Euromonitor International, 2010

Use existing data & clinical studies to market spa services through education

•  Explore ways for individual spas to get involved and support specific research studies.

Health Promotion: Educate via Clinical Data

4

Growing Interest in CAM

Most Common CAM Therapies, 2002

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NIH

Greater Interest, More Potential

CAM use greater among adults:

•  Women (42.8 percent, compared to men 33.5 percent) •  Those aged 30-69 (30-39 years: 39.6 percent, 40-49

years: 40.1 percent, 50-59 years: 44.1 percent, 60-69 years: 41.0 percent)

•  Higher levels of education (Masters, doctorate or professional: 55.4 percent)

•  Those who were not poor (poor: 28.9 percent, near poor: 30.9 percent, not poor: 43.3 percent)

•  Those living in the West (44.6 percent) •  Those who have quit smoking (48.1 percent)

NIH, 2007

Protecting Corporate Assets

5

Tapping Into Employee Wellness

6

Stress in the Workplace

25% of employees view their jobs as the #1 stressor in their lives. --Northwestern National Life 75% of employees believe the worker has more on-the-job stress than a generation ago. --Princeton Survey Research Associates Problems at work are more strongly associated with health complaints than are any other life stressor--more so than even financial problems or family problems. --St. Paul Fire and Marine Insurance Co.

Job Stress & Health: Studies Suggest!

Cardiovascular Disease Increase cardiovascular disease risk. Musculoskeletal Disorders Increases the risk for developing back & upper-extremity disorders. Psychological Disorders Mental health problems (depression & burnout) Workplace Injury Decrease safe work practices & increase injuries Suicide, Cancer, Ulcers, and Impaired Immune Function The link between stressful working conditions and these health problems. (Encyclopedia of Occupational Safety and Health)

By 2020 top 5 disease conditions share underlying factor of stress (who.int)

Relaxation - # 1 reason to spa

Where are the Opportunities? (Corporate Health & Wellness)

•  Insurance companies •  Government agencies •  Executives •  Human Resource Professionals •  Benefit Specialists •  Self-insured companies •  Corporations •  Meeting planners •  Incentive Travel Professionals

Executive Physicals

Pre and post conference services

Corporate Wellness Programs

Concierge Services

Future work comp?

Incentive and Awards

Travel Trends for USA

Incentive Travel: !  Market recovered slightly in

2010 – but less than the meetings sector

!  Incentives now well defined ROI

!  Avg # of nights/trip has fallen from 6.5 to 4

!  Trips -less extravagant !  Primarily domestic or shorter

haul international !  Business to economy class !  Every meeting now includes a

business element e.g. discussions about corporate strategy & direction

!  N.American planners less likely to postpone/cancel or rebook

!  Optimism in meeting volume !  No longer concerned about

negative publicity re: luxury properties/destinations

Source: EIBTM Global Industry Trends and Market Share Report

Traditional/culturally-based therapies

6

Opportunities to Widen the Scope of Delivery

7

Scooops Kid Spa Opens in Mall Of America – largest retail complex in the US

Scooops Kid Spa

Geared towards children ages 4 to 15

Ice-cream themed manicures, pedicures and hair treatments

The Mall of America -

40 million visitors each year

Great Wolf Lodge Resorts is North America’s largest family of indoor water park resorts owning Scooops

Warrior Resilience Program Schedule

(4)1.5-HR PSYCHOTHERAPY GROUPS (1) 1 HR REIKI SESSION/WEEK (1) 1 HR MEDICAL MASSAGE SESSION (1)1HRACUPUNCTURE SESSION (4) 1 HR MOVEMENT THERAPY GROUPS (4) 1HRR ART THERAPY GROUPS (4)"-HR MEDITATION GROUPS (1)1"-HR LIFESTYLE EDUC. GROUP (5)"-HR POWER WALKS (2) 2 HR WATER POLO SESSIONS (4) 1" HR PHYSICAL TRAINING (1) 4 HR THERAPEUTIC OUTING 1 - 20 MIN. MED. MANAGEMENT APPT EVERY 2 WEEKS

Top Spa Operators in North America Red Door Spa Holdings

Hyatt Hotels & Resorts

Four Seasons Hotels

Starwood Hotels & Resorts Worldwide

Hilton Hotels Corp World Headquarters

Spa Chakra

Marriott International

Fairmont Raffles Hotel International

Others: Canyon Ranch, Miraval, Noble House, Omni Hotels, Wyndham International

Green & sustainable practices Operational efficiencies Lowering operating costs Big expansion plans

Observations on Marketing Internet & Social Media

Web searches: “wellness” (516,000,000) “wellness + spa” (5,000,000) “wellness + trends” (1298,000) “wellness travel (42,300,000)

Observations on Marketing

Help consumers find the solution to health conditions •  Lifestyle management programs •  Evidence based therapies Emotional triggers in marketing Packaging & pricing: •  Bundled for better value •  Loyalty programs/memberships – “Belonging” •  Shorter treatment times/longer treatments •  Social Media

2009 US Resident Travel to Europe Report

2009 US Resident Travel to Europe

2009 US Resident to Europe Report

US Commerce Department Office of Travel & Tourism Industries

2009 US Resident Travel to Europe

Thank You

To participate in industry surveys, networking

or for more information, please contact:

Camille Hoheb

M.S, Healthcare Administration

Business Advisor & Spa/Wellness Travel Writer

Global Spa and Wellness www.twitter.com/camillehoheb

www.globalspaandwellness.com

Skype: camille.hoheb

camille@globalspaandwellness.com