Thomas Klein

How is Canyon Ranch planning to turn an iconic wellness brand into a scalable hospitality business? COO and president Thomas Klein talks to Katie Barnes about the transition, brand leveraging and rollouts

Having spent 35 years in luxury hospitality working for the likes of Ritz-Carlton and Fairmont Raffles, Thomas Klein was "looking for the next chapter". He says: "I loved what I did day in day out, but I wanted to find my legacy."

So he and his wife Bahr, empty nesters from San Francisco, brought an RV with a view to taking a year out to travel across America and Canada with their four chihuahuas – and to hopefully get some inspiration on what to do next. But they never made it. Just before they took off, Klein got a call from a headhunter to meet with John Goff, the owner of the iconic destination spa Canyon Ranch.

"I knew John because he owned one of our Fairmont hotels," recalls Klein. "I knew he was committed to the wellness space and growth and I knew Mel and Enid [Zuckerman, the founders of Canyon Ranch] were going to retire. What a great opportunity."

He had found his legacy. "I fell in love with Mel and Enid's mission of ‘living younger longer'," he says. "When you can change people's lives for the better, that's pretty cool. So I sold the RV, kept my wife and chihuahuas, and here I am two-and-a-half years later."

Original US destination spa
Husband-and-wife team Melvin and Enid Zuckerman launched Canyon Ranch in Tucson, Arizona in 1979. It's one of the original destination spa resorts in the US and the company has built up a reputation for transformative wellness with its combination of good nutrition, fitness and stress management and up-to-the-minute preventative healthcare.
Since then, the company has opened a sister resort in Lenox, Massachusetts and operates numerous brand extensions including Canyon Ranch spa + fitness at The Venetian and The Palazzo hotels in Las Vegas and 22 At Sea facilities on cruise ships.

It's admittedly experienced some bumps along the way. In 2008 the seminal spa real estate concept Canyon Ranch Living in Florida fell victim to the global economic downturn (see SB11/1 p30). While its first international property in Kaplankaya, Turkey, which launched in July 2016, never fully recovered from the impact of an attempted coup d'ètat just two weeks after opening and Six Senses took over management of the site in May 2017.

Yet the brand remains at the forefront of the now US$4.2tn global wellness space. Its comprehensive, professional approach includes board-certified physicians – US 17th surgeon general Dr Richard Carmona is its chief of health innovation – registered dieticians, exercise physiologists, licensed therapists and an array of other skilled staff.

After nearly 40 years at the helm of Canyon Ranch, the Zuckermans announced their retirement in 2017 when Melvin turned 89. Goff, who was already a majority shareholder, took full ownership under his company Crescent Real Estate.

The brand baton was passed onto CEO Susan Docherty who the Zuckermans appointed in 2015. Previously, Docherty spent three decades at General Motors and since joining Canyon Ranch she has added new management to her team including Klein who came on board as COO in April 2016 and then took on the role of president just over a year ago.

Huge paradigm shift
As COO and president, Klein's role is "all about strategy and growth" and his first unenviable task was to get the company ready for "a huge paradigm shift" in terms of future development. "It's been a family-run business that's grown organically for almost four decades so it's been a challenge breaking down a 37-year-old company and setting it out," he admits. "We had to solidify our foundation from an operational standpoint to get it ready for growth in years to come."

Technology and infrastructure were some of the first things he addressed. "We didn't even have a website three years ago, no dynamic pricing, we used to have a plastic sheet for rate cards and no menu engineering – all good business fundamentals that you need for scalable growth."

Notable changes include narrowing down guest programmes from over 600 to about 400. "It's still a lot," says Klein. "But everybody's an individual so you have to be able to tailor what that programme might look like for one person – and that's part of our core."

There have been additions too, such as expensive services like Nutrigenetics for Personalized Weight Loss for US$727 (€635, £558) and a US$2,950 (€2,578, £2,265) All-Night Sleep Study. It's also been criticised for the introduction of CR Aesthetics, including botox treatments, from its At Sea division. Klein responds: "As a trusted sanctuary, Canyon Ranch is constantly evolving to bring guests a comprehensive wellness experience. We want to provide more ways for our guests to feel like their best selves. Responding to frequent guest requests, CR Aesthetics aligns with this."

Most significantly, Klein and Docherty have surrounded themselves with the "right people" to facilitate growth, bringing in 15-20 different staff at senior management level from general managers to global directors of food and beverage, retail and merchandising, communications and more.

"It was difficult, because some people had been there for years. Great people. But we weren't equipped for growth and we needed to do that," says Klein. "Once the industry saw Canyon Ranch was growing, we'd get 80 to 100 applicants for leadership roles which is a wonderful position to be in. And we looked not only at who's good for today, but who's good for the future and now we're ready for growth and it's an exciting future for us."

New audiences
Happy that Canyon Ranch is now set up from an infrastructure and people standpoint, Klein's focus is on the various vertical businesses the company is planning on going into. And there's a lot!

Innovations ready for rollout include CR CREÃT – a standalone ‘grab and go' culinary concept based on the company's healthy food policy – which launched in Las Vegas in March, plus the development of a nutritious flight menu for customers on long-haul Singapore Airlines' routes.

It's also unveiled a standalone retail shop concept selling everything from skin and haircare products, to teas and fitness apparel. Voya, Red Flower, Naturopathica, Shankara, Luzern, Dr Dennis Gross and Canyon Ranch's own in-house products are among the brands on offer.

Over the years, Canyon Ranch has earned a loyal customer base (repeat business in Tucson sits at 60 per cent), largely in the 45 to 60 bracket. But now the aim is to capture new audiences – both young and old. "We want to get people early and take them through life with personalised wellbeing," says Klein. "It's a fantastic opportunity."

With this in mind, Klein outlines a plan to venture into the senior living space. "If you look at baby boomers, people my age, 20 per cent of the US population will be 65 or older by 2030. How do you create a lifestyle in an environment that you've been accustomed to versus a nursing home?

"We're working very closely with some partners to provide the wellness experience in those environments. We're currently refining with our partners how we're going to co-brand this experience as we won't operate retirement communities." At the other end of the spectrum, Klein says Canyon Ranch is "aggressively looking to acquire properties in Florida and northern California" with a view to launching family-friendly Canyon Ranch resorts to target younger audiences and the multi generation market.

"I grew up with chips and coke and my grandkids are eating bags of carrots and fruit, so there is a demand and many of our guests ask ‘are you ever going to do family resorts?'," Klein says. "They won't be as immersive as those in Tucson and Lenox, with the depth of medical skill, but we'll look to make them fun and affordable with family spas and child-friendly wellness, nutrition, activity and exercise."

Canyon Ranch is looking for properties with 150 to 200 guestrooms and south-east and north-west America are pinpointed as key markets for national as well as international guests, such as those who are travelling from Europe and Australia.

And while Klein is impatient to get the ball rolling, he's adamant they're not just going to "put the flag up". He adds: "It has to be done right. Otherwise there's a real danger of diluting the brand".

Revisiting concepts
More imminent than the senior living and family resorts, is a US$25m (€21.8m, £19.2m) renovation of the original Tucson site which started in mid October.

In addition, in the next six months, it's looking to launch smaller retreat type experiences to keep in touch with customers when they're not at flagship sites. "They're afraid they'll default back to bad habits and want accountability," explains Klein.

As if this isn't enough, Klein also announces that Canyon Ranch will be revisiting its Living concept with 120 to 150 guestrooms, a residential condominium component and up to 30,000sq ft of wellness space. "Miami was a good model for us, real estate had a premium of 25-30 per cent which was quite amazing and we'll definitely do that again. Location will, again, be a challenge and we're looking at new builds rather than taking an asset and rebranding it, so that will take a little longer."

Neither is he ruling out international expansion. "There were a culmination of issues in Turkey, geopolitical being one of them and it was too early for us. But there are some terrific opportunities. We'd love to be in Europe, whether that's in Spain, France or Italy and we'll start to evaluate propositions we've had.

"We will be a global company at some point. But you can't spread yourself too thin, which is why we're just focusing on North America at the moment."

Preserving the core
With so many plans for expansion in the pipeline, how can the new team behind Canyon Ranch be sure they won't lose sight of the Zuckerman's legacy?

"We'll never veer away from the vision of living younger longer," states Klein, adding that both himself and Docherty are very cognisant of preserving that mission. "We have a week-long Life Enhancement Programme which takes you through everything we do to help create a healthy balance in life – whether it's mindfulness, nutrition, exercise – and we put every one of our leaders through that programme because it can't be taught, you have to experience it."

Klein concludes: "When an investor comes in, people always think ‘oh god, they're going to become a corporate operation', but John was a guest at Canyon Ranch and the experience has positively influenced his and his family's lives. He appreciates the core of what we do and he's been involved with Canyon Ranch for 20 years. To all intents and purposes, we're still a family run business as it's owned by John [Goff] and his wife Cami and they're committed to preserving its core. Which is quite special."

Thomas Klein personal file

Film: The Great Escape

Book: I’ve just finished Essentialism by Greg McKeown

Place: The Great Barrier Reef and anywhere when I’m with my wife Bahr

Season: Love the spring

Spa treatment: 90 to 100-minute deep tissue massage with a great therapist

Advice: Hotelier Horst Schulze taught me to “Be humble and kind and respect your roots – elegance without warmth is simply arrogance” and “Don’t worry about the things you cannot control”

Most admire: People who don’t put their interests in front of others – I’ve been blessed to meet many of these people, including Nelson Mandela and the Dalai Lama

Katie Barnes is the editor of Spa Business magazine.
Email: [email protected]
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