Business analysis
Model behaviour
A new type of spa is emerging which is based on self-administered treatments and is less labour intensive. Lisa Starr takes a closer look at two examples in California
While massages and facials are the cornerstones of spa menus, the International Spa Association’s current definition is more broad: “Spas are places devoted to overall wellbeing through a variety of professional services that encourage the renewal of mind, body and spirit.” This description gives us a prescient look into what the brave new world of spas may look like as we come out of lockdown and realise that traditional business models need a shake up.
Even before the pandemic, many spas were struggling to firstly find the vast number of good quality therapists they needed and then to maintain payrolls which can amount to 45-60 per cent of operational budget.
That’s not to say there’s not a place for high-touch services post-COVID-19. There certainly is. But there’s also room for a fresher approach to business and Spa Business is seeing the introduction of new-age wellness centres without group amenities and locker rooms which offer all things wellness – from cryotherapy and light-stim beds to hyperbaric chambers and IV drips – which are mostly self-administered.
They require more intensive capital investment up front, but much lower operating expenses and complexity and much less staff. I visited two such facilities less than a mile apart in West Hollywood, California, just before the coronavirus outbreak.
Stepping off of the busy Sunset Boulevard into 4,500sq ft Remedy Place, you immediately feel your blood pressure go down. The earthy tones, natural finishes, soft lighting, and cozy furnishings make you feel right at home. Remedy Place, a self-named ‘social wellness club’, is the ideal name for this collection of options based on seven pillars of holistic health – heat, cold, oxygen, nutrients, movement, mind and compression – to address whatever ails you. Elements include hyperbaric chambers, infrared sauna, cryotherapy, compression therapy, IV nutrient drips, ice baths, meditation and mindfulness classes and chiropractic services. Each is situated to afford maximum privacy and can be utilised alone or with others. Acupuncture cupping and consults with a naturopath are also available.
Beyond the therapies, an important component of this self-named ‘social wellness club’ is connection – albeit respecting new social distancing rules. Founder Dr Jonathan Leary says: “It’s a place to socialise which is both temptation and toxin-free... by providing healthy substitutions for occasions like happy hour, Sunday brunch or a girls’ night out.” The beautifully designed lounge and bar offers a convenient space to work or meet friends, while enjoying locally-sourced food and drink. Adjacent is a large room suitable for group activities, such as sound healing, which is also equipped with a projector for meetings. So in all, this new type of ‘third place’ is one that enables you to visit alone or with friends, to enjoy a health-boosting treatment, have some quiet time, perhaps do a little work and sip a kombucha and nibble a healthy snack.
Remedy Place opened in December 2019 and offers a la carte treatments as well as a membership – and it only needs 200 members to break-even. COO Rhyce Lein says they were initially surprised by the amount of business (70 per cent) coming from the a la carte side, but he expects that to even out with membership in the next few months. He adds: “With our opening right before the holiday season, we had no time to launch marketing campaigns and partnerships, it was all just word-of-mouth and press.”
The most popular therapy so far has been the hyperbaric chambers, where air pressure is three times higher than normal, meaning the lungs gather more oxygen to carry through the body. Lein believes these sessions are popular because they’re unique, and consumers have a recognition of their benefits which include strengthening the immune system, speeding up the healing process and encouraging the formation of new collagen and skin cells. A 60-minute session costs US$160 (€135, £122) and clients can bring their laptop or even take calls, or listen to guided meditation if they want to relax.
IV drips offer ‘antidotes’ such as Morning After and Post-Workout, take up to 30 minutes and are priced from US$180 (€152, £137) to US$220 (€186, £168). A la carte prices start at US$45 (€38, £34) for a 10-minute cryotherapy. Monthly membership includes unlimited cryotherapy and classes, an IV drip, hyperbaric session, infrared sauna experience, ice bath class and lymphatic drainage massage, along with additional discounts for US$495 (€419, £378). Membership is month-to-month with no initiation or cancellation fees.
Despite opening just a short time before COVID hit, Remedy Place was still set to break even in its third month. Lein puts this down to the business model which allowed it to open 12 hours a day, seven days a week, with only a staff of nine people. Further, as a result of the pandemic, it’s discovered it can do the same amount of revenue in 8 hours. The initial investment for equipment and buildout, at about US$1.7m (€1.4m, £1.3m), was funded by celebrity clients of Dr Leary, but the operating expenses are modest; Lein states that, apart from founders, payroll is well under 20 per cent. That’s a very compelling number!
Just a half-mile along Sunset Boulevard is Next Health, an alternate version of modern wellness which bills itself as a ‘health optimisation and longevity centre’. Co-founded by surgeon and tech entrepreneur Darshan Shah and businessman Kevin Peake, the brand also has a second location in Century City (pictured) and two more in the pipeline, including a New York City unit scheduled to open in September.
Next Health offers its members and a la carte visitors many of the same wellness elements that can be found at Remedy Place but with the addition of more medically-based options such as COVID-19 testing and a one-visit immunity package costing US$299 (€251, £227) which includes a specialist IV drip, antioxidant glutathione and vitamin shots and a peptide injection. There’s an extensive menu of IV nutrient drips as well as food sensitivity and allergen testing, and also aesthetic medicine services like microneedling, laser treatments and injectables.
It also looks very different. It’s mostly open plan and the bright white interiors with wood accents give it a clinical med-spa feel. Six seats for IV nutrition therapy abut a glass-walled dispensary and nursing station while self-administered ‘Next Tech’ treatments – such as cryotherapy, infrared sauna and light therapy capsules and hyperbaric chambers – are aligned along one side. Private rooms are available for consults and aesthetic medicine treatments.
Next Health offers a package purchase system, where 10 units costs US$350 (€296, £267), for a la carte (Optim) elements. One unit is required for a 10-minute cyrotherapy visit, for example, while five units are needed for a 60-minute hyperbaric chamber session. Monthly memberships start at US$199 (€169, £152), including a new Quarantine Relief option which provides two IV drips, a virtual health coaching session, 10 Optim units and other discounts. Most IV drips, such as Super Immune, Longevity and Energy Plus, cost US$189 (€160, £144) although NAD (nicotinamide adenine dinucleotide) costs $1,000 (£765, €849) – NAD is an amino acid that’s responsible for how quickly you age and it functions as a powerhouse for the body, keeping cells ‘charged’.
Both Next Health and Remedy Place represent a new operating model in the wellness realm. Next Health is clearly more results-oriented and priced more accessibly, with some flexibility for members, while Remedy Place has more of a club feel with areas for hanging out. It will be noteworthy to see if traditional spas begin to incorporate some of the touchless technologies they offer in the near future, providing alternative revenue options in times of pandemics, or perhaps that just appeal more to a younger, tech-savvy generation.
• Lisa Starr is a contributing editor at Spa Business
