MARTIN PLACHY - The Medical Spa Business in Czech Republic

15 years in the medical spa business from the perspective of Czech company Martin Plachy Vice President of the Czech Spa Association Director, Chairman of Board, ROYAL SPA, Kur&Spa Hotels

ROYAL SPA, KUR & SPA HOTELS Spa Hotel ROYAL MARIÁNSKÉ LÁZNĚ

Wellness Hotel DIANA VELKÉ LOSINY THERMAL SPA VELKÉ LOSINY Spa Hotel MIRAMARE LUHAČOVICE

SULPHUROUS SPA OSTROŽSKÁ NOVÁ VES

Spa Hotel ANTOANETA LUHAČOVICE Spa VILA VALAŠKA LUHAČOVICE

ROYAL SPA is a private chain of medical spa and wellness hotels located in four famous spa resorts in the Czech Republic with a total capacity of almost 1.000 beds

Basic figures of ROYAL SPA • More than 30 thousand guests coming yearly for a spa stay with at least one procedure a day • Average length of stay – 8 days • 15 % are foreign guests • 50 % of total overnights are made by the clients of Czech health insurance companies

Main products of ROYAL SPA • Complex spa treatment for clients of health insurance companies (treatment, accommodation, full board) – min. 21 days • Curative packages – min. 2 weeks • Wellness, relaxation, preventive packages – 1 week • Various weekend packages with treatment

Spas and external influances • Medical spas and the state • Origin of the clients • Product demand

Medical spas and the state • Beginning of the 90th – total privatization of Czech spa resorts • Public health system recognizes spa treatment – 2 % of the total spending • Last five years – health insurance companies reduce slowly the spending • 2011 – government want to reduce spending on spa by half

Medical spas and the state • Czech Spas expect to lose about 70 thousand clients out of 108 thousand coming through health insurance companies • 70 thousand clients of health insurance companies generates about 1,5 mil. overnights in Czech medical spas facilities

Perspective of further development closing of spa facilities strong competition fight to get existing spa clients

Origin of the clients • Czech Republic »123 thousand clients through health insurance companies »111 thousand – self payers (In 2000 only 31 thousand)

• Foreign clients »143 thousand

• Dramatic loss of German clients • Increase of new clients from Russia, Israel, Middle East, Slovak Republic

Perspective of further development growing competition in spa industry intensive marketing, growing cost to attract customer

Product demand • 15 years ago - demand on traditional complex treatment • 7-5 years ago – demand on wellness • Last two years – comeback of classical cure, good medical care, rehabilitation

Perspective of further development People care more and more about their health Further concentration on good cure and rehabilitation together with good hotel services

Our challanges

Our challanges - Internet • Internet opens the space • Enables to reach new customer • Unlimited variation of presentation

• Immediate confrontation with competition • Enormous pressure on the price • Customer choose by price

Our challanges - quality • Make quality • Develop the product on the fundamentals of traditional spa cure - ESPA CREDO

Our challanges - quality • Promote quality

Our challanges - quality

• Sell quality

Thank you for your attention