Jo Malone Spa Launch Plan

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Jo Malone Spa Launch Plan Project “Innovative Multi-Sensory Spa Is the Next Destination.”

Savannah College of Art and Design Luxury and Fashion Management M.A. Final Project / Winter 2017 Prof. Grace Canepa Hyemin Chang

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CONTENTS

Jo Malone Spa x Kowloon, Shangri-La in Hong Kong

Offers Hectic Contemporary People “A Memorable Sense-Oriented Wellness Lifestyle� to Revitalize and Rejuvenate Them in Comprehensive Multi-Sensory Experiential Space.

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ABSTRACT INTRODUCTION SITUATIONAL ANALYSIS: INDUSTRY OVERVIEW POTENTIAL MARKET MULTI-SENSES AND SENSORY MARKETING RESEARCH ANALYSIS AND FINDINGS BRAND OVERVIEW NEW BUSINESS LAUNCH PLANS: JO MALONE SPA CONCLUSION APPENDIX WORKS CITED

p. 1 p. 2 p. 5 p. 11 p. 37 p. 41 p. 51 p. 61 p. 114 p. 116 p. 132

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01 _ ABSTRACT “Innovative Multi-Sensory Spa Is the Next Destination.”proposes collaboration between Jo Malone London, a British luxury fragrance brand, and Shangri-La Hotel, a Hong Kong-based luxury hotel chain, as the new brand expansion of the luxury fragrance brand, Jo Malone Spa. The final project seeks to address how two brands can be in partnership effectively to offer wellness experiences to fatigued millennials in Hong Kong, how each brand reduces risks and increases profits, and how both brands contribute to communities in Hong Kong as well as individual customers through launching a new spa. The project defines why the luxury fragrance brand Jo Malone can be a new business model in the spa industry on the basis of its heritage and identity and how Kowloon Shangri-La, Hong Kong can distinguish itself in the highly competitive urban hotel spa industry through industry interviews and secondary research. In-depth primary and secondary research support market trends and customers’ demands. Also, these findings allow for the creation of a feasible business plan. The final project proposes a senses-focused spa in order to deviate from standardized spa services among the urban hotel spas and beauty brand spas as well as create luxury lifestyle culture.

Keywords: Sensory spa, Sense, Experience, Urban Hotel, Partnership, Fatigue, Millennials, Business Plan, Hong Kong.

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02 _ INTRODUCTION Contemporary people suffer from chronic fatigue and stress in a competitive life. Not only micro-environments such as individual surroundings but also macro-environments such a society, politics, economy, ecology, and technology threaten people’s physical and mental health. Yeung and Johnston reported that 3.2 billion workers in the world are, particularly, unwell because of chronic disease, stress, unhappiness/depression, unsafe working conditions, and economic fluctuations (3). People crave relaxation, but their busy lives do not allow them enough time. Contemporary people seek effective ways to relieve fatigue and refresh themselves within their limited schedules.

Along with the prevalent busy lifestyles across the world, luxury consumer trends have changed since the financial crisis in 2008. The luxury consumers value luxury experience and services rather than products as status symbols (BellaĂŻche et al. 2). To meet increasing demands for meaningful experiences such as luxury holidays and spa treatments, luxury brands turn their interests to travel, health, and wellness industries (Euromonitor International 23). As current luxury consumers consider social issues as important, the luxury brands need to share their history and values with the community. Through this process, brands improve their equity and obtain financial reward as a result (Deloitte 8).

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To provide new luxury experiences and services to people living in a fast-changing world, the project suggests the new brand extension of a luxury fragrance brand, Jo Malone London as the launch plan of Jo Malone Spa. This project aims to determine how to differently approach Jo Malone Spa in Kowloon Shangri-La, Hong Kong to offer daily getaways to contemporary spa-goers with busy lifestyles and how to effectively establish a partnership between luxury fragrance and hospitality brands. Jo Malone Spa, inspired by their signature fragrance, concentrates on treatments, services, and marketing related to the five senses and synesthesia which, according to Oxford Dictionaries, means “the production of a sense impression relating to one sense or part of the body by stimulation of another sense or part of the body.” To accomplish this goal, this research will 1) investigate previously explored research on trend reports associated with luxury industry, wellness industry and wellness tourism industry, spa industry, and consumers by industries and specific regions in Hong Kong, 2) compare and contrast competitors, dividing urban hotel spas such as Mandarin Oriental, Peninsula, and Four Seasons and beauty brand spas such as Guerlain, Bliss, Lush, and Burt’s Bees according to treatments, prices, and services, and 3) interview professionals from both spa organizations and hotel spa department about current issues, challenges, prospects, consumers’ demands.

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03 _ SITUATIONAL ANALYSIS: INDUSTRY OVERVIEW 3.1 Change of luxury industry Luxury consumer trends have changed since the financial crisis in 2008. The luxury consumers value luxury experience and services rather than products as status symbols (Bellaïche et al. 2). Sarah Boumphrey, Head of Strategic of Economic and Consumer Insight, said savvy consumers identify themselves with what they see, eat, listen, feel, and do. The ownership of luxury goods is no longer important to them (Consumers 1).

A 2014 Boston Consulting Group report shows this distinct change: the expenditures on luxury experiences were approximately $1 trillion out of $1.8 trillion of total “luxuries” spending in 2013 (Sherman). In addition to “the turmoil on the global foreign-exchange markets,” this phenomenon derived from “the economic instability, social unrest, armed conflict and further threats of terrorist attacks in key luxury shopping destinations” according to Fflur Roberts, global head of luxury goods research at Euromonitor International (Aroche). To meet increasing demands for meaningful experiences such as luxury holidays and spa treatments, luxury brands turn their interests to travel, health, and wellness industries (Consumers in 2016 23). For example, L Catterton Europe, the investment arm of LVMH, acquired Italian bicycle maker Pinarello because investment in health and wellness brings commercial profits to the luxury and fashion industry. This is only one example of investments in the health and wellness sector of fashion and luxury companies. There are big commercial potentials; the global wellness market will be expected to increase from $701 billion to $833 billion to 2021 according to Euromonitor (Hoang).

Fig. 1. The proportion of luxury expenditures adapted from 2014 Boston Consulting Group report, 2016, https://www.businessoffashion.com/articles/intelligence/areluxury-brands-ready-for-the-transformation-economy-wellness-health-direct-vision.

Fig. 2. The global wellness market forecast adapted from Euromonitor, 2016, https:// www.businessoffashion.com/articles/intelligence/is-health-wellness-the-new-luxury?utm_source=Subscribers&utm_campaign=62b1ef7b99-&utm_medium=email&utm_term=0_d2191372b3-62b1ef7b99-419300969.

6 3.2 Wellness industry 3.2.1 Wellness industry and market share Wellness is “a state of complete physical, mental, and social well-being” like “health” as defined by the World Health Organization (WHO) according to the Global Wellness Tourism Economy 2013 report. Wellness embraces the prevention of disease, health enhancement, and life-enhancing activities as well as treatments of disease. While the root of wellness originated from ancient times in Asia, Greece, and Rome, the modern concept of wellness was established in the U.S. and Europe since the late 1970s (Yeung et al. 2).

Due to the increase in aging populations, chronic diseases, and imperfect curative effacement of the traditional medical system, people increasingly experience the burden of high medical costs (Yeung, Johnston, and GWI, “Global Spa” 1) and cannot maintain or improve their healthy lifestyle. These phenomena changed individuals’ recognition towards wellness, and people now seek alternative treatments such as massages, therapies, yoga, and meditation at spas, fitness facilities, and hotels (Global Wellness Tourism).

As people who suffer from various mental disorders are increasing globally, mental health is important as much as physical health. According to the WHO, people with mental diseases such as depression or anxiety rose to over 600 million since 1990 (Ellis and Mcgroarty 36). People want to relieve stress and control their emotions better. Interest in mental wellness is prevalent in everyday lifestyle. People read books related to mindfulness, download meditation applications, invest money in yoga pants, and choose travel options for mind rejuvenation (Consumers 7).

According to Global Wellness Economy Monitor 2017, the global wellness economy recorded $3.7 trillion in 2015. This wellness economy embraces the following ten sectors: 1) beauty and anti-aging, 2) healthy eating, nutrition, and weight loss, 3) wellness tourism, 4) fitness and mind-body, 5) preventive and personalized medicine and public health, 6) complementary and alternative medicine, 7) wellness lifestyle real estate, 8) spa economy (spa facilities), 9) thermal and mineral springs, and 10) workplace wellness (Yeung, Johnston, and GWI, “Global Wellness” 3).

Fig. 3. The global wellness economy in 2015 adapted from Yeung, Johnston, and GWI; “Global Wellness Economy Monitor 2017.”

7 3.2.2 Wellness tourism industry and market share As wellness consumers are interested in different kinds of preventive health care treatments, the travel industry also accompanies the wellness trends. A 2013 wellness tourism study by Yeung, Johnston, and Global Wellness Institute (GWI) defines travel for maintenance or improvement of individual well-being as wellness tourism (9). Travelers who are conscious of individual health expect to maintain their health conditions or even improve them more during the vacation. Many wellness travelers have a limited time, so providing valuable health experiences is key.

The Spafinder Wellness 365 survey shows that wellness travel brings more mental benefits rather than physical impacts: “stress and anxiety reduction (76%), a more positive mood (75%), a more rested feeling (69%), weight loss and getting fit (35%), kick-starting a healthier lifestyle (34%)” (Goldberg). Wellness tourism embraces physical and mental treatments as well as outdoor activities and cruises (Goldberg). Even though the range of wellness travel is broad, spas are still regarded as the main business within the wellness tourism industry (Yeung, Johnston, and GWI, “Global Spa” 13).

Fig. 4. The advantages of wellness travel adapted from Yeung, Johnston, and GWI; “The Global Wellness Tourism Economy 2013.”

FigFig. 5. The global wellness tourism market forecast adapted from Yeung, Johnston, and GWI; “Global Wellness Economy Monitor 2017.”

8 The wellness tourism industry economy was $563.2 billion in 2015, and approximately 15.6 percent of total tourism expenditures were from wellness travel during the same period (Yeung, Johnston, and GWI, “Global Wellness” 17). The wellness tourism economy will be expected to reach $808 billion by 2020 (Yeung, Johnston, and GWI, “Global Wellness” 5). Also, wellness tourism “is much growing faster than ... overall tourism expenditures” (Yeung, Johnston, Chan, and GWI 5). Wellness travelers invested more money and days than general tourists. They spent more money for international trips rather than domestic trips, $1,639 per trip and $688 per trip respectively, but the percentage of each expenditure is reversed. Domestic wellness travelers spend 159 percent more than the average tourists, while international wellness tourists spend only 59 percent higher than average international tourists (Yeung, Johnston, and GWI, “Global Spa” 13). The increase of double-income households, higher purchasing power, and sufficient disposable income consistently enable the growth of the wellness tourism in developed countries (Cardamenis). The growth forecast of wellness tourism in developing countries such as Asia, Latin America, the Middle East, and North Africa is also positive (Yeung et al. 10). Particularly, the CAGR for APAC will increase to $204.3 billion by 2020 (Cardamenis).

3.2.3 Workplace wellness industry and market share

Fig. 6. The global workplace wellness overview adapted from Yeung et al.; “The Future of Wellness at Work. Global Wellness Institute.”

Another trend of the wellness industry is an increase of the importance of wellness at work. Workplace wellness programs or services for employees help to not only maintain and improve health conditions and for employers but also to obtain positive effects from the bottom line based on the definition of 2010 Harvard Business Review (Yeung et al. 8). There are approximately 3.2 billion, over 43percent of the total population, of workers in the world. However, less than 9 percent of the global workers receive benefits of workplace wellness (Yeung et al. 9), which means huge numbers of the international workforce are unwell (Yeung et al. 3). Wellness and work affect each other. For example, employees’ chronic diseases bring an increase in health care expenses and a decrease of productivity (Yeung et al. 3). Also, workers who suffer from disengagement, stress, and burnout can result in theft of company equipment, negative impacts to coworkers, and frequent absences (Yeung et al. 5). According to the World Economic Forum and Harvard School of Public Health, the estimated global loss of economic output by both chronic diseases and mental illness will be cumulative $47 trillion from 2011 to 2030, making “wellness and work … interdependent” (Yeung et al. 3, 13).

9 The workplace wellness market rose from $40.7 billion in 2013 to $43.3 billion in 2015 (Statistics & Facts). The workplace wellness services embrace various employees’ demands from exercise and healthy eating to sleep, stress, and depression (Yeung et al. 8). As stated in the definition of workplace wellness section, approximately 90 percent of the global workforce do not access to workplace wellness services. The current situation means that workplace wellness has a great potential to grow further (Yeung et al. 9). For example, the spa industry collaborates with companies to promote their employees’ health and wellness by offering treatments and products both in the office and in spa facilities.

Fig. 7. The global workplace wellness forecast adapted from Yeung et al.; “The Future of Wellness at Work. Global Wellness Institute.”

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04 _ POTENTIAL MARKET 4.1 Market overview 4.1.1 The spa industry 4.1.1.1 The importance of a spa in the wellness market Spa, yoga, and meditation still come across people’s mind first in accordance with wellness, including wellness travel, even though adventurous activities have become popular (Ellis). Alison Gilmore, senior exhibition director for the International Luxury Travel Market (ILTM), said that the spa is definitely a core market in the luxury wellness tourism industry (Clausing). Growing income and a fast-moving lifestyle accelerated people’s desire to seek relaxation and rejuvenation therapy, which become the driving forces for the spa industry.

4.1.1.2 Definition of spa and classification of spa SRI International writes that “Spas are defined as establishments that promote wellness through the provision of therapeutic and other professional services aimed at renewing the body, mind, and spirit” (Statistics & Facts). Spas vary based on size, location, concept, and purpose, but the spa facility is usually divided into six types: day/club/salon spa, destination spas and health resorts, hotel/resort spas, thermal/mineral springs spas, medical spas, and other spas including cruise spas, airport spas, and mobile spas.

The current spa industry largely consists of day/club spas, followed by hotel/resort spas (Yeung, Johnston, and GWI, “Global Spa” 5). The Global Spa Market 2016-2020 report illustrates that day spas account for 78 percent of global spa market share. As Asia and the Middle East have invested enormously in the tourism infrastructure, hotel spas also will show a prominent increase during the forecast year from 2014 to 2022 (Spa Services).

Day spas have been highly developed since the late 1990s. Day spas offer alternative health therapies such as massages, aromatherapy, hydrotherapy, and acupuncture, beauty salon services including manicures, pedicures, and hair styling, and classes including yoga and meditation (The Gale Group). In comparison with hotel and resort spas, hotel spas are usually located in an urban areas and resort spas are placed in a natural environment. Both urban hotel spas and natural resort spas offer similar services as day spas. A distinct difference between a hotel and resort spas is how much each spa promotes indoor and outdoor activities. The natural resort spas offer visitors a variety of activities such as water sports, hiking, and riding because of geographical location, including seas and mountains.

12 4.1.1.3 Spa industry market share Major players of the global spa market are the following: “Emirates Palace, Four Seasons Hotel Limited, Trailhead Spa, Massage Envy Franchising LLC, Jade Mountain, Six Senses Hotels Resorts Spas, Clarins Group, Lanserhof Tegernsee, Belmond Maroma Resort & Spa and Gaia Retreat & Spa” (Spa Services). According to the newsletter of December 2015 from Intelligent Spas, spa treatment rooms are 8.9 and spa scale is 18,299 ft² (=1,700 m2) on average (Global Spa Opening).

The spa industry reached $98.6 billion globally in 2015. From 2013 to 2015, the global spa market added 16,004 spa locations and reached 121,595. During the same period, spa workers increased to 2.1 million (Yeung, Johnston, and GWI, “Global Wellness” 10).

Technavio predicts that the global spa industry will increase over $130 billion by 2020, and CAGR for the global spa market will be 8.7 percent.

Fig. 8. The global spa economy adapted from Yeung, Johnston, and GWI; “Global Wellness Economy Monitor 2017.”

Hotel and resort spas particularly saw noticeable growth in both number of spas and spa facility revenues from 2013 to 2015.

The category of day/club/salon spas is still the largest sector in the spa market because of its revenue and number of spas. However, hotel and resort spas show the fastest growth rates among six spa categories. According to Global Wellness Economy Monitor 2017, the number of hotel and resort spas increased from 22,076 to 30,180 while day/club/salon spas rose from 59,339 to 64,262 during the last two years. The revenue of hotel and resort spas increased by US 3.4 billion dollars, but that of day/club/salon spas rose by US 300 million dollars in 2015 (Yeung, Johnston, and GWI, “Global Wellness” 12).

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Fig. 9. The global spa economy by spa categories adapted from Yeung, Johnston, and GWI; “Global Wellness Economy Monitor 2017.”

Spas are spread out among 210 countries, but 86 percent of the global spas are mainly located in Europe, Asia-Pacific (APAC), and North America. Europe is the biggest market with 35.4 percent of total market revenues in 2015. APAC is the second largest market in terms of revenue, but the number of spas surpassed Europe (Yeung, Johnston, and GWI, “Global Wellness” 10). During the past ten years, APAC added 10,000 spas, mainly at hotels and resorts (Cardamenis), with the development of the hospitality industry (Spa Services).

Like Asia, Latin America shows strong growth derived from the growth of the middle class. The middle-class consumers tend to invest in goods and services related to spa and wellness. The growth of the middle class is concentrated on emerging markets such as Asia, Latin America, the Middle East, and Africa (Spa Services).

Fig. 10. The global spa economy by spa categories adapted from Yeung, Johnston, and GWI; “Global Wellness Economy Monitor 2017.”

14 4.1.1.4 Trends of the spa industry The change of consumers’ attitudes and work environment promotes the growth of the spas. Spa-visitors consider spa treatments such as massage and hydrotherapy, facial treatments, and reflexology as daily and regular health maintenance (Yeung, Johnston, and GWI, “The Future” x). Moreover, many companies utilize spas as rewards for employees and clients. Employers encourage their employees to benefit from spa experiences. Companies sometimes hold meetings at spas. For being free from job-related stress, decreasing absenteeism, and increasing productivity, several companies such as Google, General Mills, and TPG Credit Management already offer spa experiences to their employees. Providing spa services to employees shows how much their companies are concerned about their health and well-being, according to ISPA president Lynne McNees (The Gale Group 4).

People visit spas not only for a personal getaway but also doctor’s recommendation. Spas provide a range of treatments and services for satisfying consumers’ demands (Global Spa Market 2016-2020). The current spa trend is moving beyond massage, yoga, and meditation and reaching self-discovery and self-improvement experiences such as art and healthy cooking classes (Henkin). According to Abhay Sinha, author of the report and analyst for Technavio, the current spa providers co-work with other industries for serving convenient and one-stop services to spa-goers. Nowadays, there are no distinct boundaries among beauty aesthetic clinics, gyms, massage shops, beauty and hair salons, and even doctor’s offices and hospitals (Cardamenis). Yoga instructors, nutritionists, personal trainers, and doctors stay at modern spas together to guide an integrated wellness service (Global Wellness Focus). Furthermore, Bliss, a beauty and a spa brand, developed spa products with JetBlue Airways Corp to serve overnight passengers. Spa kits include “eye masks, earplugs, moisturizer, and lip balm, as well as a promotional offer from Bliss” (JetBlue). Like this example, the current spa market invites various categories and creates integrated services for busy people.

4.1.2 The hospitality industry 4.1.2.1 Trends of the hospitality industry The combination of different industries is also popular in the current hospitality industry. Hotel visitors expect a differentiated and hidden experience as well as comfortable stays. For satisfying consumers’ complex tastes, the hospitality industry offers integrated services like the spa industry through Merger and Acquisition (M&A) and partnership or collaboration with local retailers and restaurants.

Moreover, hospitality brands support or participate in local festivals and events (Langford, Weissenberg, and Pingitore 10). Through these hospitalities’ efforts, guests enjoy craft beer and organic food from local markets (Langford, Weissenberg, and Pingitore 6) and they experience various cultural activities.

15 Hospitality guests desire convenient accessibility by digital technology and personalized services. They are fond of mobile check-in and digital room keys (Langford, Weissenberg, and Pingitore 6). By extension, brand applications, such as Virgin’s hotel app “Lucy” enable visitors “to control [room conditions such as the brightness of lights,] the [humidity and] temperature of their room, order room service, book spa appointments, and even text with hotel staff and other guests” before arriving and during stay (Langford, Weissenberg, and Pingitore 8).

As younger consumers frequently use social media, the hospitality industry leverages visual contents such as videos and pictures for social network platforms like Instagram (Langford, Weissenberg, and Pingitore 6). Young consumers book a hotel according to peers’ reviews and recommendations on social media Fig. 11. The combination of digital technology and hospitality mobile application, Virgin’s (Killarney Hotels). For this reason, not only for enhancing brand hotel app “Lucy” adapted from PSFK; 2015; http://www.psfk.com/2015/01/virgin-appawareness but also for maximizing room occupancy rates, social hotel-streaming-thermostat-control.html. media is an important platform to hoteliers.

According to Gil Charlton in the UK Telegraph, solo travel is the current trend. The main consumers of solo travel are mostly “the younger, millennial premium single guest[s]” (Kasriel-Alexander 39). Several hotel groups including Marriott and Hyatt concentrated on this consumer group and established the new lifestyle property brands (Kasriel-Alexander 39). Solo travelers pursue authentic, wellcurated, and high-end products and services even though they are pricier than others. Interestingly, this group enjoys investing in “nieces, nephews, and friends’ children” (Kasriel-Alexander 38) and even more travel with them (Kasriel-Alexander 40). Kasriel-Alexander of Euromonitor said that the solo travel group embraces Yuccies (38), PANKs (Professional Aunt No Kids), and PUNKs (Professional Uncle No Kids) (Kasriel-Alexander 41). Yuccies represent the group of “urban creatives in their 20s and 30s seen as a hybrid of hipsters and yuppies and enjoying a way of life blending counterculture with the consumption of luxury” (Kasriel-Alexander 38). These groups are becoming targeted consumers to the hospitality industry.

16 During Cosmoprof Hong Kong 2016 fair, Andrew Gibson, Vice President of Well-Being, Luxury Brands for AccorHotels, announced the current hotel spa trends. Wellness influences not only the design of spa and fitness facilities but also special rooms fitted for the spa. Hotels offer social activities with fun elements at gyms. The development beauty technology and devices enable various skin treatments “including HydraFacial, body sculpting, skin mapping and oxygen facials” in the hotel spas (Starr).

4.2 Geographical overview 4.2.1 Why Hong Kong?

4.2.1.1 Overview of Hong Kong Hong Kong, which in Cantonese means “fragrant harbor” (“Hong Kong,” Wikivoyage), is one of the most influential cities in Asia in finance, banking, and trading as well as tourism (Hong Kong Travel). As the British colonized Hong Kong before transferring its sovereignty to China in 1997, the city was affected by Western style and open to various people and cultures. This trait led Hong Kong to become a major city of tourism and business in Asia. As an air hub, Hong Kong airport offers various connections in the world and attracts tourists to stop over in the city (“Hong Kong,” Wikivoyage).

Five regions, Hong Kong Island, Kowloon Peninsula, Lantau Island, the New Territories, and the Outlying Islands, compose the city of Hong Kong (“Hong Kong,” Wikitravel). Hong Kong Island is the main part of not only business, economy, and politics but also entertainment and shopping. Kowloon is increasingly the most popular destination, including Tsim Sha Tsui and Mong Kok. Compared to both Hong Kong Island and Kowloon, the New Territories and Outlying Islands are calm and natural (Hong Kong Travel). Also, Lantau Island is well-known for the Hong Kong airport and Disneyland ((“Hong Kong,” Wikitravel).

Hong Kong Island is regarded as a luxury district rather than the other four regions with modernized high skyscrapers, luxury boutiques and malls, and tourist attractions. However, Kowloon has now established Fig. 12. Five regions of Hong Kong. a reputation for one of the hottest spots for tourism, shopping (Kowloon), nightlife, the best and most splendid views of Hong Kong, and luxury hotels such as the Peninsula and InterContinental (Chow). The Airport Express also enables people to access the airport and Kowloon in 20 minutes (Kowloon).

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18 4.2.1.2 Overview of Hong Kong travel market According to the Hong Kong Tourism Board (HKTB), 2016 visitor arrivals are 56,654,903, which shows a decrease of 4.7 percent compared to the last year. The Hong Kong Tourism Commission revealed the following statistics in tourism performance in 2015. The number of total visitor arrivals was 59.3 million. There was a decrease of 2.5 percent over 2014. Among all inbounds, the number of same-day arrivals were about 22 percent higher than the number of overnight arrivals. The average hotel occupancy rate was 86 percent and the average length of Fig. 13. Hong Kong visitor arrivals in 2016 adapted from Hong Kong Tourism Board; 2017; http://partnernet.hktb.com/en/research_statistics/index.html. stay of overnight visitors was 3.3 nights. The largest visitors were from mainland China with 45. 8 million, which accounted for 77 percent of total inbounds. In terms of haul, short-haul visitors except mainland China were 4.3 million more than long-haul visitors. Top 10 visitors’ markets are mainland China, Taiwan, the U.S., South Korea, Japan, Singapore, Philippines, Malaysia, Macao, and Australia.

According to the Hong Kong Tourism Demand Forecasting System, global inbound tourists to Hong Kong will increase at a 10.18 percent annual rate from 2010 and 2020 even though there is a slight decrease in annual rate compared to the previous decade. The top three Fig. 14. The forecast of Chinese travelers to Hong Kong adapted from the Hong markets of tourist arrivals in Hong Kong in 2020 are expected to be Kong Tourism Commission and J. Scott and Green; 2016 and 2012; http://www. tourism.gov.hk/english/statistics/statistics_perform.html and http://tourism. mainland China, Taiwan, and South Korea. Especially, mainland China is forecastingprinciples.com/index.php?option=com_content&view=article&id=6 predicted to account for about 80 percent of the total inbounds (J. Scott 17:release-of-hong-kong-tourism-demand-forecasting-report-volume-2-issue4&catid=45&Itemid=332. and Green).

Increasing numbers of business travelers are important to both hotels and hotel spas. Currently, the number of overnight business travelers in Hong Kong are growing according to Legislative Council Secretariat. The main purposes of business travelers are “meetings, incentive travels, conventions, and exhibitions (“MICE”) events” (Legislative Council Secretariat 9). According to the research of Hong Kong’s tourism industry, this group spends more and considers value added services including accommodation and meals (Legislative Council Secretariat 9).

19 Chinese tourists Along with Macau, Hong Kong is the most popular destination for Chinese travelers because both have relatively similar cultures and tastes. Also, travelers do not need to spend lots of money on other destinations such as Europe and North America. Due to geographical closeness, Chinese access to Hong Kong is conveniently free of jet lag. Since Hong Kong local residents claim political and economic issues to the Chinese government, Hong Kong tourists inbound from Mainland China have considerably decreased. Hong Kong protestors request more autonomy and VAT discount benefits (How to Target 4). However, Hong Kong will be the second largest destination in East Asia and the Pacific region while China is still predicted as the first destination in both Asia-Pacific and the world in 2020 (World Tourism Organization 61).

4.2.1.3 Overview of Hong Kong working environment As of January 16, 2017, the total population is 7,379,986, which consists of 3,493,942 males (47.3%) and 3,886,044 females (52.7%) sourced from United Nations Department of Economic and Social Affairs: Population Division (Hong Kong population clock).

According to the world factbook by the Central Intelligence Agency, the working population, ages ranging from 25 to 54, accounted for 45.34 percent of total population, which was estimated at 7,167,403 people as of July 2016. Workforces consisted of 1,385,536 males and 1,864,077 females. According to Population Division of Department of Economic and Social Affairs of United Nations, Hong Kong populations are expected to reach 7,557,000 in 2020 (Population Pyramid).

Fig. 15. Hong Kong population forecast adapted from United Nations Department of Economic and Social Affairs: Population Division and Population Division of Department of Economic and Social Affairs of United Nations; 2017 and 2015; http://countrymeters.info/en/Hong_Kon and https://populationpyramid.net/ hong-kong-sar-china/2020/.

Fig. 16. The proportion of working and non-working population in Hong Kong & Hong Kong working population by genders adapted from the Central Intelligence Agency; “The world factbook-Hong Kong�; 2017; https://www.cia.gov/library/publications/the-world-factbook/geos/hk.html.

20 The latest working condition According to Prices and Earnings 2015 by UBS, Hong Kong ranked as the hardest-working city out of 71 cities in the world. While Hong Kongers work 2,606 hours per year (same as 50.11 hours per week), but they have only 17 paid vacation days every year. On the contrary, Paris showed the least working hours with 1,604 hours per year (same as 30.85 hours per week). However, Parisien workers have 12 more holidays than workers in Hong Kong (36). Its survey responses were from 15 different occupations such as construction 17. The comparison of working conditions between Hong Kong and Paris adapted worker, department manager, electrical engineer, bank credit clerk, Fig. from UBS; 2015; “Price and Earnings 2015.” cook, and teacher (Prices and Earnings 38).

4.2.1.4 Driving forces 4.2.1.4.1 Growth potential of Hong Kong spa market The spa market in Hong Kong According to Global Spa Summit, Hong Kong is one of the notable spa destinations in the world (Guillet and Kucukusta 419).

Guillet and Kucukusta found that there were significant increases of spas, about 500 percent, in China and Hong Kong since the report of Intelligent Spas. Global Spa Summit said that the developments of the spa industry were caused by the Hong Kong government’s openmind (419). According to Foster, day spas account for nearly 70 percent of the total Hong Kong spa market (Kucukusta and Guillet).

In terms of the hotel spas, approximately 2 percent of overnight hotel visitors in Hong Kong experienced the spa treatments in 2010 based on the Hong Kong Visitor Profile Report (Guillet and Kucukusta 419). Data from the Hong Kong Tourism Board, “the average spa [and] health club revenue per available hotel room is [estimated] HK$3,533 [same as US$455.46 as of exchange rate in 19 January 2017]” (PolyU Study 1).

The spa market in Hong Kong has huge opportunities for investment. Approximately 30 million spa employees worked at over 2,000,000 salons and spas in 2013. The turnover of the spa industry exceeded US$ 300 billion, which was the same GDP as Shanghai in 2012. The spa market is increasingly growing in double digits every year. The growth will accelerate more with the high demands of groups above the middle-class until 2020. Women and middle to high-class consumers have an interest in maintaining their beauty and health through superior products and services (Tam). Also, there is a distinct shift of spa-goers in Hong Kong. Younger male consumers are growing and account for one-third of total spa consumers (PolyU Study 1).

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Fig. 18. The proportion of Hong Kong spa-goers by genders adapted from PolyU Study; 2014; http://hotelschool.shtm.polyu.edu.hk/wcms-common/ temp/201406161803520502/news_hotel_spa_20140616.pdf.

Fig. 19. The proportion of Hong Kong spa market share by spa types adapted from PolyU Study; 2014; http://hotelschool.shtm.polyu.edu.hk/wcms-common/ temp/201406161803520502/news_hotel_spa_20140616.pdf.

Spas and beauty salons in Hong Kong are popular to both tourists and locals (Opening a SPA). According to the study of Inbound Travelers’ Selection Criteria for Hotel Spas in Hong Kong Hotel by Deniz Kucukusta, Loretta Pang, and Sherry Chui of the School of Hotel and Tourism Management (SHTM) at The Hong Kong Polytechnic University, inbound Hong Kong travelers regard spas as one important factor (PolyU Study 1). Which means the spa industry in Hong Kong has growing opportunities to develop more.

The authors found that the growth of the spa market resulted from consumers’ attitudes about health and wellness. Consumers prefer proactive maintenance rather than passive cures. Three researchers mentioned that “more than 90 percent of the world’s luxury resort hotels now boast spas, and the figure for high-tariff A hotels in Hong Kong is 100 percent” with industry statistics (PolyU Study 1).

Additionally, in terms of revenue, Kucukusta, Pang, and Chui said that Hong Kong is included among the 20 largest global spa markets. Especially, hotel spas account for about one-third of total Hong Kong spas (PolyU Study 1). Survey results, which were conducted for inbound Hong Kong travelers, support Kucukusta, Pang, and Chui’s argument of the importance of the spa industry in the Hong Kong tourism market. Approximately 50 percent of total interviewees responded that they have already experienced spas and among them, there were people who had 10 or more visits to spas in 2013 (PolyU Study 2-3).

22 The additional potentials from the beauty market in Hong Kong To examine the overall beauty market, there are lots of potentials to expand the market share. First, importers do not need to pay tariffs for cosmetics, toiletries, and skin care products. Only skincare products with hydroquinone are required to directly register with the Department of Health, Pharmaceuticals Registration and Import/Export Control Section. The process takes 9 months to a year (Cosmetics 28).

Second, bath product preferences of Hong Kong consumers has changed to liquid soaps, bath salts, and bath additives. Also, there are very few households in Hong Kong that have bathtubs. These current states can promote the growth of both the bath products and the spa market (Cosmetics 25).

Anna Treier, Managing Director of Sense of Touch spas and Capelli Salon, said that Hong Kong spa-goers are interested in skin treatments such as anti-ageing (Nicol), and China spa industry professional Johnny Chang also pointed out that whitening and brightening treatments are prevalent among Chinese Spa-goers (Fung). Furthermore, Chang said that Chinese consumers want to check treatments result quickly (Fung). Based on Treier and Chang’s opinions, if the spa market offers specialized beauty treatments according to customers’ concerns, spas can increase their revenues and more loyal consumers.

In accordance with the fragrance market, Hong Kong consumers highly concentrate on brand names such as Marc Jacobs, Giorgio Armani, and Kenzo when purchasing. Lighter floral perfumes are popular among local consumers (Cosmetics 25) and sales of body sprays are continuously growing (Cosmetics 26). As Jo Malone Spa can sell both original Jo Malone London product and Jo Malone Spa products in the new business market, understanding the Hong Kong beauty market is important. From the research, Jo Malone Spa expects additional revenues from body, bath, and home products.

The challenges of the Hong Kong spa market The Hong Kong spa market faces challenges related to safety, hygiene, and professionalism (Opening a SPA). The low quality of products and treatment services is prevalent across the overall spa industry in Hong Kong (Tam). Even though luxury hotel spas provide superior spa experiences, the overall market status shows a reverse reputation. For tackling these obstacles, investors should put top priority on cleanness and employ a qualified and accredited staff to offer high-level services (Opening a SPA).

Kucukusta, Pang, and Chui illustrated that “sense of privacy, [the] range of facilities, and product branding” are also highly considered for visiting spas along with professional techniques and knowledge of products and services (PolyU Study 1).

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4.2.1.4.2 The importance of the hectic Hong Kong working environment to support the spa industry Fatigued working environment The environment of long working hours in Hong Kong is not the latest issue.

Since 2008, people in Hong Kong have recognized bad working conditions already. Tat Mung, Hong Kong Confederation of Trade Union organizer, claimed that there were no legal working hours as the current issue in 2008 (Wild). In 2016, a former member of the Legislative Council of Hong Kong, Lee Cheuk-yan, claimed that standardization of working hours should be enacted by the government (Hongkongers). According to Tat’s mention in 2008, over 40 percent of the workforces in Hong Kong spent over 48 hours working every week. Also, Hong Kong ranked “the fifth longest working hours in the world” at the same period based on a study by the union (Wild). As you see, between 2008 and 2015, there was an increase of working hours in Hong Kong and Fig. 20. Hong Kong classified as the hardest working environment its ranking also went up the top. The current research of UBS illustrates that working in 2015 adapted from UBS and Tat; 2015 and 2009; https://www. and environment in Hong Kong has been increasingly suffering from excessive work and ubs.com/microsites/prices-earnings/prices-earnings.html http://thingsasian.com/story/sleep-pod-hong-kong. little rest time.

24 The increase of napping spaces The nap culture is increasingly spreading all over the world. According to Frej, several companies such as Google, Zappos, and Ben & Jerry’s have already adopted napping cultures into their offices and offer nap rooms to their employees (Frej). Napping spaces can be found in not only companies but also universities and colleges as well as shopping malls nowadays.

Especially in Asia, napping spaces are growing. Nap cafes in Japan offer rejuvenation to exhausted business people. Some nap cafes offer massages with nap times (Runnebaum). Nap cafés are popular in South Korea too. The lack of sleeping time derived from stress and overtime work brings sleep disorder (Kang). For this reason, nap cafes are growing in areas with a large transient working population. The trend of increasing napping places flows to Hong Kong.

Napping is no longer a surprising activity in Hong Kong, rather it is regarded as a promising business. Due to a sturdy work ethic (Chen) and hectic, crowded, and exhausted environment, people’s demands for the relaxation have been rising. Also, Joanne Mazzitelli, International Training Director of Thalgo Cosmetics, pointed out that demands for a quiet space are growing in urban areas including Hong Kong. She said that consumers want to receive special services such as chronic pain relief, light foods, and wifi during short stays at calm spaces (Nicol). Mazzitelli did not mention the napping places exactly, but her explanation is support for why busy people seek relaxing places in urban areas.

According to Sam Wild from AFP, a global news agency, Nap services were already offered at a shopping mall in Causeway Bay at the end of the 2000s. The shopping mall placed state-of-the-art nap pods which blocked out both sounds and sights but added the sound of nature. The facilities aimed for not only shoppers but also exhausted business people (Wild). David Lau, Nap Lounge’s general manager, said that a midday break is popular, especially in mainland China, and this concept can be applied to Hong Kong people because Hong Kongers are under high pressure every day (Justice).

25 4.3 Consumer overview 4.3.1 Wellness consumers Generation X and baby boomers still account for the largest portion of luxury wellness tourists, yet millennials’ demands are increasingly growing. As younger consumers are concerned with wellness more than other generations, they invest in health, travel, and spas rather than a car or mortgage (Wellness Growth). Regardless of consumer groups, word-of-mouth primarily influences all wellness travelers. Consumers are interested in alternative treatments and personalized services more than ever before. A distinct change of wellness travel is male consumers’ attitudes in the spa market. Men are not reluctant to receive massages, manicures, and pedicures any longer. These services are popular among older men, but young male consumers have started to invest their money and time to grooming and beauty to maintain better appearances (Cardamenis). Spa treatments are not necessarily regarded as women’s exclusive property in the current wellness industry.

4.3.2 Spa consumers Eco spas The current spa-goers are concerned with environmental issues while receiving spa experience. Environmental friendly spa trends include natural energy from solar and geothermal heat and wind power, and recycled sources such as wood, bins, and water (Henkin). As the importance of the eco trends across all industries, including the spa market, are growing, environment initiatives will impact consumers’ purchasing decisions (Henkin).

The importance of water Water shortage is one of the significant issues in the spa market because several treatments including hydrotherapy use lots of water. According to the World Wildlife Fund, over 60 percent of the global population will suffer from insufficient water by 2025.

Consumers expect spas to preserve water resources and to apply alternative solutions for their services. According to Mintel, interests in the products of minimizing water use are popular for the younger generation (Trends 2025 4).

Integrated treatments People in busy and fast-changing lifestyles are concerned about their fatigue and low level of energy. Consumers alleviate these issues through a wholly balanced lifestyle. For example, Chinese maintain high-quality of sleep, eat balanced foods, and exercise more to improve their skin condition based on the research of Mintel (Trends 2025 6).

The importance of ingredients Like foods, consumers prefer natural and organic ingredients of beauty products. They prefer non-chemical products and are creating beauty recipes at home for the environment as well as their health (Trends 2025 8).

26 Wellness socialization Wellness socialization is increasingly growing. The current spa consumers visit spas not only for personal health improvement but also socializing and interacting with others. They enjoy spa treatments in groups (Henkin). As wellness festivals are popular nowadays (McGroarty, Ellis, and Isroelit 55), wellness consumers participate wellness festivals beyond the spas. These festivals vary based on concepts, for example, the UK’s Innocent Unplugged. In the festival, participants are forbidden the use of technology. People need to generate power through pedal bikes (Ellis). People freely converse with other participants and increase their social relationship during wellness festivals.

Male consumers With growth in men’s interests in the beauty and wellness market, male spagoers are increasing with approximately 80 percent of annual growth (Global SPA Market). Along with massages, men look for facials and nail treatments (Henkin).

For attracting male spa-goers, spas serve “from beer and single malt scotch to sporting events on big-screen TVs” (The Gale Group 4).

Kids spa The increase of child health problems such as obesity and diabetes brings parents to awareness of their kids’ health habits. Additionally, the current children’s lifestyle is highly intensive and their busy schedule results in excessive stress to kids (McGroarty, Ellis, and Isroelit 34). Children play with digital devices and games rather than outdoor activities (Clausing). For these reasons, parents want their children to participate in wellness programs more. The spa market has already captured parents’ demands and offer kid spas. Kids wellness services range from massages, yoga, and meditation to healthy cooking classes (McGroarty, Ellis, and Isroelit 34).

27 4.3.3 Hong Kong spa consumers This section investigates what motivates spa-goers to visit hotel spas in Hong Kong. The motivations of spa-goers in Hong Kong are as follows: “relaxation (97.4%)” is the most important to respondents, followed by “pampering (52.0%)”, “beautifying treatments (41.1%)”, and “enhancement of overall health (39.7%)” (Mak, Wong, and Chang 190-191). Mak, Wong, and Chang illustrate that Hong Kongers living in busy lifestyles suffer both mental and physical problems such as stress, insomnia, headaches, and high blood pressure.

For this reason, Hong Kongers are eager to relax and balance their lifestyles and health and wellness (190-191). Another interesting motivation is “friendship and kindship”. Spa-goers in Hong Kong desire to share spa experiences with friends and family. However, this factor is the lowest motivator among spa-goers in Hong Kong (Mak, Wong, and Chang 193).

Additionally, understanding who are real Hong Kong spa-goers and why they choose the hotel spas are also crucial. In their research, Mak, Wong, and Chang found that younger groups who are in “upper-middle socio-economic status” are attracted by the spa. These consumers are more health conscious and not reluctant to pay more money and invest time in the spa experiences (189).

According to Mak, Wong, and Chang, “mid-level” spa-goers, who had visited two to five times, and “one-time” spa-goers are dominant in Hong Kong. However, more than 10 percent of total respondents of their surveys had six or more spa-experiences during the last two years (189). The survey results of Mak, Wong, and Chang show that Hong Kong spa-goers prefer to visit the hotel spas mostly (52.6%) due to exclusive environment and high-quality services of the spas as well as other hotel amenities (189).

For defining the proper target consumers of the project, the following two studies are significant to understand the Hong Kong spagoer segmentation. First, Guillet and Kucukusta divide spa market segmentation into four groups: spa enthusiasts, high spenders, value seekers, and price-sensitive spa-goers in accordance with price, therapist qualification, level of privacy, the range of spa facilities, and product branding (425). Respondents of their survey are general travelers to Hong Kong, not business travelers (423).

Fig. 21. The motivations of spa consumers in Hong Kong (total respondents: 302) adapted from Mak, Wong, and Chang; “Health or Self-indulgence? The Motivations and Characteristics of Spa-goers.”; 2009.

28 According to Guillet and Kucukusta’s research, spa enthusiasts account for the largest portion (34.2%), followed by value seekers (30.0%), price-sensitive spagoers (21.9%), and high-spenders (13.9%). Overall, all segments emphasize therapist qualification, level of privacy, and price rather than the range of spa facilities and product branding. The distinct difference is consumers’ attitudes to the price. Spa enthusiasts and value seekers consider valuable experience as a significant factor. While spa enthusiasts are not concerned about the price so much, value seekers want to pay a medium price for a high-quality experience. Price-sensitive spa-goers prefer low prices, but high-spenders seek high prices. Particularly, level of privacy Fig. 22. The segmentation of spa consumers in Hong Kong adapted from Guillet and Kucukusta; “Spa is less important to price-sensitive spa-goers than the other Market Segmentation according to Customer Preference.”; 2016. three groups (Guillet and Kucukusta 425-426).

In terms of socio-demographic profiles, females ages ranging from 26 to 35 account for spa enthusiasts and they prefer to visit hotel spas and medical spas, while price-sensitive spa-goers are mostly male consumers who visit spas for meetings and business. Also, people who have only one spa experience during the past year are prevalent in the price-sensitive group. High-spenders are more from North America and Europe and their ages range from 36 to 45 and over 45. They enjoy a spa experience with a spouse or a partner.

Compared to high-spenders, value seekers are more from mainland China and are the youngest group, under 26 years old. As they are younger than other groups, many of them do not have jobs. They prefer to visit spas with friends, relatives, and colleagues (Guillet and Kucukusta 428).

Another research study by Kucukusta and Guillet shows the lifestyle of Hong Kong spa-goers. In the study Lifestyle Segmentation of Spa Users: A Study of Inbound Travelers to Hong Kong, Kucukusta and Guillet identified five lifestyle groups: health conscious and intellectual lifestyle, average lifestyle, family-focused lifestyle, pleasure-oriented lifestyle, and carefree lifestyle. All groups are highly educated and mostly visit Hong Kong for business purposes (264). The largest portion of respondents are the health conscious and intellectual lifestyle group with 94 people. They enjoy their lives and business actively and care about families more (267). This group consists of about half Chinese and Taiwanese, most are female ranging in age from 26 to 45 (268).

29 The second largest groups are average lifestyle and pleasure-oriented lifestyle groups with 84 people. The average lifestyle group cares about family, but does not consider their health. This group enjoys their lives, but are less active in business (267). Similar to the average lifestyle group, the pleasure-oriented lifestyle group is active in their lives and conscious about families and health. The distinct character of this group is that they love travel and going out (268). This group mostly comes from Europe and North Asia. In the pleasure-oriented lifestyle group, there is no distinct difference in gender and the range of age, but Fig. 23. The lifestyle segmentation of spa consumers in Hong Kong adapted from Kucukusta and the average lifestyle group includes more men, their ages Guillet; “Lifestyle Segmentation of Spa Users: A Study of Inbound Travelers to Hong Kong.�; 2015. ranging from 26 to 35 and under 26 (270).

The family-focused lifestyle group is the lowest of those active at work and who care about health (268). This group is mostly Chinese and Taiwanese, female, ages ranging from 26 to 35 (270). Among the five groups, the carefree lifestyle group is the smallest, with only 26 people. This group cares less about their families and health and enjoy fewer activities in life. They are quiet people (268). They come more from China and Taiwan and consist of more 36 to 46-year-old people than other groups, they visit Hong Kong for vacation (270).

As the growth of male spa-goers in Hong Kong is a global trend, understanding the focused consumers’ characteristics is needed.

From their current research, Tsai, Suh, and Fong found that male Hong Kong spa-goers mainly visit the hotel spas for relaxation. The authors illustrate that male spa-goers prefer to receive body massages mostly. Male consumers are satisfied with the spa environment, and this factor influences their next visits and recommendations to others (Tsai, Suh, and Fong 265). However, male spa-goers in Hong Kong claim that price is higher than the quality offered (Tsai, Suh, and Fong 266).

30 Core male spa-goers were from 31 to 40 years old (37.7%), but consumers whose ages range from 41 to 50 also accounted for a similar proportion (34.8%). Most respondents are highlyeducated and over a half of total respondents were married and at management level or professionals. About a quarter of total respondents earned between US$75,000 and $99,999 annually (Tsai, Suh, and Fong 255).

4.3.4 Target consumer’s characteristics 4.3.4.1 Millennials 4.3.4.1.1 Definition The age range of millennials is different according to organizations and researchers. However, it is accepted that millennials are commonly born between 1980 and 2000. Some research includes information from the late 1970s and others embrace the early 2000s. According to Pew Research Centers Internet & American Life Project, global millennials are 1.8 billion out of the 7 billion worldwide population, the same as about 25 percent of the total population in the world (2015 Fact sheet). In the case of the U.S., the number of millennials ranging in age from 15 to 35 surpasses that of baby boomers ranging in age from 51 to 70 in 2015, 92 million and 77 million respectively, based on US Census Bureau data (Who are millennials).

Research in this final project defines consumers, ages ranging from 25 to 40 as of the year 2017, as the enthusiastic spa millennials. There are gaps among the above age ranges. However, the research investigates millennials’ overall characteristics for understanding what millennials want and how they think.

Fig. 24. The proportion of male spa consumers in Hong Kong by age groups adapted from Tsai, Suh, and Fong; “Understanding Male Hotel Spa-Goers in Hong Kong.”; 2012.

Fig. 25. U.S. population between millennials and baby boomers adapted from US Census Bureau; 2016; http://www.millennialmarketing.com/who-are-millennials/.

31 4.3.4.1.2 Characteristics General characteristics of millennials As millennials have been growing up during an ever-changing period in technology and economics, their tendency and values are different from previous generations. According to Goldman Sachs Global Investment Research, the traits of millennials are as follows.

First, they are not concerned with marriage and children but enjoy their single lives. Second, they are not possessive of products, rather interested in a “sharing economy”. Third, they adopt new technology and digital worlds more rapidly than the first digital generation.

Fourth, they create their own contents and share reviews with others. Also, these actions influence their shopping decisions. Fifth, they actively provide feedback to companies whether products or services are satisfactory or not. Sixth, they invest money and time in their wellness lifestyles including physical and mental health and eating. Seventh, millennials consider not brand names, but valuable products and services which improve their lifestyles. Also, they would gladly pay more them. Last, they enjoy global travel, long journeys, and adventurous experiences (Who are millennials).

Millennials in wellness industry The wellness industry is no longer the exclusive property of Baby Boomers. Particularly in wellness tourism, millennials are regarded as core target consumers along with Generation X, according to Chief Operating Officer of Spafinder Wellness John Bevan (Study Shows). Global millennial travelers are predicted to increase approximately from one-fifth of total travelers in 2015 to half of them in 2020. Chinese millennials particularly bring this rapid growth of the travel market (The Impact 12).

In addition to a shift of millennials’ attitudes, they are now the largest segment of the working population, which means millennials have been obtaining more disposable income (Aroche). These changes enable millennial consumers to spend more on physical and mental treatments including fitness and meditation.

Beyond these general wellness programs, the millennial group prefers more active and experimental services. According to Bevan, millennials pursue adventurous and intensive activities (Study Shows). Jeff Fromm, President of FutureCast, pointed out that millennials prefer to enjoy events and experiences rather Fig. 26. The global millennial travelers forecast adapted from “The Impact of Millennials’ than possess products (Aroche). An interesting example of this Consumer Behaviour on Global Markets.”; 2016; http://go.euromonitor.com/rs/805statement is that millennials invest $10,000 not a luxury bag, but KOK-719/images/SB_Millennials-Consumer-Behaviour_1.1-1115.pdf.

32 on overseas travel or VIP seats for favorite performances (Aroche). Young consumers want to actively participate in a series of processes rather than passively receive an event invitation from a brand. Furthermore, millennials share their enjoyment of an experience on social media before, during, and after the experience (Aroche).

The interests in wellness embrace not only healthy treatments and activities but also diet. Food is an emerging industry nowadays.

Due to their hectic lifestyle, millennials seek natural healthy foods such as Greek yogurt and enjoy trying snacks with new flavors (The Impact 10).

Defining the global millennial’s visits to Hong Kong for wellness as the main purpose is difficult. They travel in Hong Kong for a variety of reasons such as business, leisure, and shopping. Even though their first objective to visit Hong Kong is not wellness, millennials who seek maintenance of a healthy lifestyle during travel can be considered potential wellness consumers. Also, if the wellness market in Hong Kong offers unique and distinctive services, millennials tend to visit Hong Kong for unpublished experiences.

Undaunted striver among millennials Euromonitor identifies that 22 percent of total global millennials are the Undaunted Striver. This type of millennial is “high achieving, confident, ambitious … [and] tech/internet orientated” (The Impact 3). The group mainly put emphasis on their careers and status. Also, they are interested in “fitness, appearance, status, friendships and ethical and eco issues” (The Impact 3). The Undaunted Striver especially prevails in both the U.S. and China. This type of millennials in two regions obtain higher incomes than their parents (The Impact 3). Due to these traits, the Undaunted Striver expects a high-quality lifestyle and is not reluctant to spend money on cuttingedge products and services (The Impact 14).

33 4.3.4.2 Hong Kongers and tourists Hong Kong millennials According to the study of Text100, Hong Kong millennials differently called “Post-80s Hong Kongers”, are practical and ambitious about their career success rather than glamorous lifestyle. The Post-80s generation is similar in the U.S. and the U.K. millennials as they carefully listen to others’ opinions from parents, peers, and professionals. Smart devices including a smartphone and a tablet and the Internet use are prevalent in this group. Especially, this group uses the Internet for obtaining information about travel (78%), events (74%), and restaurants (71%). Millennials in Hong Kong use various social media platforms such as Facebook (97%), YouTube (91%), and Instagram (59%). Compared to western countries, Hong Kong millennials prefer Instagram almost twice more. Over half of this generation has access to Discuss.com.hk while approximately half of millennials in Hong Kong do not visit Twitter. Interestingly, the study shows that Hong Kong millennials balance between digital life and non-digital life such as hobbies and interests (Thorpe).

The following two groups of Hong Kong millennials have common characteristics of global millennials in the way that they are immersed in technology and the digital world, have a passion for their careers, and enjoy travelling. For these reasons, the research investigates the details of each group further.

Fig. 27. The popularity of social media among Hong Kong millennials adapted from Thorpe; “Hong Kong Post 80s Millennials Shun Stereotypes.”; 2014; https://www.text100. com/2014/12/23/hong-kong-post-80s-millennials/.

Fig. 28. The segmentation of Hong Kong millennials adapted from Thorpe; “Hong Kong Post 80s Millennials Shun Stereotypes.”; 2014; https://www.text100.com/2014/12/23/hongkong-post-80s-millennials/.

34 Emerging Technocracy among Hong Kong millennials Among six characteristics of Post-80s Hong Kongers identified by the study of Text100, Emerging Technocracy and Digital Shoppers are selected for understanding the target consumer groups. Emerging Technocracy accounts for 15 percent of Hong Kong millennials, represent its older group and male. Success keys to this group are hard-working, energetic, and enthusiastic. This group usually works at least senior positions with higher income. Emerging Technocracy is immersed in the most up-to-date technologies and products. Also, this group browses online via smartphone much longer time than other groups. They enjoy video chat, create content, and share reviews with others on their own blogs. Emerging Technocracy identifies themselves as sociable, progressive, and pragmatic.

Their concerns are travel, cooking, eating, and reading (Thorpe).

Digital Shoppers among Hong Kong millennials Compared to Emerging Technocracy, Digital Shoppers account for 22 percent of the Post-80s Hong Kongers, it consists of both females and males, but the proportion of females is higher than male. Their work position and income are higher than average people whether they have various occupations. They pay attention to the fight, work hard, and intellect for their success. While this group is a big follower of Facebook and YouTube, Twitter and Instagram are not popular for Digital Shoppers. Even though they spend a long time on social media, they are finally ordinary internet users. Unlike Emerging Technocracy, Digital Shoppers concentrate on shopping rather than creating contents. The group expresses themselves as broad-minded, confident, and realistic. Their interests are travel, entertainment, and computer games (Thorpe).

Though Emerging Technocracy and Digital Shoppers have differences such as gender mix, a core age group, and Internet using preference, both groups are important to be considered as potential spa-goers. First, working hard for their success results in chronic fatigue and high-pressured stress, which leads them to desire relaxation. Second, earning higher incomes rather than other groups reflects their higher consumption competencies, so they tend to invest more money in wellness treatments including spa services. Third, the prevalent use of the Internet and social networking brings the rise of spa revenue through influencers as content creators and online shoppers. Fourth, result-oriented spa services attract practical consumers. For these reasons, both Emerging Technocracy and Digital Shoppers have a potential to visit spas in Hong Kong more than other Hong Kong millennials.

35 Asian and mainland Chinese millennials as tourists The survey results of Agility Research show what the affluent millennial travelers in Asia want. Asian millennials consider Hong Kong as the top destination along with Singapore and Tokyo. Nearly 80 percent of total respondents are interested in new activities and experiences, which influence their destination decision. However, they still want to shop during travel. Another influencer of their travels is social media. Asian millennials actively use the Internet and social media content for planning trips.

The large spending power of Asian millennials influence all industries, including spas and hotels. Brand Karma predicted that Asian millennials’ international travel spending will reach $340 billion by 2020 because of the increase of the middle-class (Saiidi).

Mainland Chinese millennials still consider Hong Kong as the first destination according to Daxue Consulting. Almost a half of Chinese overseas travelers are the younger group, ages ranging from 15 to 29, followed by the middle group, ages ranging from 30 to 44 and accounting for 37 percent of total outbound travelers based on GfK data (Gazdik). GfK data illustrates that among Chinese millennials, over 60 percent of them earn high income and 70 percent of Chinese millennials have executive or professional occupations.

Also, millennials in China are more enterprising and hedonistic rather than previous generations according to GfK (Gazdik).

There is no specific data of Chinese travelers to Hong Kong by age groups. However, according to Hong Kong Tourism Board, in 2016, three quarters of total visitor arrivals in Hong Kong (42,778,145) were Chinese. Based on both China’s outbound travelers and Hong Kong inbounds data, Chinese millennials who have great spending power account for a large portion of Hong Kong travels. For this reason, if the spa industry offers unique and exclusive services and experiences, the spas can expect an outstanding growth in sales and consolidation of the brand awareness.

Fig. 29. China’s outbound travelers by age groups adapted from Gazdik; “Chinese Millennials Drive Tourism Spending.”; 2016; http://www.mediapost.com/publications/ article/266846/chinese-millennials-drive-tourism-spending.html.

Fig. 30. Visitor arrivals in Hong Kong by country in 2016 adapted from Hong Kong Tourism Board; “Monthly Report - Visitor Arrivals Statistics: Dec 2016.”; 2017; http://www.discoverhongkong. com/common/images/about-hktb/pdf/tourism_stat_12_2016.pdf.

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05 _ MULTI-SENSES AND SENSORY MARKETING Sensory marketing is no longer only for goods industries such as beauty and food markets. Nowadays, the wellness industry has become a sensory experience hub beyond general health care studios such as yoga and meditation centers. For example, WOOM in New York applies visual, olfactory, and acoustic elements to its yoga classes. Also, Inscape meditation center of Intermix uses sight, sound, touch, and taste senses in meditation programs (11 Wellness).

The reasons both merchandise and service industries use senses in marketing are humans’ natural habits, the relationship between brands and consumers, powerful attraction, and synergy effects. According to Jeremy Lindley, global design director of British drinks brand Diageo, consumers’ purchasing decisions are influenced by their emotions because people do not always think logically (Cassidy). Additionally, sensory marketing allows brands to strengthen their images and imprint distinct awareness in consumers by combining five senses (Sundar and Noseworthy). These embodied experiences subconsciously affect consumers’ further spending (The Science). Especially, Hemsley illustrates that this sense-based marketing promotes audience’s desires more than advertising which uses only one sense element such as sight and sound in a digital world. Compared to one sense marketing, either intersensory or synaesthesia bring various synergies such as enduring memory and emotional connection between brands and consumers (Cooper and Binder 2). For these reasons, sensory marketing leads to a great potential for many brands regardless of specific markets.

It is important to look at the impact of each sense. First, olfactory sense is the most significant element to Jo Malone Spa, which originated from the fragrance brand Jo Malone London. Cooper and Binder mention that fragrance promotes all five senses, not only smell, which creates the overall brand features (1).

Interestingly, olfactory sense has been examined in various research studies including science studies. The study of the Sense of Smell Institute in New York found that people can distinguish about 10,000 scents and accurately remember approximately two-thirds of them, on average, a year later. Also, the leverage of smells is much stronger than visual. After three months, only half of people can remember images they saw (Dan-Bergman). Moreover, Valenti and Riviere refer to many research projects, including those by Laird, Cox, Spangenberg, Crowley, and Henderson, who have already proven olfactory effects. Smells impact not only product evaluation and buying decisions, but also the time spent at the store (Minh and Truc Ly 13).

38 Even though scents embrace positive effects, olfactory senses are diversely perceived based on people’s gender and age (Valenti and Riviere 13). For this reason, finding proper scents for Jo Malone Spa is the most difficult challenge to satisfy all spa-visitors. For reference to resolve this problem, the following two examples of other brands are helpful. First, the Soho House brand, Cowshed, uses eucalyptus and clary sage for both promotion of products and relaxation. The other example is Bulgari. All Bulgari hotels help their guests to recall healing and relaxing images by utilizing their own green tea fragrance (Davis 2). From analysis of both examples, Jo Malone Spa needs to find genderless and relaxing scents for spa-goers.

The second sense is sight which is prevalently used in marketing. Visual impacts are related to various factors such as colors, shapes, and alignments. Among different elements, both colors and forms largely influence audiences because two factors clearly stand out. Particularly, each color expresses distinct traits (Minh and Truc Ly 5) such as the cleanness of white, high-quality of black, refreshment of green, and the serenity of blue according to Leatrice Eiseman.

Moreover, light is one of the important visual factors in the environment. Based on the intensity or source of light, consumers’ feelings and purchasing habits are changed. While a space of wellness concept uses natural or softened artificial light for visitors to feel much healthier, food markets apply artificial and intense lights to attract consumers’ interests (Minh and Truc Ly 6).

Sound sense acts as a bridge between the point of sale and consumers’ perception. When a store plays music related to products sold, consumers are more immersed in products, which impacts their purchasing behaviors (Minh and Truc Ly 6). For example, athletic shoe store mainly selects exciting and fast music rather than classic. Music, tempo, volume, and genre have a significant role in consumers’ shopping patterns such as the time spent in stores and product sales.

39 The sense of touch includes various factors such as texture, shape, weight, temperature, and malleability. From these elements, customers discern the quality or durability of the products whether they directly hold, touch, or just show the products (Minh and Truc Ly 8). People can imagine how the products feel without virtually touching. For this reason, building the proper image of the product in marketing is important because many consumers face new products through advertising first.

Gustatory sense is composed of four distinct tastes including sweetness, sourness, bitterness, saltiness, and spiciness. In current marketing, taste is encouraged to combine other senses such as visual and acoustic senses. CĂŠlier makes a connection between colors and tastes: sweet-red, sour-green, bitter-blue, and salty-yellows. This relationship results in packaging design as well as real food servings (Minh and Truc Ly 7). According to a study from Oxford University, taste can also be affected by sound. For instance, sweet taste is strengthened by high-frequency sounds (Cassidy).

Sensory marketing intensifies the relationship between people and objects or brands as much stronger by instinctive emotional links. This characteristic of senses results in both consumers’ shopping behaviors and their memories, which brings direct financial benefits to brands. For these reasons, Jo Malone Spa considers how to effectively use sensory marketing in accordance with treatments, products, services, and atmosphere as well as promotional marketing plans. The main purposes of sensory marketing of Jo Malone Spa are ultimately to increase the brand awareness, induce continuous visits, and obtain profitable gains through holistic and plentiful experience.

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06 _ RESEARCH ANALYSIS AND FINDINGS 6.1 Analysis of secondary research Global economic instability, social unrest, regional conflict, and threats of terrorist attacks lead to the change of luxury consumption. Luxury consumers prefer unique and exclusive experiences and services including wellness, health, and travel rather than conspicuous products. With the increase of interest in wellness, not only local consumers but also tourists are also concerned about their on-going healthy lifestyles during travel. Also, internationally, many workers are unwell and they are eager to relax in the limited time they have. Companies as well as individual workers seek spas for alleviating physical and mental health problems.

The spa economy shows the strong growth in global wellness industry in terms of numbers (15%), revenues (5%), and employment (13%) between 2013 and 2015. Hotel and resort spas especially resulted in remarkable increases in the number of spas (36.7%) and the spa facility revenues (3%) during the same period. For these reasons, the spa market has a great potential to grow in hectic urban areas.

The following findings are divided into the trends of the global spa market, the characteristics of millennial consumers, the current status of the spas in Hong Kong, and the characteristics of Hong Kong spa-goers.

The trends of global spa market The variety of services available in the current spa market are in collaboration with other industries such as beauty. This combination enables the spas to provide not only massage and hydrotherapy but also facial and nail care, yoga and meditation, and art classes.

In addition to the variety of services available, there is also a rising trend in the new target consumers. While women traditionally represent typical spa-goers, there is an increase in the number of men and children who visit spas. The increase of global male spa-goers derives from the change of attitude to beauty and grooming, resulting in men’s specialized treatments from massages to manicures and pedicures. Mothers are also beginning to encourage their young children to take care of themselves, and those mothers who take their children to the spa treatments are increasingly growing. Additionally, stress caused by on unbalanced diet, academics, and digital devices has resulted in the rise of children’s health problems. For these reasons, operating kid spas can invite households with young children, which lead to additional financial profits.

42 Influencing these new trends in the global spa market is the rise of technology. The developments of digital technology influence the marketing of most industries, including the spa market. Consumers, including millennials in Hong Kong, share their experiences of products and services as well as refer to others’ reviews via digital platforms such as social media. This trend emphasizes the spas careful attention to word-of-mouth impact. For understanding spa-goers’ demands, look at the millennial consumers, who are rising spa-goers in the current global spa market.

The characteristics of millennial consumers Millennials are concerned with wellness lifestyles more than older generations who are still the largest consumers in the wellness industry including wellness tourism and the spa market. As time goes on, millennials are going to be the center of consumption with enough disposable income as their spending powers are increasingly growing. In terms of millennials’ demands for the spa industry, millennial spa-goers are concerned with environmental issues, so they prefer eco spas and natural and organic ingredients for treatments and products that the spas provide.

Also, they are interested in socialization in both the real and digital world. In spas, millennials enjoy social activities with others, particularly friends, and they participate in wellness festivals and events. As stated in global spa market trends section, they actively share their experiences with others through social media. Millennial consumers in this fast-changing period demand integrated treatments, for example, healthy food service after massages, rather than only one treatment. The increase of male spa-goers is popular in the millennial generation as well as with older businessmen nowadays.

The evolvement of the younger male beauty industry leads to changing of attitudes about men’s beautification and spa menus.

In terms of Hong Kong millennials, they are similar to global millennials. Digital devices are prevalent in Hong Kong millennials and they use social media platforms such as Facebook, YouTube, and Instagram. The distinct trait is that Hong Kong millennials prefer to use Instagram rather than other western millennials.

The current status of the spas in Hong Kong Based on previous research, the Hong Kong spa market shows a growing potential. First, the change in consumers’ attitudes about wellness and health enables spas to be considered as one of the important elements to Hong Kong travelers according to authors Kucukusta, Pang, and Chui, experts in Hotel and Tourism Management (SHTM) at The Hong Kong Polytechnic University. Even though inbound travelers in Hong Kong are slightly decreasing, the support of the Hong Kong government for the spa industry, the development of the hospitality industry in Hong Kong, and geographical, cultural, and exuberant shopping environments still make Hong Kong the first destination for Chinese millennials. Second, about half of travelers, whether leisure or business travel in Hong Kong, have visited

43 spas before based on the study of Inbound Travelers’ Selection Criteria for Hotel Spas in Hong Kong Hotel. Third, the environment, quality, and hotel amenities attract Hong Kong spa-goers to visit the hotel spas rather than day spas which account for 70% of the total spas in Hong Kong according to a study by Mak, Wong, and Chang.

The characteristics of Hong Kong spa-goers In accordance with the traits of spa-goers in Hong Kong, they mainly visit spas for relaxation, followed by pampering and beautification. Hong Kong spa-goers mainly consist of spa enthusiasts and value seekers. Both consumer segmentations regard qualified therapists, high-level privacy, and price. Attitudes toward the price of spa enthusiasts and value seekers are different, while both groups place emphasis on valuable experiences. These two groups comprise younger generations ranging in ages from 26 to 35 and under 26.

Overall, Hong Kong spa-goers are highly educated and conscious about families and health. The primary consumers are young females from mainland China. In terms of male spa-goers, they are sensitive to the price of spa treatments and have fewer spa experiences compared to females. Male spa-goers are part of the MICE industry such as meeting, incentives, convention, and events and exhibition.

They mainly prefer to visit the hotel spas for relaxing with a massage. These male hotel spa-goers in Hong Kong are older than core female spa-goers. The age ranges of male consumers are from 31 to 50. They work at management level or are professionals.

44 6.2 Analysis of primary research In total, three professionals from spa organizations and two spa directors from luxury hotels were interviewed through emails.

The purpose of the primary research for urban hotel spas is to deeply comprehend the current issues and trends of spa-goers, both tourists and residents. The interviews discerned the differences and identities of urban hotel spas, determined two types of spa-goers’ propensities, and suggested appropriate promotions to tourists and residents.

The following spa organization professionals participated in the interviews:

Allan Share

The President Day Spa Association International Medical Spa Association

Andrew Jacka

The Chairman of Asia Pacific Spa & Wellness Coalition The Director of Spa Origins Co., Ltd. The Managing Director of Spa Origins International Co., Ltd. The Asia Pacific Representative of Termatalai The Thailand Ambassador of Global Wellness Day

Allie Hembree Martin

The Public Relations Manager International SPA Association

Jeremy McCarthy

The Group Director Spa & Wellness of Mandarin Oriental

Todd Hewitt

The Corporate Director Spa, Health Clubs, and Recreation Shangri-La Hotels and Resorts

Because Allan, Andrew, and Allie come from three different backgrounds (day spas, Asia Pacific, and international spa organizations respectively), they have different ideas and can provide unique insight to this study.

McCarthy and Hewitt also shared their personal insights based on their hotel spa environments and the spa industry trends via emails. Both interviewees are crucial to the project because Hewitt comes from Shangri-La, the target location of the project, and McCarthy is the professional from one of the core competitors, Mandarin Oriental. Additionally, they are on the front line of the luxury hotel spa industry.

45 Ten questions were posed to all interviewees and an additional question related to the importance of a spa in a hotel to the hotel spas representatives was added. All answers are compiled and analyzed and findings are expressing the general consensus. The questions with the findings from all interviewees are listed below.

Q1. What are major trends and directions in the current spa industry?

A1. According to Jacka, actual trends of the spa industry do not exist and the same concepts are repeated as the newest trends in the spa marketing. However, interviewees commonly pointed out that the change of consumers’ attitudes results in the application of wellness elements to spa services for improving better lifestyles. Beyond the personal wellness, the current spa-goers are concerned with the environment, which leads to the development of organic and natural products and services.

The transition of the wellness industry brings a shift in spa-goers. The professionals of the spa industry said that female consumers still account for the large portion of total spa-goers, but the growth of male spa-goers, which currently accounts up to about 30 to 40 %, is remarkable compared to the past. Regardless of genders, health conscious consumers in these bustling times desire shorter services and fast result-driven treatments.

Q2. Who are your core consumers? Ex. The overview of real spa-visitors.

A2. Interviewees responded that clarifying the proportion of gender mix and the age ranges of real spa-goers are difficult because this statistic depends on spa locations. However, they assumed that the global female spa-goers generally account for 60 or 70% of total spa-goers. The age ranges of spa-goers are considerably broad like 30 to 60 years old. Compared to gender mix and age ranges, spa professionals notified that their consumers are affluent who have enough disposable income to spend money on their wellness issues.

Hewitt from Shangri-La added that core spa-goers in the world mainly desire massage treatments which account for “70% of treatments performed worldwide”.

Q3. What do spa-goers expect for treatments, activities, and special services in their spa experiences?

A3. Each interviewee mentioned a variety of consumers’ expectations such as relaxation, beautification, and new experiences.

In common, the highest spa-goers’ desires are the high quality of products, treatments, and skilled therapists. Communication between staff and consumers, which includes interchange of feeling and consumer recognition, is also highly demanded.

Additionally, Share argues that spa-goers including millennials want to use the Internet in the spas and Jacka added relaxation and beautification such as anti-ageing treatments as other consumers’ demands.

46 Q4. How are millennial consumers different from traditional consumers in perception, behaviors, and preferences?

A4. As Share noted in question 3, about spa-goers’ expectation, millennial consumers, which are regarded as the digital generation, highly desire to use their smartphones in the spa. Within the millennials group, using the Internet and digital devices are the highest wishes. Interestingly, millennials book their spa appointments through traditional ways such as telephones or in-person rather than websites, social medias, and mobile applications according to Martin. Martin also mentioned that millennial consumers sometimes want to be in ‘technology time-out’ compared to millennials’ enormous affection for high-tech devices. Other distinct difference is that result-oriented treatment, which was reported in a question of the current spa trend. Millennial spa-goers want quick and direct results after having spa treatments.

Spa professionals made the majority opinions about the traits of millennials such as customization and preference of shorter services caused by time pressures, fair-trade and recycled products and packaging, and home treatments. Among various opinions, the following two insights are worthy of notice. Share defined the relaxation to millennial generation as “have my friends around”. Jacka illustrated that millennial spa-goers did not insist on a specific brand.

Q5. What percentage of spa users account for tourists and local residents?

A5. Like the question 2, about the composition of spa-goers, the proportion of spa-goers as tourists and locals varies on areas.

While McCarthy from Mandarin Oriental assumed local residents account for 70% of the total spa users, Hewitt from Shangri-La anticipated that at least 50% of total spa-goers were from locals. However, local residents visit the spas more than tourists in urban areas such as Hong Kong. Even though urban spas are prevalent for locals, Jacka emphasized on the consideration of tourists as potential spa-goers. He said that “tourists are increasingly including spas as part of a holiday experience”. Moreover, Jacka illustrated that the Tourism Ministries in the ASEAN promote the spas as one of marketing factors; “the ubiquitous image of someone being massaged with a background of sun, sand and sea is common place in tourism marketing materials, regardless of country.”

Q6. What are pros and cons of urban hotel spas compared to resort spas, spa boutiques, and etc.?

A6. The large size of urban hotel spas allows them to provide diverse services and sell products such as skincare, cosmetic, and nail to spa-goers. Also, urban hotel spas have more optional packages such as couple and wedding rather than day spas. Higher geographical accessibility is also one of the strengths of urban hotel spas. According to Martin, urban hotel spas have their own websites, but, interestingly, online booking services are lesser popular than day spas.

47 There are several advantages of urban hotel spas, but higher prices compared to day spas and high competition are challenges.

Moreover, urban hotels are influenced by hotel room occupancies and its fluctuant vacant ratio impacts the revenue of the hotel spas.

Urban hotels’ core consumers are business people who have not enough time to spend on the spas, the hotel spas should consider nonhotel guests.

Q7. What do you expect for the future directions of the spa industry?

A7. Along with the new services and products, creating spa branding and community partnerships are driving forces. Lifestyle focused services, the improvement of skincare, and home treatments support this strategy.

Q8. What do you expect for the future directions of urban hotel spas?

A8. The main consumers of urban hotels are busy business people related to MICE industry, which includes meeting, incentives, convention, events and exhibition, and corporates, so they do not spend long times at spa experiences. This characteristic of urban hotel spas brings shorter treatments with the application of personal issues and well-being.

Q9. What would you suggest for creating an innovative spa environment and experience?

A9. Jacka and McCarthy pointed out that the lack of innovation of the spa industry makes most spas considerable similar. Beyond the functionality, the spa industry needs to serve impressive experimental services such as experience showers, planetariums, high-tech machines with a sensorial element, and sleeping pods.

Q10. What would you suggest for a successful partnership with a brand spa in an urban hotel spa?

A10. The mutual exchange of opinions and information between a hotel and a spa is the most necessary factor for a successful partnership. The close relationship enables both of them to recognize customers’ issues and then apply these issues fast. Also, consistent staff training leads to success.

The partnership is needed to align both hotel and spa brand values and differentiated services or products, which are not available in other online retails or spas.

48 Q11. How important is a spa to your hotel and why?

A11. Both hotel representatives said that spas are crucial to their hotels. Jacka, a professional of a spa organization, responded that if a spa is just a ‘marketing tool’ to a hotel, it will not bring better Return on Investment (ROI) in the question 8, about the future directions of urban hotel spas. Compared to Jacka’s concern, McCarthy and Hewitt showed a positive status of the hotel spas. McCarthy illustrated that their consumers are wellness conscious and eager for wellness experiences during travel. Particularly, the hotel benefits from spa-goers who stay longer and spend more money on spa as well as room, food, and beverage. McCarthy mentioned that if a hotel has no spa regardless of size, the hotel loses competitiveness.

Regardless of specific questions, interviewees mentioned similar words continuously, which means that repeated concepts are core elements related to the spa industry and spa-goers. Trends actually come from consumers’ demands, so interviewees illustrate the same opinions in different questions. After reviewing all responses, the following words were mostly mentioned: better lifestyle, wellness elements, corporate wellness, skincare, customization, male, online booking, shorter services, result-oriented, the Internet, relax, beauty, massage, professional skills, communication, smartphones, busy, and experience.

49 6.3 Comprehensive findings From the above subjects and the findings of secondary research, the current spa market and spa-goers are identified as follows: • • • • • • • • • • • • • •

The current spa-goers are eager for better lifestyles and application of wellness factors to the spa experience.

Spa-goers mostly visit spas for relaxation with massage and beautification with skincare treatments.

Therapists’ high-qualification is a crucial factor for spa-users to choose spa.

Communication is important between spas and consumers as well as both spas and hotels.

Online booking service is needed.

Urban hotel spas are influenced by busy business people and corporates.

Spa-goers who do not have enough time to enjoy spa treatments demand shorter and result-oriented services.

Millennial spa-goers desire to use of the Internet and smartphones.

Millennial spa-users prefer socializing with others, especially, friends in both the real and digital world.

Millennial consumers enjoy sharing their experiences through digital platforms such as social media.

Millennial consumers are eager for customized, integrated, and experimental services.

Male spa-users are rising in the current spa market, and demands for kids spa have begun to grow.

Both hotel spas and beauty brand spas provide similar treatments such as facial and body treatments.

In terms of groups of spa-goers, a kids spa is a starting point while male and mother focused treatments can be easily found in both hotel and beauty brand spas.

• Hotel spas have introduced experience showers to offer multi-sensory experience to spa-goers, but they are not prevalent, and beauty brand spas have not begun to use them according to the latest research.

• Inter-sensory or multi-sensory emphasize effectiveness of senses rather than one sense use.

• Five senses subconsciously influence people’s purchasing behaviors, which finally leads to not only an increase of sales but also an improvement of brand image and awareness.

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07 _ BRAND OVERVIEW 7.1 Brand overview of Jo Malone London Jo Malone London, a luxury British fragrance house, was founded by Joanne Lesley Malone in 1994 (Our History). She recognized her “instinctual talent for creating scented products” while she was a facial therapist (Jo Malone MBE). Jo Malone achieved its fame through unexpected, unique, elegant, and simple scents (Jo Malone). Jo Malone values offering “an iconic lifestyle” to customers (The Estée Lauder 5) through individual or tailored layering scents creation (Our brand portfolio). Jo Malone seeks the brand’s quintessence from London heritage (The Estée Lauder 5) which evokes “a fragrant garden in an English countryside (Our brand portfolio. However, the brand pursues modern exclusivity at the same time (The Estée Lauder 5). In conclusion, Jo Malone London delivers consumer’s novelty by offering personal and tailored services as well as the brand’s authenticity. Jo Malone offers not only fragrances but also bath, body, and home products with coveted scents. In October 1999, Jo Malone joined The Estée Lauder Companies (General Information) and worked as a creative director by 2006 (Jo Malone MBE). Jo Malone London is now in 41 markets worldwide (Jo Malone).

Fig. 31. Jo Malone London Basil and Neroli Cologne; Jo Malone London; https://calec.chinaairlines.com/eshopping_new/webc/html/product/show.aspx?num=XD2131.

52 The current issues The first global premier Jo Malone boutique opened on Regent Street in London in the fiscal year 2016 to provide attractive retail experiences. Consumers enjoy “an indoor scented garden, Artisan’s Studio for gift customization, and first ever interactive digital Fragrance Combining Cabinet” (2016 Annual Report 13). Additionally, Jo Malone London concentrated on social media channels, especially Pinterest, offering lifestyle and bridal trends to followers (2016 Annual Report 14).

The current operation results and future directions According to the Estée Lauder Companies, Jo Malone London and Tom Ford led to the increase of higher net sales of nearly $91 million together, and the sales offset Fig. 32. Jo Malone London Fragrance Combining Cabinet; Malone London; https://clios.com/fashion-beauty/ the decrease in sales of other brands (2016 Annual Report 61). This remarkable sales Jowinner/13697. growth resulted from the launches of both Basil & Neroli in the first quarter of fiscal year 2017 (The Estée Lauder Companies Fiscal 2017) and Mimosa & Cardamom in fiscal year 2016, brand expansion in department stores, freestanding stores and travel retail, and the sales growth of existing fragrances (2016 Annual Report 60). Jo Malone achieved notable sales gains regardless of specific regions (The Estée Lauder Companies Fiscal 2017). According to a 2016 annual report of the Estee Lauder Companies, these outstanding results derived from the following reasons: expansion of new retail distribution, particularly freestanding retail stores (64) and a travel retail, launch of the new products (62), the increase of the aspirational, luxury but approachable product category, and the increase of “Me generation” (18). However, the brand generated double-digit sales growth in North America and travel retail (The Estée Lauder Companies Fiscal 2017), this is only a distinct difference.

The Asia-Pacific (APAC) region is an important market to Jo Malone London. The brand is regarded as one of “the top three prestige fragrance brands” and online sales are 6 percent higher than total sales in APAC. Unfortunately, business in Hong Kong is influenced by the decrease of Chinese travelers (2016 Annual Report 15).

Jo Malone London will still focus on travel retail expansion as international tourism by plane is increasingly growing by the next 15 years. Also, travelers consider fragrance as gifts, the fragrance market in airports has a great potential in the long term (2016 Annual Report 13). Another future strategy is an investment in innovative digital technology to retain and engage both existing and potential consumers (2016 Annual Report 14).

53 Responsible business Jo Malone is mainly inspired by gardens, so the brand supports urban community gardens with charities (Charity Gardens). This charity program started in 2012 and supports five gardens in the U.K. The mission of charity gardens is to support people who suffer from mental illness through cultivation and preservation of gardens as trainee gardeners. Support for gardens and gardeners training derived from the sale of specific Jo Malone candles (Garden Goodness). For example, the brand donated $146,000 (Future Beautiful 26) which resulted from the U.K. sale of Peony & Moss candle to the charities (Jo Malone London).

Through the charity gardens, Jo Malone also provides lots of benefits such as beauty, well-being, and safety of the public (Charity Gardens).

Fig. 33. Jo Malone London charity garden; Jo Malone London; https://www.elcompanies.com/ourcommitments/citizenship/focus-areas.

54 SWOT analysis

STRENGTHS

• Precise brand position and image as a high-end and distinctive fragrance brand • Well-designed and identified packaging – “wrapped in [its] iconic cream and black box, tied with grosgrain ribbon” (Jo Malone London) • High quality products and ingredients • Bespoke scents – “400 scent combinations with fragrance combining with consultation” (Jo Malone London) • Confident support from the Estée Lauder Companies • Growing sales in the world - a leading and influential fragrance brand in the Estée Lauder Companies • Growing awareness in the world with the increase of global sales • Customized unforgettable experiences offering private events such as bridal parties, weddings, and special events (Jo Malone FAQS) • Facial treatments by an elite team – Jo Malone’s special massage techniques with the brand’s skin care products “at the Brook Street and Sloane Street stores in London” (Jo Malone FAQS) • No animal testing except when required by law (Jo Malone FAQS) • Consideration of consumer health and safety (Jo Malone FAQS) – Charity Gardens CSR projects for people who suffer from mental illness • Loyal customers • Gents line – colognes and grooming • A range of product categories – colognes, bath and body products (body & hand wash, body & hand wash lotion, dry body oils, bath oils, shower oils, body cream, body scrub, shampoo & conditioner, soap, and vitamin E products), home products (candle, diffuser, room spray, and linen spray), and special collections • Skilled workforce in marketing and sales

55

WEAKNESSES • • • •

Low brand recognition compared with other luxury fragrance brands such as Chanel and Dior Short history Ineffective promotion – no spokesperson and inactive social media activities Limited distribution channels and stores, especially in the emerging market

OPPORTUNITIES

• Increasing interests in natural, organic, healthy ingredients and products – Jo Malone is already focused on and following these trends.

• Increasing customization – Jo Malone is already offered tailored services.

• Increasing men’s beauty industry – Jo Malone is already focused on men’s grooming as well as colognes. Many Jo Malone products are regarded as genderless scents.

• Increasing international tourism industry – a high potential to enhance brand awareness by tourists and expand the number of boutiques in the world including airports, duty free shops in cities, and inflight duty free shops • Collaboration with other industries – ex. the luxury hospitality industry and airlines offering amenities • Professional boutique services such as hand & arm massages and facial treatments – a potential to develop these services as a new brand category

THREATS • • • • •

Highly competitive market of luxury fragrance industry – luxury fashion houses and luxury fragrance boutiques Increasing counterfeit products Increasing expenditures including cost of goods and salaries Instability of the exchange rate Influenced by the tourism market – particularly, less frequent travel by Chinese tourists to outside destinations

56 7.2 Brand overview of Shangri-La Hotel Hong Kong-based Shangri-La Group first began business in 1971 in Singapore. Its legendary serenity and services were “inspired by the legendary land featured in James Hilton’s 1933 novel, Lost Horizon” (About Shangri-La). Shangri-La has served their visitors as if they were a family, which is a philosophy derived from Asian hospitality (Shangri-La Culture). All of Shangri-La’s services and products originate from the Asian philosophy of “heartfelt hospitality.” In other words, Shangri-La’s mission is “to delight [their] guests every time by creating engaging experiences straight from [their] heart.” Being the top priority for all related people, shareholders and business partners as well as guests and colleagues is the vision of Shangri-La (Our Vision & Mission).

Fig. 34. (Above) Inspiration of “Lost Horizon” (Below) Kowloon, Shangri-La Hotel in Hong Kong, Shangri-La Hotel and Resorts; http://www.cntraveler.com/hotels/china/yau-ma-tei/kowloonshangri-la--hong-kong.

57 Today, Shangri-La Group is regarded as one of a group of five-star luxury hotels in Asia Pacific. Shangri-La Group owns and/ or manages over 90 hotels and resorts with over 38,000 room inventories in Asia Pacific, North America, the Middle East, and Europe (About Shangri-La). According to concepts, pursuits, and target consumers and markets, Shangri-La Group is divided into five brands: Shangri-La Hotels, Shangri-La Resorts, Traders Hotels, Kerry Hotels, and Hotel Jen, and two clubs: Aberdeen Marina Club and Xili Golf and Country Club (About Shangri-La Group). In Hong Kong, particularly, two Shangri-La luxury hotels are located on both Hong Kong Island and Kowloon Peninsula (Explore Shangri-La).

The current issues Shangri-La provides a high level of customized services beyond a luxurious and comfortable resting place for the growing number of the affluent who pursue leisure as well as business at the same time. The Suite Class is available at 12 selected properties in APAC (King) and offers “limousine transfer, private in-room check-in, club concierge services, portable wi-fi device, club lounge access with evening cocktail hour” to enhance visitors’ tailored demands (Suites). The Business Travel Program helps business people to enhance connectivity, efficiency, and comfort during business travel. A company’s associates can utilize a room at a discounted rate, as well as business center facilities and health club facilities for free (Business Travel).

Shangri-La has applied integrated virtual reality (VR) technology for a destination browsing experience. Shangri-La first introduced VR to its luxury hotel chains. Consumers can reach global Shangri-La properties with virtual reality headsets and YouTube videos. According to Steven Taylor, chief marketing officer of Shangri-La International Hotel Management Ltd., Shangri-La invests in high-technology to improve their unique services for their travelers (Shangri-La embraces).

Shangri-La is concerned not only with hospitality but also people’s health and wellness. In 2016, Shangri-La celebrated the Global Wellness Day for the first time. The Global Wellness Day was established in Turkey in 2012 to promote health wellness. ShangriLa invited communities as well as guests to enjoy wellness activities, including “10-minute massages and juice bars to beach-side yoga and healthy cooking demonstrations” (Embrace Health). Shangri-La encourages participants to share their experiences “by hashtagging posts with #ParadiseWithin and #GWD2016” on social media (Embrace Health).

58 The current operation results and future directions Compared to 2014, the key performance indicators of the Shangri-La hotels in Hong Kong in 2015 show negative results.

Occupancy decreased from 82 percent to 78 percent, the weighted Average Room Rate (ADR) declined from US$327 to US$307, and the weighted Average Room Yields (RevPAR) fell from US$267 to US$239 in one year. However, all indicators are much higher than total weighted average (Shangri-La Asia Limited 30). This decrease resulted from the following causes: the decrease of Chinese visitors, other attractive and affordable destinations, and weak local currencies against the US dollar (Shangri-La Asia Limited 31).

However, mainland China has become a core market of Shangri- Fig. 35. The current operation results of Kowloon, Shangri-La; Shangri-La Asia Limited; 2016; http://www.hkexnews.hk/listedco/listconews/sehk/2016/0426/ La Group since renovating and establishing its new properties LTN20160426614.pdf.

(Shangri-La Asia Limited 27).

Addition to Sustainability Vision 2020, which will be explained in the section of responsible business below, Shangri-La has more future plans. One is additional property developments. Shangri-La Group will newly establish 16 hotel and resorts within the next 5 years in mainland China, Hong Kong, Sri Lanka, Saudi Arabia, Indonesia, and Cambodia (Future Developments).

Another thing is investment in creating stunning contents for marketing. According to Steven Taylor, chief marketing officer of Shangri-La Hotels and Resorts, Shangri-La needs two different focused marketing plans because about 50 percent of the total properties of Shangri-La Group are located in China. Chinese and other international consumers prefer different social media channels. Taylor said that WeChat is mostly prevalent in China compared to other areas where people use various media platforms (Peltier). For attracting consumer from all over the world, Shangri-La applied consumer-driven marketing rather than brand-oriented marketing. According to Taylor, Shangri-La promotes influencers and consumers to create their own contents and share with others. The brand has already tested collaboration with influencers on Snapchat and obtained very positive results with 1.4 million views of its Beautiful Destinations campaign (Peltier). Through the testing, Shangri-La will further concentrate on consumer-oriented contents marketing on WeChat and Instagram (Peltier).

59 Responsible business Shangri-La regards responsible business as important. Shangri-La’s culture applies to not only their guests but also communities and the environment further. Shangri-La Group implements various CSR projects whose main concept is sustainability to make a better world. These projects include the following initiatives: “Environment, Health & Safety, Employees, Supply Chain, and Stakeholder Relations” (About Shangri-La).

The brand has been conducting environmental impact management to decrease carbon footprint and water waste and food waste management programs. Also, the hotel suggests their amenities suppliers minimize waste (Shangri-La Asia Limited 56) through packaging redesign of bathroom amenities and the “Soap for Hope” project for soap recycling. According to Shangri-La, the brand forecasted that up to 4,500kg of paper can be saved annually through the suppliers’ support. With collaboration with suppliers and external partners, Shangri-La provided sanitized soaps derived from guest rooms to underprivileged people (Shangri-La Asia Limited 58). Shangri-La’s Rooted in Nature campaign focuses on promoting local and small-scale food resource suppliers. Also, the group cooperates with suppliers who ethically cultivate food (Shangri-La Asia Limited 61).

Shangri-La Group also commits to two CSR projects. Embrace, Shangri-La’s Care for People Project, is devoted to children’s health or education (Embrace). Sanctuary, Shangri-La’s Care for Nature project, is committed to biodiversity conservation and habitat protection (Sanctuary). Creating a blog for the responsible business and the CSR projects, “Your VoiCE” (Shangri-La Asia Limited 59), Shangri-La improves its brand awareness, shares their efforts for the environment and communities, and obtains regular guest feedback through surveys (Shangri-La Asia Limited 56). In the findings from the “Your VoiCE” survey result, Shangri-La noticed that guest loyalty is associated with the connection between the brand and the environment and the society (Shangri-La Asia Limited 59). For this reason, Shangri-La announced the Sustainability Vision 2020 program in 2014 and is promoting initiatives to achieve social responsibility goals (Shangri-La Asia Limited 68).

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08 _ NEW BUSINESS LAUNCH PLANS: Jo Malone Spa 8.1 Leading Brnads analysis The final project is the establishment of a fragrance brand spa in the five-star Kowloon Shangri-La, Hong Kong. For this reason, and because not all beauty brand spas are located in Hong Kong, Jo Malone Spa needs to investigate both the luxury hotel spas in Hong Kong and beauty brand spas in the world.

8.1.1 Comparison of the hotel spas in Hong Kong

Fig. 36. The comparison of hotel spa competitors in Hong Kong.

62 Thirteen five-star hotel spas in Hong Kong were selected for the competitors’ comparison: Island Shangri-La, The Peninsula, Mandarin Oriental, Landmark Mandarin Oriental, The Four Seasons, Ritz Carlton, Grand Hyatt, Hyatt Regency, InterContinental, W, Langham Place, SkyCity Marriott, and The Mira Hotel. This research compared treatments, facilities, opening hours, the requirement of early arrivals, allowance of digital use, and a special note. Particularly, the spa treatment is the important factor of the spa industry, and the treatments section is divided into facial and body, including massage and spa programs which combine both facial and body treatments, a spa suite for two, male, mother, kids, nail, waxing, and special treatments.

Most hotel spas offer facial, body, and spa programs. All spas provide facial treatments. On the one hand, Hyatt Regency does not have body treatments, but offers a spa program. On the other hand, Grand Hyatt does not provide a spa program, but offers body treatments. Eight hotel spas have spa suite services for two people. Except for the Four Seasons and Hyatt Regency, all hotel spas offer treatments to males. Approximately a half of hotel spas provide special treatments for mothers including pre-natal and postnatal mothers. Only Hyatt Regency and SkyCity Marriott serve kids spa. While nail treatments are available at seven hotel spas, waxing treatments are served by all spas except Mandarin Oriental and Hyatt Regency. Special treatments include packages for honeymoon, bridal, and afternoon tea, Traditional Chinese Medicine, executive treatment, wellness treatment including consultation and organic cleanse, and spa parties such as girl’s night.

From this comparison, the hotel spas fundamentally serve facial, body, and spa programs. The number of male only services directly reflect the current global spa trends. Hotel spas in Hong Kong consider mothers’ treatments, but kids spas are not prevalent yet. This status reversely means that a kids spa can be a hidden card to the hotel spas to reflect the growing concern for kids health.

The number of nail and waxing services shows the hotel spas bring salon services into their spas to provide one-stop services to busy consumers at the same place. Wellness services and executive-focused treatments show the change of consumers’ awareness about wellness and the importance of wellness elements in the spas. Luxury hotel spas serve only executive treatments, if the hotel spas recognize the prevalence of exhausted workers and apply this trend to the new spa menu, the hotel spas can expect more revenue.

63 Beyond the general spa facilities, Island Shangri-La, Mandarin Oriental, Landmark Mandarin Oriental, and The Mira hotel provide experience spa treatments with solarium and experience showers to meet consumers’ demands for experience-based treatments.

About half of the hotel spas arrange spa boutiques to sell spa products along with offering spa treatments. The spa boutique leads to additional revenue through offering opportunities for home spa treatments. One-stop services can be found in cuisine services like salon care. Approximately half of the hotel spas serve healthy cuisine for partial spa programs and spa suite consumers during or after the treatments. Especially, Landmark Mandarin Oriental has a spa café.

The Peninsula, Mandarin Oriental, Landmark Mandarin Oriental, Ritz Carlton, and the Mira Hotel require spa-goers to arrive at spas prior to appointment times, from 30 to 60 minutes. These hotel spas offer pre-treatments without additional payment. Before the main treatment, professional staff consult consumers’ health condition and preferences for customized services. Then consumers receive heat and water treatments for relaxing muscle tension and mind and enhancing the effectiveness of the main service.

All hotel spas do not allow the use of digital devices for more effective treatments. However, the current millennial consumers want to use their smartphones during treatments, so this concept is considered to further plan.

Other notable services are as follows: W hotel in Hong Kong cooperates with Bliss spa, beauty brand spa. The Peninsula offers an instant results-driven, anti-ageing program. According to interviews with Andrew Jacka, these programs are trending in the current spa industry. Chuan Spa at Langham Place operates Chuan Academy to maintain highly qualified therapists, which reflects Hong Kong spa-goers’ most important demands.

The core competitors of Kowloon Shangri-La are The Peninsula, Mandarin Oriental, Landmark Mandarin Oriental, The Four Seasons, and Ritz-Carlton based on the reputation of the hotels and hotel spas as well as the price ranges. Island Shangri-La operates a spa better than Kowloon Shangri-La which serves several facial and body treatments including massages in the health club, but the overall status is lower than the above 5 hotel spas. For this reason, Island Shangri-La is excluded as the main competitor.

Fig. 37. The hotel spa competitors of Jo Malone Spa at Kowloon, Shangri-La. (Left) Mandarin Oriental Spa, Landmark Mandarin Oriental Spa, The Peninsula Spa, The Ritz-Carlton Spa, The Four Seasons Spa (Right)

64 8.1.2 Comparison of the beauty brand spas in the world Eleven beauty brand spas were selected regardless of their locations for better understanding how beauty brands are the same and different with the hotel spas. Eleven beauty brand spas are as follows: Guerlain, Darphin, Caudalie, Sulwhasoo, SK-II, Clarins, Aveda, Jurlique, L’occitane, Lush, and Burt’s Bees. Except for Darphin, SK-II, and Burt’s Bees spas, all spas are located in Hong Kong. The same elements of comparisons are used as for the hotel spa.

Fig. 38. The comparison of beauty brand spa treatments.

65 As beauty brand spas mainly focus on beautification, all spas offer facial treatments. These spas also provide body treatments exclusive of Darphin and SK-II, which only serve facial treatments. Approximately half of beauty brand spas provide spa programs, but not all beauty brand spas have spa suite treatments like the hotel spas. Guerlain, SK-II, Clarins, and Jurlique serve male only treatments.

Like the hotel spas, beauty brand spas also offer mothers’ treatments more than kids, in which Burt’s Bees only serve kids. Compared to the hotel spas, beauty brand spas do not focus on nail and waxing treatments. Only Guerlain and Aveda have nail and waxing treatments along with Clarins’ waxing treatments. However, about half of spas offer makeup and bridal services according to the origin of the beauty brand. Only Aveda provides professional hair treatment services including hair esthetics, color, and perms.

While only Chuan spa at Langham Place has its own academy among the hotel spas, beauty brand spas have more institutes: L’Institut Guerlain, Darphin Vendôme Insitute, and Aveda Intitues. Institutes’ continuous training professionals maintains the high qualified skills of therapists and satisfy one of the highest demands of spa-goers. For this reason, operating a brand academy directly brings benefits to the brand spas. Three brands highly concentrate on maintenance and improvement of therapists’ qualification. Beauty brand spas are considerably concerned about beautification even though they provide body treatments and spa programs. This distinct concept is attractive to the current spa-goers who visit spas for beautification. However, the core purpose of spa visits is generally relaxation, so operation of body treatments, such as massages, aromatherapy, and hydrotherapy, and other services except facial treatments are challenges to a beauty brand spa.

It is difficult to choose the main competitors among beauty brand spas because Jo Malone Spa is inspired by fragrance unlike competitors who originated in skincare and beauty. However, Guerlain, Sulwhasoo, Jurlique, L’occitane, and Lush are selected as the core competitors. These beauty brand spas have similar price ranges for treatments with the main competitors of the hotel spas and are located Hong Kong.

The brand position of Lush is different from the other four competitors. However, the Lush spa is considered one of the competitors of Jo Malone spa because Lush provides experimental and multi-sensory experiences in their spa treatments. All five brand spas provide aromatherapy, but very few options are related to the aromatherapy in these spas. Jurlique distinctly arranges aromatherapy as one product category with various types of essential oils. From this finding, while aromatherapy is a staple treatment in spas, there is not high competitiveness in the spa market. For this reason, a fragrance leader, Jo Malone Spa, will adopt this niche market to the different kinds of services and strengthen its originality.

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Fig. 39. The beauty brand spa competitors of Jo Malone Spa at Kowloon, Shangri-La. (Top Left) L’occitane Spa, Lush Spa, (Middle Left) Jurlique Spa, Sulwhasoo Spa, (Bottom Left) Guerlain Spa

67 8.2 Target consumer identification The target consumers of this project are identified based on the findings of the primary and secondary research into this topic.

68 Demographic The target consumers of Jo Malone Spa are both female and male, ranging in age from 25 to 40. While female consumers are mainly late 20s to 35-year-olds, male consumers are mostly 30 to 40-year-olds. The consumers are composed of singles, couples without kids, and couples with one or two kids. They live in urban and close-in suburbs in the world, particularly, Asia-Pacific, North America, and Europe. The target consumers mostly own trendy apartments or houses. Their neighborhoods are surrounded by state-of-the-art fitness centers, exclusive designers’ boutiques, casual restaurants, roaster and brewing cafes, juice bars, breweries and wine bars, and upscale malls. They typically obtain a Master’s degree or higher degree. The consumers work at management level and are professionals, and the median household income is over USD 125,000 per year.

Psychographic The target consumers shop at high-end department stores, rising designers’ boutiques, and exclusive online retailers. Also, they buy electronic toys, wireless devices, and top-of-the-line sporting equipment. They frequently travel to Asia and Europe for leisure and the business purposes. The consumers read Dwell, Condé Nast Traveler, Vogue, W, and GQ, and watch independent film channels, international travel channels, and cooking channels. The target consumers drive cars such as Audi A3, Mercedes-Benz SUV. They enjoy skiing and surfing, visiting theme parks, going out to eat, attending shows, exhibitions, private social events, and music festivals, and participating in social dining.

The target consumers are also conscious about their families and health. They are visiting wellness centers including fitness centers and spas mainly for relaxation and beautification. They invest time and money in their lifestyles and are not reluctant to pay more money for making better conditions. They are hard-working, energetic, enthusiastic, open-minded, confident, and pragmatic. Also, the target consumers are concerned about the environment and social issues, and these issues influence their spending. The consumers have goals of both careers and lifestyle. They feel uneasy without smartphones while they are often eager to be free from the digital world. The target consumers subscribe to newsletter from their favorite brands and feed through email, application push, and social media. They enjoy taking pictures around them and sharing content with others. The consumers actively review products, services and brands with other users.

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70 8.3 New brand introduction Through both primary and secondary research, the spa industry in urban hotels show growth possibility in revenue and profit as the wellness industry is evolving. However, not only urban hotel spas but also other types of spas such as day spas offer similar treatments and services. While some hotel spas try to offer experiential services, beauty brand spas focus on treatments and their results.

For beauty brand spas to compete with luxury hotel spas, the project of Jo Malone Spa proposes “a memorable senses-oriented wellness lifestyle”, through collaboration with Kowloon, Shangri-La Hotel in Hong Kong. Senses have an impact on people’s subconsciousness, which results in changes in consumers’ shopping behaviors in store and increases actual sales. Moreover, sensory experiences help to strengthen brand images and enhance awareness.

The main objectives of this project are as follows: to bring additional profit structure to Jo Malone London, to maximize profits and minimize risks through collaboration between Jo Malone Spa and Kowloon, Shangri-La, to satisfy consumers’ complexed demands for a wellness lifestyle, and to propose a new concept of beauty brand spa. For achieving these goals, Jo Malone Spa embraces the following 4Ps (Product, Price, Placement, and Promotion) of marketing not only to distinguish from other beauty brand spas but also to be a leading spa brand in urban hotel spas.

71 8.4 Marketing plans 8.4.1 Products: treatments, services, and retail products 8.4.1.1 Treatments and services Sensory and synesthesia experience The most important consideration of Jo Malone Spa is the customer’s sensory and synesthesia experience while visiting the spa store. For this reason, Jo Malone Spa provides personalized services to all consumers in not only treatments but also environments. Spagoers select their preference of five senses including sight, smell, taste, hearing, and touch through the smart devices which are offered in each treatment room. During treatments, spa-goers can control sensuous elements they like on a treatment bed or in a jacuzzi. Offering personalized options allows spa-users to enhance their multi-sensory experiences.

• Vision: Spa-goers can choose a visual factor among colored light moods, natural landscape images, and moving scenes based on what fragrance consumers have selected for treatments such as Jo Malone Fragrance Combining Cabinet.

• Olfactory: Jo Malone Spa fragrance professionals offer exclusive tailored olfactory experiences to spa-goers. Professionals recommend proper fragrances including aroma oils, diffusers, or candles based on the consultation. The fragrance can be used as only one scent or layered. The olfactory element use all services including facial and body treatments as well as the environment of the spa store.

• Auditory: Spa visitors have a variety of options to select an acoustic factor from natural sounds such as the sound of the wind to white noise to music.

• Taste: Spa-users select complimentary drinks and foods such as fruits and snacks based on their treatments or health conditions.

• Touch: Sense of touch varies according to treatments such as oil or non-oil and stone. Also, massage is influenced by therapists’ acupressure and spa-goers’ muscle conditions. Furthermore, not only treatments but also indoor environments such as temperature and humidity can impact the sense of touch.

72 Treatments Regardless of types and locations of spas, most spas provide similar treatments and services such as massage, facial, and body treatments. This current state means that the basic spa treatments are still highly demanded by spa-users at any type of spa. For this reason, Jo Malone Spa also provides the basic treatments and services to satisfy a majority of spa-goers and adds unique services to differentiate with other spas.

Jo Malone Spa offers the following basic treatments: facial, body, spa program (combination facial and body), spa suite, male, mother, kids, and special package treatments with organic and natural spa products. Each category of treatments includes a massage because it is the most popular spa treatment according to Hewitt from Shangri-La. In accordance with the growth of male spa-goers, Jo Malone Spa offers tailored facial, body, and spa programs with fundamental grooming services to male customers. For enticing more male consumers, Jo Malone Spa provides a men’s only rest lounge. Male spa-goers enjoy magazines and TV programs through individual earphones and screens which are installed in each resting chair. Jo Malone Spa also offers exclusive cocktail services for male VIP members. Cocktails with different flavors vary depending on consumers’ treatments, so spa-users can enjoy extended aromatherapy and sensory experiences even when they drink.

Also, pre-natal and post-natal mother care and children’s treatments are available. Particularly, Jo Malone Spa prepares not only kids massage and yoga but also children’s cooking and art classes for stimulating the five senses. Kids make jelly, take a drawing class with scented or bubble paints, and participate in a soap or a candle making class. Jo Malone Spa pilots these play-based treatments and adopts them as regular treatments based on consumers’ satisfaction and demands.

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Jo Malone Spa offers special packages: exhausted executive, mother-daughter, friends’ get together, bridals, hotel room and spa, and therapeutic art healing package. The exhausted executive package focuses on a 30 minute massage, which is shorter than the other options, with optional treatments, both 30 minutes, including grooming services and experience showers and sauna.

Mother-daughter packages target both millennials and late Generation X and Baby Boomers. Jo Malone Spa wants younger female spa-goers to create a great memory with their mothers and promote their close relationship. Additionally, this package can be expected to show an increase of awareness from older generations.

The friends’ get together package is available for up to 6 people to meet together for a socializing experience. This socializing package offers treatments and food services at outdoor mini pools as well as treatment rooms. The bridal package includes not only bride-to-be treatments but also bridal shower spa parties. In the bridal shower spa package, the service can be carried out at many places including treatment rooms, outdoor lower rooftop gardens, hotel rooms, and even outside places.

A hotel room and spa package benefits people who use both facilities by offering add-on services. Not only consumers but also both Shangri-La Hotel and Jo Malone Spa can expect an increase of revenue and an enhancement in brand awareness. For example, Shangri-La hotel can consolidate its luxury and upscale images and Jo Malone Spa can be naturally exposed and inform its new business to hospitality consumers.

Last, the therapeutic art healing package combines both artistic activities such as coloring book and spa treatments. Consumers experience comprehensive therapeutic programs at the same time. These simple hand-works help people to relieve their stress level by getting their minds off of any concerns, which leads to different types of mindfulness. During this healing package, Jo Malone Spa serves herbal teas, spreads out scents such as lemongrass, and plays classical music such as Vivaldi’s “Four Seasons” to promote participants’ concentration. Like the children’s cooking and art classes, Jo Malone Spa testifies the therapeutic art healing package’s growth potential.

Even though this package enhances multi-sensory experiences and provides enjoyable elements, if spa-users desire complete rest, this service will be replaced as a special event.

74 Shorter treatments From the primary research, the current spa-goers desire shorter treatments because of their busy lifestyles. While many spas concentrate on 60 minute or 120 minute treatments, Jo Malone Spa provides different, shorter treatments such as 30 minute facial or body treatments using essential oils. The shorter treatments highly focus on the biggest concerns of spa-users and serve intensive care such as neck and shoulder massage or foot reflexology. Even the treatment time is short, as convergent care helps to considerably alleviate consumers’ stress and muscle pain.

The shorter treatments also include a relaxing lunch package which is only served between 11 a.m. to 2 p.m. from Monday to Thursday. The relaxed lunch pack includes a 30 minute massage, 15 minute experience showers, and a healthy lunch box. After the spa experiences, spa-users pick up their lunch boxes at Jo Malone CafĂŠ. The lunch box is comprised of juice and salads with fruits, vegetables, nuts, and seeds.

Digital detox program Even though millennial consumers demand the use of the Internet and smartphones during treatments mentioned above, they are sometimes eager to be free from the digital world. For this reason, the digital detox program can reach their desires and offer a tech-free environment for a limited time.

Spa-goers who select the digital detox program are not allowed to use any digital devices in the treatment room. Before consumers enter a treatment room, they should store their devices at the reception desk. The digital detox program embraces hand-treatments not using any electronic equipment as well as yoga and meditation classes. Spa-goers experience this treatment in a room designed with natural environments such as green plants and small water falls. Apart from mechanical environments, digital detox program participants experience tranquility and eliminate toxins to heal their mind and any physical ailments.

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Midday getaway – nap lounge with complimentary experiential service Taking a brief pause during midday helps people to revitalize and refresh their hectic lives. Jo Malone Spa provides nap lounges for people who need a calm and comfortable place for a nap or rest. By midday, exhausted workers or tourists visit the Jo Malone napping space and recharge energy for the rest of the day. Consumers utilize nap pods or four senses loungers in each personal area and experience scent, light, touch, and sound like spa-users. These senses-based functions enhance the quality of the short rest. Jo Malone Spa serves sleep tea and light snacks to nap lounge users to experience the rest of senses, taste. After napping, consumers can use experience showers and saunas. While nap lounge visitors sleep, laundry service is available in close co-operation with Kowloon, Shangri-La and Jo Malone Spa receptionists can answer consumers’ phones if they wish

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Yoga and meditation Jo Malone Spa’s yoga and meditation classes combine multi-sensory experiences.

The class participants experience exclusive aroma scents, visual movement, and sound which promotes body vibration, detox waters, and automatically controlled room temperature and humidity at a specially designed studio. During these classes, people enjoy an ever-changing environment, especially auditory and visual elements. This environment aims to advance consumers’ body, mind, and spiritual experience as well as to offer enjoyable factors. Jo Malone Spa finally enhances the efficacy of classes and increases the engagement of class attendees.

Wellness food serving and nutrition consultation Eating well is one of the ultimate goals of a wellness lifestyle and it influences both physical and mental health. For improving basic and lasting health, Jo Malone Spa includes wellness food services and nutrition consultations at the Jo Malone Café and Restaurant. Wellness foods are served by both general menus and customized menus. According to spa-users’ health conditions, nutrition consultants recommend proper menus to spa-users.

Food servings are available after treatments, but fullday treatments offer light food buffets including drinks, snacks, sandwiches, and salads between treatments. Apart from complimentary food, spa-goers order general meals according to their preference. This order can be available to non-spa-users who are concerned about healthy eating, which aims to further attract them to Jo Malone Spa treatments and services.

Nutrition consultation requires paying additional consulting fees, but the consulting includes an eating habits analysis and making out a personalized menu based on purposes such as losing weight or maintaining health conditions. Consumers can achieve their goals and enhance their healthy eating habits through this tailored consultation.

77 Private spa suite room service for Shangri-La Hotel For increasing both Shangri-La Hotel and Jo Malone Spa’s revenue and highend images, two suite rooms are renovated in to Jo Malone Spa suite rooms through a collaboration with both brands. These suite rooms are optimized for the best spa treatments for High Net Worth Individuals (HNWIs) who consider privacy and individual experience.

The spa suite rooms include state-of-the-art spa beds and a multi-purpose bath facility which include a steam bath, aromatherapy, infra-red bath, and experience shower.

When suite room guests order spa treatments, Jo Malone therapists visit the guests’ rooms and serve treatments. Complimentary drinks and foods are delivered by room service.

Kowloon, Shangri-La promotes the private spa suite rooms for Golden Circle members to enjoy the attractive experience.

In-room service Not only guests in the spa suite rooms but also other hotel guests are able to request an in-room service for a surplus charge if they want to receive a private spa service in their rooms. The in-room service is limited to massages and aromatherapy because the equipment for hydrotherapy and beauty treatments are difficult to move to each guest room. If consumers want to receive a treatment when all treatment rooms are in use, Jo Malone Spa offers the in-room service without an additional charge. Also, guests who stay on the same floor of Jo Malone Spa can take advantage of free of charge in-room service.

Outreach spa service – company, organization, and social party or event Growth of the workplace wellness market and various socializing events bring a potential of the outreach spa service. For offering better workplace wellness, Jo Malone Spa cooperates with companies in Hong Kong for regular mobile spa services. For example, Jo Malone visits contractors’ offices and offers spa treatments such as aroma massages and foot baths every second Wednesday. Second, on-demand services are open to any organizations or individuals to plan private events or parties. Jo Malone Spa consults clients’ demands and suggests proper spa events with foods services. Through the outreach spa services, Jo Malone can reach more local consumers, which decreases the risks in accordance with fluctuation of Shangri-La’s room occupancy.

78 Jo Malone Spa offers an additional option of consultation service to hectic business people and tourists who do not have enough time to fully participate in the consultation. They can respond to a checklist through a mobile application while visiting Jo Malone Spa. If these spa-visitors want to participate in consulting, professional consultants respond via a live chat room with a text or a face time session. However, for better understanding consumers’ physical and mental conditions, Jo Malone Spa encourages spa-goers to meet consultants face-to-face.

Consultation service offered free of charge Consultation service is one enhancement of a spa-goer’s sensory experience. Experience is affected by consumers’ condition and surrounding environment, so Jo Malone Spa consultants create an optimum environment by setting the consultation service apart from spausers’ individual control in treatment rooms. For proposing appropriate treatments and services, Jo Malone Spa provides complimentary consultation service to consumers who they wish to participate in the consultation. Professional consultants communicate about visitors’ demands, concerns, and expectations. This service is not a requirement to all spa-users because many contemporary people are busy. For this reason, Jo Malone Spa does not fix early arrival times compared to other competitors who stipulate early arrivals from 30 minutes to 60 minutes.

However, consumers are highly recommended to arrive 30 minutes prior to their appointment times for proper diagnosis. After the consultation, spa-visitors receive light pre-treatments such as hand and foot ritual and signature herbal tea.

Result-oriented services Millennial consumers want to check the efficiency of treatments after their services, which means they demand visible results such as changes of numerical value or close-up pictures of their skin. Jo Malone Spa measures both skin condition and stress levels with automatic diagnosis systems including multi-sensors and a scanner.

Skin diagnosis equipment measures oil, moisture, pore, sebum, wrinkle, pigment condition, elasticity, skin tone, and skin temperature. Through these data, Jo Malone Spa informs consumers of their skin type and recommends proper treatments and products. Measuring heart rate and Heart Rate Variability (HRV) helps examine spa-goers’ extent of stress by analyzing Pulse Wave Velocity (PWV), Autonomic Nervous System (ANS) activity, and fatigue index. Additionally, Galvanic Skin Response (GSR) and Skin Temperature (SKT) are measured by sensors. Through these scientific results before and after treatments, spa-users compare how they are changed and whether Jo Malone Spa is effective. Jo Malone Spa treatments can ultimately reinforce the authentic relationships between the brand and consumers.

79 Jo Malone Spa provides results not only at the spas but also through the ‘My Space’ page on their official website. Spa-users can scan transactions of previous results and compare how their conditions are improved at any time. The My Space page recommends appropriate programs and products related to consumers’ condition or previous treatments as a regular alert. Also, Jo Malone Spa provides basic home care methods to users through the website.

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Spa concierge service As one element of Customer Relationship Management (CRM), Jo Malone Spa offers a spa concierge service to consumers for an additional charge. Beyond the consumer recognition when spa-users re-visit the spa, a specially trained customer relationship staff under takes follow-up services to intensify the close relationship and improve brand loyalty. For instance, a consumer directly calls the customer relationship staff and lets the staff know when they want to receive a service.

The representative of the concierge serWvice books a treatment, sets room conditions, and prepares appropriate spa products and foods based on the consumer’s previous databases and preference. The concierge staff serves the consumer from when they arrive to when they return, offering results of treatments and further recommendations and regular check-ups. Through the close relationship and extremely tailored services, Jo Malone Spa entices consumers who yield high turnover.

The use of the Internet and smart devices Millennial spa-goers desire to use their smart phones during spa treatments, but many spas do not allow it for concentration and enhancement of spa treatments. Jo Malone Spa partially allows consumers to use the Internet and smart devices during services such as foot reflexology. Spa-users can control their preferences of the spa environment through the Jo Malone official website as well as communicating with their friends. Jo Malone Spa encourages consumers to share their ongoing experiences with others through social media platforms Beyond the allowance of using their devices, Jo Malone Spa helps them to charge their devices on treatment chairs or beds which include USB docking. Spa-users do not need to request recharge services at reception desks and freely utilize it whenever they need.

Also, Jo Malone Spa offers free wi-fi connection for every spa-goer.

81 8.4.1.2 Retail products Jo Malone London products Sales of existing products of Jo Malone London at the spa boutique area in Jo Malone Spa bring not only additional profits but also consolidation of brand position to both brands. Composition of selling products include fragrance, body, bath, and home products. As mentioned in the section of the additional potentials from the beauty market in Hong Kong, Hong Kongers prefer to purchase branded fragrance rather than non-branded perfumes. Also, they are interested in various types of bath products such as liquid hand wash, so arranging original Jo Malone London products in the spa leads to subsidiary profits apart from spa treatment revenue.

There are nine Jo Malone London stores in Hong Kong, which makes selling only Jo Malone London products highly competitive.

However, consumers have a variety options to experience and purchase products at the spa, so Jo Malone Spa can attain a dominant position rather than other Jo Malone London stores.

Jo Malone Spa products One of Jo Malone Spa’s goals is to introduce home spa treatments for spa-users. Also, Jo Malone Spa wishes many people sustain their health in their everyday lives. For achieving this goal, Jo Malone Spa provides its own spa products which are made of organic and natural ingredients so spa-goers can enjoy home spa treatments. The spa products include essential oils, bath salts, bubble bars, bath bombs, massage bars, and facial masks. Additionally, Hong Kong consumers have interest in branded body sprays as well as fragrance. So, Jo Malone Spa develops a new body spray line, and the new products will result in more gains.

Jo Malone Spa also creates a special spa product set for Kowloon, Shangri-La. The set is made of different scents and designs which represent the collaboration between Jo Malone Spa and Kowloon, Shangri-La. This product package combines both brands’ signature colors, black, white, cream, and gold. Consumers can buy this specialized set at only Kowloon, Shangri-La, not at any online retailers or other spas. This scheme aims to differentiate Kowloon, Shangri-La from other competitors by offering signature scented products.

82 8.4.2 Prices Even though Jo Malone Spa belongs to a beauty brand spa, the spa wants to compete with hotel spas, so Jo Malone Spa provides more optional treatments and services rather than other beauty brand competitors. For these reasons, the pricing of Jo Malone Spa is appointed in comparison of that of hotel spas mainly. The price range of spa treatments starts as low as 70 USD for shorter treatments to 1,150 USD for full-day services. The core treatments, 60 to 90 minute massages, range from 160 to 280 USD. Special services and packages cost from 45 USD for a midday getaway nap lounge to 650 USD for a mother and daughter package for two. Out-reach spa services vary on consumers’ demands including location, treatments, and the number of people, so the price of this service cannot be referenced. In terms of retail products, while Jo Malone London products are the same price at any other stores, Jo Malone Spa products range from 7 USD for products added to the bath to 200 USD for home products, and gift sets start from 130 to 450 USD.

83 Apart from general price plans, Jo Malone Spa focuses on time difference pricing. As Jo Malone Spa is located on Kowloon, Shangri-La Hotel, hotel occupancy affects the spa’s revenue. Also, spas have a big gap between peak time and off-peak time. The peak time is usually weekday evenings and weekends from 11 a.m. to 3 p.m. The off-peak time is considered as weekday mornings and late nights. For minimizing this risk and increasing efficiency of empty rooms, Jo Malone Spa applies different pricing plans.

First, Jo Malone Spa offers different lengths of treatments such as a 30 minute facial or body treatments and a relaxing lunch package. Second, different types of treatments such as midday getaway nap services and studio classes can lead non-spa-goers to the spas. Jo Malone Spa allows them to experience spa facilities such as the public hydrotherapy area, the relaxing room, the spa boutique, and café and restaurant. This offer finally results in non-spa-users’ purchases in the future. Third, Jo Malone Spa does not implement a discount strategy, but rather provides special prices for off-peak time treatments including package treatments. For example, the spa does not show a sign like “30% off”, but advertises “70 USD” toward peak-time prices of 100 USD. Both are consequentially the same price, but Jo Malone Spa prefers to mention the latter not to spoil brand image. The other example is offering combination treatments.

For instance, Jo Malone Spa offers different packages. The first is a facial scrub and massage package, and the second is a body scrub, wraps, and massage package. The prices of these combination treatments are moderate rather than sum up each treatment individually.

Fourth, membership consumers and advance reservation spa-goers benefit by room-upgrade services from general treatment rooms to a spa suite or complimentary add-on service during non-peak time. These upgrade and add-on services bring higher margin sales in the long-term by informing various options to consumers.

Through different types of treatments and pricing plans, Jo Malone Spa aims to increase higher-margin sales and decrease fixed expenditures such as therapists’ wages and empty room turnover. Jo Malone Spa appeals to consumers’ positive feelings by offering various prices and treatment options. The purpose of these pricing plans is the increase of long-term profits and reinforcement of brand status.

84 8.4.3 Placement 8.4.3.1 Store composition details and visual merchandising plans Jo Malone Spa is located on the seventh floor which is right above the Mezzanine floor. For offering various experiences, Jo Malone Spa embraces both a garden side and Victoria Harbor side view. The size of the spa is approximately 10,000 square feet. The Spa is composed of nine treatment rooms, a hydrotherapy room, a spa boutique, a spa cafĂŠ and restaurant, a relaxation area, an experiential area, a yoga and meditation studio, a nap lounge, an outdoor garden with mini pool, changing rooms, shower rooms, and a reception area.

The most important element of a visual merchandising plan of the Jo Malone Spa is providing multi-sensory and synesthesia experiences from the entrance to any in-store places. Jo Malone Spa allocates interactive art walls or water walls which combine light and visual effects, sounds, scents, and touch around the entrance. When spa-visitors pass this area, water walls or video panels are changed based on visitors’ movement and body temperature using sensors. The spa plays mellow and calm new age music and diffuses specially blended exclusive scents. Spa-goers experience a unique environment in advance of receiving spa treatments or services.

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87 Jo Malone Spa partially follows the original concept of Jo Malone London stores. The main colors of visual merchandising include both exterior and interior designs of black and white using signature cream colored lights. While Jo Malone London embraces both modern and ornamental styles together, Jo Malone Spa pursues minimal design to maximize multi-sensory experiences. Many spa facilities also incorporate a futuristic aesthetic, minimizing decorative elements to match the whole environment of the spa.

Jo Malone Spa boutique is a retail space for product sales. The spa boutique is situated between the entrance and treatment rooms to attract consumers’ eyes and interests while not only they arrive and depart but also while they stay at the spa. The main goal of spa boutique is to entice spa-users additional purchasing at the spa. Professional therapists advise on the right products and teach home treatment methods to consumers. Also, Jo Malone Spa provides customized product services at the spa boutique. Therapists help consumers to find their preferred scents and proper ingredients based on their skin types or concerns. The spa boutique is a small making bar as well as a retail place.

Along with the garden, Jo Malone cafÊ and restaurant has added green colors using plant decorations. In terms of lights, the relaxation area and nap lounge decrease the level of illumination rather than other areas for a complete rest. Also, Jo Malone Spa offers a mini self-snack bar in the relaxation area to enjoy healthy beverages and light snacks to satisfy spa-goers’ hunger. Consumers can also experience a taste sense by utilizing the snack bar.

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89 Nine treatment rooms are divided into two spa suites, including up-to-date style therapy beds, sound bath pool, and multipurpose bath space, two eco rooms which are surrounded with greenery and water falls, and five treatment rooms. In each treatment room, spa-goers can experience multi-sensory services through high-tech spa equipment and facilities. The treatment rooms are no longer just a place for services, but an experiential space for maximizing sensory experiences.

The hydrotherapy room has private spaces for individual’s sound bath, float bath, and aqua bike facilities. While the sound bath promotes multi-senses, especially sound and touch, the float bath controls spa-users’ sensory experiences including sight and sound, which leads to deeper relaxation. Instead, consumers can perceive the movement of their muscles and hear heart-beats, which brings an alternative sensory experience to spa-goers. Agua bikes offer both relaxation and a fun element, which satisfies active millennial consumers. In aqua bike bathtubs, spa-users ride bikes while enjoying a scented bubble bath with music or video. As current spa-goers are concerned about environmental issues including water shortages, Jo Malone Spa contemplates water management including recycling, which Shangri-La Group has already implemented in their hotels and resorts. With cooperation with the hotel, Jo Malone Spa contributes to saving water and offering clean water during services.

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91 The relaxation area offers heated spa lounge chairs and flotation space which promotes the best relaxation. The experiential area provides public hydrotherapy space such as jacuzzi and experience showers, steam rooms, and red-infra rooms.

Especially, the experience shower is a growing trend in hotel spas and offers a unique experience which combines hydrotherapy, chromatherapy, aromatherapy, and acoustic therapy. Jo Malone Spa adopts this new trend which coincides with the brand’s mission, providing a multi-sensory experience. Experience showers can be designed according to individual demands, so Jo Malone Spa requests its own signature sense options to supplier. As options of experience showers are tailored, Jo Malone Spa can provide exclusive memories to Jo Malone Spa visitors even though other hotel spas have already installed it.

The nap lounge offers private space for each visitor to have deep rest and to be free from strangers’ disturbances. Changing rooms and experience showers are separated for both female and male visitors.

Jo Malone Spa does not include its own swimming pool and fitness club. Rather, Jo Malone Spa-goers can access the Shangri-La swimming pool and the health club. However, Jo Malone Spa recommends that Kowloon, Shangri-La renovate these facilities to match Jo Malone Spa with a modern and unique atmosphere.

The concept of an outdoor garden comes from Jo Malone London’s indoor garden on Regent Street in London. The outdoor garden is designed for both relaxation and socializing, offering spa-visitors an urban oasis in a dense building forest. The garden includes a mini pool for foot therapy, poolside table and chairs for relaxing and eating food, and greenery areas for walking and refreshing. Jo Malone Garden is decorated with greenery, flowers, and water. For those who have hay fever, Jo Malone Spa selects lesser allergic plants and notifies spa-goers. When special events or treatments are held in this area, the garden is decorated with based on consumers’ desires or purposes of occasions. Except on booking special spa packages or socializing events, this space is open to all spa-users to experience an oasis in the building district.

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93 8.4.3.2 Website design and mobile application While most spa brands have their own websites, apps are not prevalent yet. The Peninsula Spa, Sulwhasoo Spa, and Jurlique spa have their own spa apps among ten competitors of Jo Malone Spa. Even though these three brands operate apps, they only offer basic options such as treatment information, appointment options, and directions.

Jo Malone Spa extends the spa category on Jo Malone London’s official website and Kowloon, Shangri-La’s official website at the beginning of the new brand launch. Through this connection with the two brands, Jo Malone Spa can reach both Jo Malone London consumers and Kowloon, Shangri-La hotel guests at the same time. Through the Shangri-La hotel app, consumers can reserve spa treatments as well as hotel rooms. The cost of developing a mobile application is highly expensive, and creating Jo Malone Spa’s own app is postponed until Jo Malone Spa opens at least 10 stores. Instead Jo Malone Spa offers downloading services using shortcut icons on the home screen of a user’s mobile. Consumers can download the icon through Jo Malone’s official website through their mobile phones. They can directly access a mobile version of the website by touching the icon on their phones like other apps. This system allows consumers to easily connect to the Jo Malone digital world. Another option is developing the spa section when Jo Malone London creates an official mobile application in the future.

For inducing more younger generation consumers and possessing competitive power over other spas without its own official website and app, Jo Malone Spa offers not only appointment and product shopping but also online consultations and tracking services of previous treatments. Busy spa-goers can fill checklists through the website about their conditions and consult with professional consultants through live chat before arriving at the spa. As stated in the result-oriented service section, the My Space page in the official website allows consumers to track their treatment results and receive further treatment and product recommendations and home spa treatment tips.

Also, the website links to Jo Malone Spa’s social media channels such as Facebook, YouTube, Instagram, so consumers can easily share their experiences and reviews with others. Another distinct option is a controller system that allows guests to control treatment room conditions before and during treatments through the website controller system page.

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95 8.4.4 Promotion 8.4.4.1 Reward promotion Jo Malone Spa provides a reward program for both tourists and locals as well as new customers and loyal members. The reward program aims for enticing spa-goers to experience Jo Malone Spa’s exclusive treatments, services, and products and for improving brand loyalty. For increasing brand awareness and inducing more hotel guests to utilize the spa, the spa offers an initial reward to hotel guests.

Jo Malone Spa collaborates with Kowloon, Shangri-La to send an e-mail with a credit code when hotel guests check-in to their rooms; it also places the spa notification card with credit number at rooms. To use these complimentary spa rewards, hotel guests need to activate their codes through their email link or at the Jo Malone Spa website.

When guests receive a 60 minute or more body massage, they can use this credit for a 20-minute head massage or hot stone massage.

Both tourists and locals who reserve early morning treatments, for example from 8 a.m. to 11 a.m., are rewarded complimentary 1 hour facial massages or body scrubs with a lunch box. In terms of loyal members, spa-goers earn a free 1 hour aroma oil massage after receiving 10 treatments. Through the reward promotion, Jo Malone Spa mainly aims to improve brand awareness, introduce other treatments, and increase loyal members in the long term.

96 8.4.4.2 Guestroom promotion Guestroom promotion concentrates on both increasing brand awareness with hotel guests and offering advance treatments at hotel rooms with Jo Malone Spa amenities and gifts. Jo Malone Spa supplies cost-effective bathroom amenity samples such as body wash, shampoo, conditioner, and body lotion in bathrooms of all guest rooms. Guests of suite rooms and rooms on the same floor of Jo Malone Spa additionally receive the small gifts including aroma oils, facial masks, a sleep balm, a sleep shade, an earplug, and a relaxation tea. For information about the Jo Malone Spa, the hotel places greeting card in each guest room table. The greeting card includes a letter from the spa manager with his/her signature, a QR code for the spa catalog, and a complimentary reward code. Through the guestroom promotion, Jo Malone Spa tries to lead hotel guests to become spa-visitors.

97 8.4.4.3 In-hotel promotion In-hotel promotion is enacted by one partnership term with Kowloon, Shangri-La, so Jo Malone Spa promotes new brand for hotel guests inside of the hotel without spending additional promotion budgets. The hotel creates advertising boards and arranges them on the front desk, concierge desk, lobby, health club, and swimming pool.

Also, hotel guests can watch introductory publicity images when they turn on televisions in their guest rooms. ShangriLa Hotel’s other promotion channels such as the official website, mobile application, and social media are used for spreading the new brand establishment. Kowloon, ShangriLa promotes opening the new spa to their existing press media and exposing the spa launch through their search engine optimization (SEO).

The in-hotel promotion aims to increase revenue not only for the spa but also the hotel. Kowloon, ShangriLa can expect direct and indirect income from promoting Jo Malone Spa with their own promotion channels. When more consumers visit the hotel because of the spa, they will spend additional money on rooms and restaurants in the hotel. Also, the hotel obtains lease income from the spa according to the spa’s total revenue, so the hotel needs to attract more spa-goers to optimize their leasing profits.

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8.4.4.4 Website and mobile application As stated in the section of placement plan, Jo Malone Spa creates the spa category at Jo Malone London’s official website and Shangri-La’s official website and its mobile application. The main purpose of using the website and mobile application is for Jo Malone Spa to provide convenience for visitors. Jo Malone Spa utilizes technology not only to browse and book a spa treatment but also to communicate with consultants and manipulate multi-sensory elements of service rooms.

Jo Malone Spa analyzes databases such as tracking of searches and orders and uses the analysis as a promotional tool. For example, My Space page on the Jo Malone website pushes the description of the products which are used for previous treatments to spagoers. Along with commercial information, Jo Malone Spa website delivers wellness news such as event alerts and home treatments care.

99 8.4.4.5 Social media One distinct characteristic of millennials is their active social media use. For this reason, communicating with the millennial generation through various social media channels are important. Jo Malone Spa creates accounts on Facebook, YouTube, Instagram, WeChat, and Weibo which are well-known to global, Chinese, and Hong Kong millennials. Jo Malone Spa posts pictures or videos more than written contents because the younger generation is easily attracted by the visual contents. Jo Malone Spa not only delivers brandoriented information but also promotes followers or fans who create their own contents about Jo Malone Spa and share actively with others.

Each social media channel has different aims as follows: Facebook is for communicating with global followers including Hong Kongers as well as publicizing the latest spa information. YouTube also targets global viewers. This channel is for increasing engagement with consumers and improving brand awareness through outstanding and memorable videos. The current spa industry uses its YouTube channel to show what their spas look like, which is just a video brochure. Rather, Jo Malone Spa shares spa-goer’s feelings when they visit the spa through VR video which Shangri-La has already adopted for looking around other properties. This video is also uploaded on Shangri-La Hotel’s YouTube account. For enticing consumers, Jo Malone Spa concentrates on creating story-telling content including live recordings of wellness festivals, the making of Jo Malone Spa products, and the story of the garden throughout the year. Videos are placed under the Jo Malone Spa official account page and their links are shared with other social media channels such as Facebook. Instagram focuses on both global and Hong Kong consumers. Hong Kong millennials use Instagram twice than other western countries and are affected by influential Instagramers. For increasing engagement with consumers, Jo Malone Spa invites Instagram influencers such as Sam Wong (lifestyle) and Feiping Chang (luxury events) to Jo Malone Spa launching parties and spreads posts using specific hashtags.

Compared to Facebook, YouTube, and Instagram, Weibo and WeChat target both Chinese and Hong Kongers. The main spagoers in Hong Kong are locals and Chinese tourists, so Weibo and WeChat marketing is important. As Weibo is open to broader audiences and most users are Chinese, Jo Malone Spa targets a huge number of Chinese consumers to improve brand awareness, which finally results in visiting the spa and indirectly impacts Kowloon, Shangri-La Hotel. Through this promotion, the hotel can expect an increase of their revenue from Chinese tourists. Like Instagram, there are many influencers in Weibo, so Jo Malone Spa creates contents with Weibo power users such as Barbie Hsu (beauty) and Gogoboi (fashion) to emphasize marketing effectiveness. Compared to Weibo, WeChat is a one-to-one channel and very popular to Hong Kongers. For this reason, WeChat is suitable for enhancing brand loyalty of targeted consumers in Hong Kong and increasing word-of-mouth through their relationships. Consumers can closely communicate with Jo Malone Spa about their personal questions through a chat room like talking with friends. Also, WeChat users can shop products and book treatments through the Jo Malone Spa page.

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102 8.4.4.6 Public relations Public relations embrace both public release and launching media events. Jo Malone Spa releases information about not only the launching plan of the first spa store but also new product introductions to different press media and social media influencers. In terms of public releases, Jo Malone Spa publicizes in travel, airline, and high-end magazines to entice tourists. Jo Malone Spa supplies publicity materials to the hotel sales staff to attract locals who attend conventions and meetings and share information with local business magazines.

For celebrating the first spa store launch, Jo Malone Spa holds a launch party and invites press representatives, travel agency advisors, airline marketers, travel magazine editors, influencers, celebrities, VIP hotel guests, and the core consumer groups to experience exclusive Jo Malone Spa experiences. Additionally, when Jo Malone London introduces its new products, holding its launch party at Jo Malone Spa maximizes promotion effects as increasing brand awareness and strengthening brand authenticity. Through public relations, Jo Malone desires to spread the new brand and product establishments and increase word-of-mouth through various social media channels during and after the events by participants.

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104 8.4.4.7 Direct mail Jo Malone Spa uses both e-direct mail and physical mail.

E-direct mail lists are obtained by creating a landing page on the Jo Malone Spa official website and mobile app. As consumers from all over the world can access the website and mobile app, Jo Malone Spa accumulates potential global consumers. E-direct mail offers complimentary new product trials when consumers purchase certain products, for example over US $100. Based on the database of e-direct mail subscribers, Jo Malone Spa displays interest-based contents to each user.

Compared to e-direct mail, physical mail is concentrated on Hong Kongers. Physical direct mail aims at reconnecting with past spa-goers to promote further spa experiences in the near future. For reaching this goal, Jo Malone Spa sends a thank you letter with the spa manager’s signature and the brochure of recommended treatments and products related to previous programs. For loyal members, Jo Malone Spa provides incentives to VIP spa-goers such as an upgrade opportunity to spa suite treatments or customized products such as facial oils and body creams, soaps, and candles based on consumers’ skin conditions and scent preferences with complimentary engraving services on the package.

Additionally, at the end of the year, Jo Malone Spa selects members for whom their level is unknown and offers special mystery gifts to these loyal consumers. This special gift is not sent to members’ houses, but Jo Malone Spa calls them to notify special selection and asks to visit for receipt. This process leads to additional purchases when VIP customers visit for their gifts.

105 8.4.4.8 Special events Special event promotions for Jo Malone Spa pursue the following three missions: leading people to wellness in daily life, contributing to nature and community, and evoking people’s artistic sensitivity.

First, leading the contemporary people to wellness lifestyles with Jo Malone Spa is the ultimate goal. Changing the perception of health and wellness is not to be done in a day. For this reason, Jo Malone Spa participates in various social events, meets different people, and shares their wellness values.

Above all, in 2016, Shangri-La Hotels and Resorts participated in Global Wellness Day to promote guests and communities’ wellness. Jo Malone Spa with Kowloon, Shangri-La regularly participates in this wellness event. Additionally, Hong Kong holds various wellness-related events every year. For example, Wellness 360 Fairs support consulting, media relations, events, and product promotions for participants of the fairs. World Sleep Day includes a public lecture, professional health assessment and consultations for free. IRIS: Your Escape is the largest yoga and wellness festival in Hong Kong and serves free yoga classes and events. Jo Malone Spa participates in the above annual festivals and events as one of the wellness ambassadors to interact with different potential consumers as well as increase brand awareness. Particularly, Jo Malone recommends Kowloon, Shangri-La to participate in wellness events such as Wellness 360 Fairs or World Sleep Day by sponsoring rooms to extend Shangri-La’s community contribution as with the previous participation in Global Wellness Day in 2016. Through these supports, Kowloon, Shangri-La as well as Jo Malone Spa can announce brands’ wellness vision and strategy. Along with wellness events, Jo Malone Spa holds special events on International Women’s Day for female spa-goers and sponsors Clockenflap, a famous music and arts festival in Hong Kong, for reaching various younger generations. During festivals, Jo Malone Spa offers free of charge, shorter treatments and healthy energetic drinks and snacks. Through these activities, Jo Malone increases its brand awareness.

106 Second, nature preservation and co-existence with community are one important mission of both Jo Malone London and Shangri-La Group.

Inspired by gardens, Jo Malone London supports a charity garden program, and Shangri-La Group progresses Care for Nature project as an environmental sustainability. Jo Malone Spa extends this concept to its promotion plan with Kowloon, Shangri-La. While Jo Malone London’s charity gardens are focused on supporting people who suffer from mental illness, the collaboration of both brands concentrates on teaching the public about the importance of green space in a city and helps them to enjoy greenery spots. Both the spa and the hotel hold green wellness festivals at parks in Kowloon peninsula by offering free spa treatments, consultations, and healthy foods for festival participants. By informing the green space effects to visitors, both hosts of the festival introduce organic scents derived from nature and benefits of nature conservation.

In addition to the charity gardens, Jo Malone London has already held flower classes for their consumers as a special event promotion. Jo Malone Spa expands this event to community contribution. Attendees primarily learn flower design, home gardening, and the importance of a natural environment.

Then, they contribute to creating a new public garden project or delivering flowers to public hospitals to enhance patients’ feelings.

Last, Jo Malone Spa provides not only experiential services through the spa treatments but also artistic experiences to consumers. This promotion is an extension of therapeutic art treatments. Jo Malone Spa invites visual and installation artists who use different sense elements within their works to share artistic sensitivities with consumers. Artists’ performances stimulate visitors’ multi-sensory experiences along with spa treatments or yoga meditation classes. From this special collaboration, Jo Malone Spa expects consumers to realize their own artistic sensitivity and recover, which finally results in creating a unique memory, recalling this experience, and revisiting Jo Malone Spa.

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Pre-Launch

Launch

Post-Launch

All Promotions Except on Bathrooms, Guestrooms, Rewards, Physical Direct Mail

All Promotions Except on Physical Direct Mail

Each Month: Bathrooms, Guestrooms, Social Media, E-Direct Mail Special Period: Rewards, Websites and App, Pysical Direct Mail, PR, and Special Events

(Aug. - Nov.)

(Dec.)

First Year Promotion Plans

(Jan. - July)

108 8.5 Management plans for long-term strategy 8.5.1 Communication between Jo Malone Spa and Kowloon, Shangri-La Communication is a fundamental element to maintain a harmonious partnership between a spa and a hotel just as communication is important between a spa and consumers. For more effective communicating, Jo Malone Spa and Kowloon, Shangri-La can use both spa management software such as Enterprise Resource Planning (ERP) and face-to-face meetings. The spa management software allows both brands to transfer databases, check updated news in real time, and solve simple complaints immediately. Regular meetings strengthen a close relationship and enable both brands to propose better services to consumers. The level of communication between both brands results in consumers’ satisfaction and actual revenues and profits. For this reason, Jo Malone Spa and Kowloon, Shangri-La should maintain a close connection and constantly communicate with each other.

8.5.2 Close relationship with group sales and concierge staffs Group sales and concierge staff in Kowloon, Shangri-La can bring a big opportunity to Jo Malone Spa without spending lots of money for marketing. They have a variety relationships with their own consumers such as companies, organizations, and HNWIs. If Jo Malone Spa maintains a close relationship with group sales and concierge staff, the spa can reach their own powerful consumers much easier. For this reason, Jo Malone Spa invites this staff to experience Jo Malone Spa treatments and services and educates them on what are distinctive and exclusive factors compared to other spas. The spa listens to staffs’ feedbacks and adopts their recommendations in spa services. The close relationship cannot be established, so Jo Malone Spa regularly invites them to receive spa treatments and trains the new services. Through this management, Jo Malone Spa can increase higher profits because the investment in this staff is much lower than in other marketing strategies.

8.5.3 New opening Jo Malone Spas in other branches of Shangri-La Group Along with the increase of Jo Malone London stores across the world, Shangri-La Group will have over 100 hotels and resorts in the world within the next five years. Both brands’ future business plans can bring a lower barrier to expand Jo Malone Spa stores in other countries. If Jo Malone Spa shows outstanding revenue or reputation in the spa industry, opening new spa stores in other ShangriLa branches as a partnership results in a great opportunity for both brands to gain more earnings and strengthen brand loyalty. For example, both brands offer reward programs to their loyal members such as Shangri-La’s Golden Circle and Jo Malone Spa’s VIP. Each loyal member can benefit by receiving either hotel services or spa services at both brands’ branches. Previous satisfactory experiences at either a hotel or a spa will affect their next decisions to revisit, offering an additional opportunity for increased brand exposure to previous and new spa customers.

109 8.5.4 Creation of Jo Malone Spa’s own mobile application Along with opening additional Jo Malone Spas in other Shangri-La hotels, Jo Malone Spa will consider creating its own app for their global consumers. Jo Malone Spa app offers descriptions of spa treatments, services, and products, booking services, products shopping, payment, consultation, concierge service, individual tracking data, and controller systems of the spa environments. Even though the Jo Malone website offers the above services, the app allows visitors to use these services much easier than going through the website. Apart from consumers’ benefits, Jo Malone Spa obtains spa-users’ focused data and correctly analyzes them to apply appropriate promotion plans. The Jo Malone Spa app seeks to enhance consumers’ convenience and interactive communication between the brand and consumers through its own app.

8.5.5 Jo Malone amenities for Shangri-La Hotel Like the special spa kit for Kowloon, Shangri-La stated in the section of Jo Malone Spa products, Jo Malone Spa recommends creating Jo Malone amenities with unique scents for Shangri-La Hotels. Jo Malone London has already served its bath and body products as bathroom amenities at several hotels such as Monument hotel in Barcelona, Spain, Mandarin Oriental Hyde Park in London, the U.K., and Peninsula Hong Kong’s presidential suites. Not only Jo Malone London but also other luxury fragrance brands such as Penhaligon’s and Annick Goutal serve luxury hotel bath amenities with their exclusive scents. Luxury hotels are currently offering luxury fragrance brands’ amenities to entice their guests and reinforce exclusive and high-end hotel images.

Beyond providing amenity samples at bathrooms in Kowloon, Shangri-La, Jo Malone develops both bath and room amenities including towels, robes, slippers, and sleep shades for other Shangri-La hotel branches as well as Kowloon, Shangri-La. Jo Malone amenities leave sensuous and unforgettable memories to hotel guests, which attract them to re-visit the hotel and experience the Jo Malone Spa further. This recommendation is one long-term strategy to improve brand awareness and strengthen the brand identities for both Shangri-La and Jo Malone Spa. 8.5.6 Qualified therapists and consultants The upmost reason of the use of hotel spas is high qualification of therapists based on research. For maintaining consumers’ visits and satisfying their expectations, Jo Malone Spa will establish Jo Malone Institute in London. The institute periodically trains therapists and consultants to improve their professional skills.

Not only does it offer continuous education of employees, but also Jo Malone Spa hires therapists and counsellors with at least three years of experience. All experienced therapists are trained in Jo Malone Spa’s specialized skills and knowledge for three months at the institute before starting their work and also receive periodical education every six months for mastering new treatments and services.

Jo Malone Spa invites outside counselling experts to educate Jo Malone Spa consultants. The educational objectives of consultants are to be good listeners to consumers, to comprehend spa-goers’ demands and expectations, and propose proper treatments or services.

110 8.6 Financial Plans Based on treatments, services, and retail product plans, Jo Malone Spa expects about $10 million in the first-year revenue with 16.4% of a profit margin. In year 3, the spa will reach $11 million in revenue with about 22% of a profit margin.

The revenue from treatments and services

111 The revenue from retail sales

112 Financial Forecast and Statement

113 The promotion budgets

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09 _ Conclusion The Jo Malone Spa project aims for providing a variety of spa experiences based on multi-senses (something which is unnoticed within the current spa industry) through the collaboration with Kowloon, Shangri-La in Hong Kong. Jo Malone Spa offers memorable multi-sensory experiences for spa-goers who visit the spa to take back to their homes. The ultimate purposes of this project are to maximize revenue and profit and minimize the risk of the launch a new business. Additionally, the project pursues improving brand awareness and reinforcing the brand position. The other goal is increasing consumers’ awareness about the importance of a wellness lifestyle.

The final project proposes a comprehensive wellness lifestyle space by offering sensory experiences beyond a place for relaxation and beautification. Expansions to the spa market of skin care and beauty brands are no longer surprising. Some beauty brand spas including Guerlain spa have already collaborated with five-star hotels and accumulated both brands’ stature. However, mainly sensesfocused spas are still very rare. Even though some spas including Lush spa arrange multi-sensory spa treatments, this experiential spa treatment accounts for few portions of all services. For this reason, Jo Malone Spa, primarily focused on the five senses and multi-sensory experiences, enhances its competitiveness in the whole spa market.

The Jo Malone Spa project suggests different visions including result-oriented services, allowance of the use of smart devices, and nap lounges. The current spas, regardless of type of spa, provide similar treatments and services. Hotel spas have introduced experience showers to offer new spa experiences to their spa-users. However, there are no distinct differences between hotel spas and beauty brand spas except for experience showers. Jo Malone Spa proposes active approaches to digital channels including websites, app, and social media. The current spa industry compared to other industries such as fashion, beauty, and hospitality does not actively utilize technology and social media. Spas offer basic functions such as booking on their websites or mobile applications. In social media, spas advertise their treatments or spa facilities. Jo Malone Spa concentrates on mutual interaction with consumers to entice more millennial consumers by sharing storytelling contents and promoting consumer-oriented contents.

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The goals of collaboration between Jo Malone Spa and Kowloon, Shangri-La are enhancing both brands’ luxury brand images and eventually increasing both brands’ profits together. Shangri-La group has its own spa brand, Chi, but the recognition of ShangriLa hotel spas in Hong Kong is unusually low compared to other regions. Especially, Kowloon, Shangri-La offers spa treatments at its health club, not a spa. Also, Kowloon, Shangri-La continues to suffer a decrease of revenue owing to reduced Chinese tourists and other attractive destinations in Asia. For this reason, the collaboration with Jo Malone Spa helps Kowloon, Shangri-La to become newly recognized as a must visit place in Hong Kong with its unique multi-sensory spa experiences, which brings additional direct and indirect profits to the hotel. Additionally, Jo Malone Spa can benefit by reducing development expenses of the new store, increasing the influx of the hotel guests, and utilizing the hotel’s various marketing tools through the collaboration with Kowloon, Shangri-La. These advantages finally improve the profits of Jo Malone Spa. For maintaining this smooth business cooperation, both brands should remember the importance of communication. Whether both brands use a management system or face-to-face meeting, Jo Malone Spa and Kowloon, Shangri-La regularly communicate and share their data or information with each other. Through a close relationship, both brands achieve their ultimate purpose, maximization of revenue and profit and enhanced brand loyalty with expanding new spa stores in other Shangri-La hotels and resorts, creating the hotel’s amenities with unique scents created by Jo Malone Spa, and offering the spa’s own mobile application for consumers’ convenience.

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10 _ Appendix 10. 1 Interviewees’ Responses 10.1.1 Allan Share / President / Day Spa Association and International Medical Spa Association 1. What are major trends and directions in the current spa industry?

Back to grass roots 101. There are always trends, but most of them relate to “an interesting year” item. The basics are still the winners.

2. Who are core consumers of the current spa industry? Ex. The overview of real spa-visitors.

We don’t deal at the public end, but my anecdotal research would say 70/30 women/men, 25-85 years of age, middle and upper scale income.

3. What do spa-goers expect for treatments, activities, and special services in their spa experiences?

A lot. Just like any industry, the consumer has extremely high expectations of what should be delivered and you better deliver. Otherwise, they go to the internet and go on every review site and say negative things.

4. How are millennial consumers different from traditional consumers in perception, behaviors, and preferences?

Millennials, in general, are picky, but not overly so as made out to be in the media. What they do want to do is use their phone in the spa, relaxation means “have my friends around,” dual treatments and hang out. They’re not in a hurry to go anywhere.

5. What percentage of spa users account for tourists and local residents?

There’s no answer to this question, its different in every area. A resort in Miami might have 100% tourists or might be 60% locals and 40% tourists. A day spa in MT might be 100% locals.

6. What are similarities and differences between tourists and local residents?

Again, no answer here.

7. What are pros and cons of urban hotel spas compared to resort spas, spa boutiques, and etc.?

Nothing. Urban, you mean in the city. A good spa operator will understand the demographics of the area and have built there marketing around attracting the best clientele to grow their business.

On the other hand, you can look at Hilton and Hyatt, for example, and they totally run their own spas and very successfully.

8. What are pros and cons when a hotel operates not its own specialized spa, but a brand spa, for example, a beauty brand or a spa product brand?

Not sure. A lot of this goes on as many hotel operators are not in the spa channel, so hiring a management company makes great sense. On the other hand, you can look at Hilton and Hyatt, for example, and they totally run their own spas and very successfully.

117 9. What are pros and cons of brand spas between individual boutiques and partnership with hotels?

Same answer as above.

10. What do you expect for the future directions of the spa industry?

BIG THINGS. The Spa industry is on fire and doing amazing. Part of this stems from the debacle known as the Affordable Care Act, which is helping drive traffic to the spa channel (go to the spa before going to the medical doctor or clinic).

11. What do you expect for the future directions of brand spas?

Not sure.

12. What do you expect for the future directions of urban hotel spas?

Not sure.

13. What would you suggest for creating innovative spa environment and experience?

Hire a great designer, and there are many in our industry, to help build something that makes the clientele you’re after go “wow.” If you’re not a designer by trade, hire someone who is. They’ll give you a unique feel so you’re not just another spa down the street.

14. What would you suggest for a successful partnership with a brand spa in an urban hotel spa?

I’m not equipped to answer this question. If I didn’t know what to do, but had the rights to open in a hotel, I’d start by hiring a management company in our industry or someone with experience in leases and numbers to help walk through this process.

10.1.2. Andrew Jacka / Chairman, Asia Pacific Spa & Wellness Coalition / Director, Spa Origins Co., Ltd. / Managing Director, Spa Origins International Co.,Ltd. / Asia Pacific Representative, Termatalai / Thailand Ambassador, Global Wellness Day 1. What are major trends and directions in the current spa industry?

Trends are marketing hype. With the exception of the IT industry which is rapidly evolving, I do not know of any other industry that is as seemingly obsessed with trends as the spa industry. Each year we take the same subjects and massage them to provide the “latest trends” but ultimately there is little or no real trends, with spas offering the same menu they have been offering for the past decade or more. This is highlighted by the ongoing and persistent need for: a. continued EDUCATION (of industry, consumers and regulators) b. greater RESPECT (for our forefathers and our environment) Our industry is saturated with ‘sameness’. We have shown little innovation or creativity in the last 20 years despite purported ‘trends’. This is highlighted by the menu offering in spas around the world – they (with minor exception) are all the same, and haven’t changed since they first opened. Any good restaurant changes its offering seasonally, or at least once per year, but in the spa industry, we are ok with sameness.

118 Having said this, there is a general service & operational trend toward environmental considerations, although this does not seem to be supported by product houses, where it is still all about price, and anything ‘eco’ hardly rates a mention. The other general trend is an increased awareness of culture and traditions. We have raped and pillaged the culture and traditions of the past, picking the ‘pretty bits’ and utilizing them without context and in most cases with any understanding from whence they came or what their underlying benefits were intended to be (if employed correctly). For this we still have a long way to go, but at least it’s now being discussed.

The Wellness movement is also making inroads into the industry – arguably made easier by our complacency, but reasonably as some operators look to broaden their markets and make spas much more about being a lifestyle rather than being about any one specific treatment.

2. Who are core consumers of the current spa industry? Ex. The overview of real spa-visitors.

This varies enormously across the region, but with limited access to such information it is. Globally we are still looking at something akin to a 70:30 mix (F:M) but in countries such as Thailand where the industry is more resort based, then you are talking nearer to a 50:50 mix, while countries such as New Zealand are a purported to have a very female orientated market (with a 82:18 mix), and India enjoys a more male orientated market. These figures have little if any backup information as most are anecdotal with little research being done to determine the ‘real’ statistics.

3. What do spa-goers expect for treatments, activities, and special services in their spa experiences?

Relaxation seems be the most common expectation from a visit to a spa, with Beautification high up the list also. Depending on the spas location depends a lot of the treatments, activities and services being offered, but with limited variation between operators, there remains limited choice for consumers. Anti-aging and the desire to find the eternal fountain of youth remains a strong fixation, while ‘authentic/indigenous’ treatments are in high demand. Most spa goes expect a wet area, but research has suggested they are generally not likely to use these facilities (somewhat like the gymnasium in a hotel – it is expected by the majority of guests, but mostly used by the minority).

4. How are millennial consumers different from traditional consumers in perception, behaviors, and preferences?

They are more fixated on the “me” and “now” of life. Purportedly not very brand loyal, they seem to know what they want and when they want it. Treatments must be result orientated. We are already seeing spas start to look at changing the design of their foot chairs, to incorporate a USB Port or plug for recharging to ensure continued. Hand treatments reasonably will grow disproportionately for this market segment where ‘connectivity’ is paramount and the ‘smart phone claw’ is a reality of our times.

5. What percentage of spa users account for tourists and local residents?

This varies significantly around the region. In Thailand we continue to talk an 80:20 mix, with 80% foreign tourist, 10% local tourist, 10% locals although there is no recent statistics to support if this is still the case. Others, such as Singapore & Hong Kong which are must more ‘local’ focused in their marketing, but tourists are increasingly including ‘spa’ as part of a holiday experience. In the ASEAN region generally it is the Tourism Ministries that are driving the spa market – including the spa element in much if not all of their marketing programs. The ubiquitous image of someone being massaged with a background of sun, sand and sea is common place in tourism marketing materials, regardless of country.

119 6. What are similarities and differences between tourists and local residents?

To the best of my knowledge there is no information to support this question, but reasonably given the time considerations, tourists would be looking at individual treatments or visits, while residents would be looking at multi-visit packages or programs 7. What are pros and cons of urban hotel spas compared to resort spas, spa boutiques, and etc.?

The biggest pro is the destination themselves. Urban locations are generally concrete jungles where spas is limited, while resorts have the luxury of space (be it actual, or just a picturesque view out a window). As of today the various types of spas have made little inroads into establishing any sort of a different menu/ service offering.

8. What are pros and cons when a hotel operates not its own specialized spa, but a brand spa, for example, a beauty brand or a spa product brand?

Whether to be an owner operator or to bring in a third party to operate their spa, is dependent on the hotels management and whether or not they understand a spa operation. Few hotel managers understand spa, and even fewer visit their own spas – making it much easier for them to ‘outsource’ the management. Having said this industry research has shown that spas can increase ARR and length of stay of guests, so reasonably even if the spa is outsourced, one would have thought management would still want to work closely with the spa, or they are missing out on these benefits. The biggest con of any spa operation is the number of staff required proportionate to space and services being offered. As an industry we average something like 1.3 staff per spa goer (depending on the number of B.O.H. staff employed), so employee wages and benefits can be a significant portion out of the bottom line.

9. What are pros and cons of brand spas between individual boutiques and partnership with hotels?

See comment above 10. What do you expect for the future directions of the spa industry?

We need to define what a spa is. While some have taken the leap and made a clear definition, globally there is wide variation with most apparently putting this into the ‘too hard basket’. More by default than design we seem to have (at least for now), prevented being consumed by the beauty industry. However today, we are in the process of allowing ourselves to be heavily influenced by the wellness movement as we have not yet taken collective ownership of our industry, what we stand for or the billions of dollars we could help save current and future governments grappling with an aging society. Unless we can make a stand soon, we are destined to be recorded in history as a ‘turn-of-the-century fad’, because we focused solely on luxury instead of a more sustainable lifestyle market segment.

11. What do you expect for the future directions of brand spas?

Branded Spas – as in own brand or product brand or chain branded – all spas are branded in one form or other 12. What do you expect for the future directions of urban hotel spas?

This is probably the market segment that is most likely to see a major shake up. It has long been seen that “every 4* & 5* hotel much have a spa – but do they really need it? In an urban environment, and especially in hotels that rely heavily on the corporate, mice or incentive markets – the average hotel guest does not have the time to visit the spa. If the spa is purely a facility being provided as a ‘marketing tool’ and not seen as an active profit centre, then these will survive, but for those business savvy hotel owners who are bottom line driven, the ROI would reasonably be much greater if there is no spa. Ultimately it comes down to who the customer of a specific hotel is, and whether they have the time or the money or the desire/need to visit a spa regardless of location. There is no ‘one answer

120 for all’.

13. What would you suggest for creating innovative spa environment and experience?

Innovation is sorely lacking in the spa industry with the exception of those few spas that have incorporated innovative design elements – although for the average spa operator, these are often seen as expensive and therefore not necessarily of a priority. Boutique hotels, Young designers, Chic operators, and deep pocketed Product labels are arguably the ones that are moving this forward. From ‘experience showers’ to ‘self service wet areas’, planetariums, or high tech machines such as MUSSA, or even the sensorial element as provided by Zensations Arboreium’s (http://zen-sations.blogspot.com) there are an increasing awareness of wellness design. Functionality is and must always remain at the forefront, but wellness design, with the use and understanding of colours, textures, materials, sounds and scents can significantly impact on any experience, so the more understanding that we have of this, the most we can push the boundaries in creating an innovative spa environment with a memorable experience. After all, the best marketing is still that ‘word of mouth’ referral from a happy customer.

14. What would you suggest for a successful partnership with a brand spa in an urban hotel spa?

It requires a hotel operator to understand their customer a little better. How much time to they have, how much money are they prepared to spend, what are their life goals/ambitions? The spa operator that can tap into this information and provide appropriate services at an appropriate price and with and appropriate treatment duration that meets (or preferably exceeds) their customers’ expectations will be a successful partner for an urban hotel. It does not mean that the spa will have to have expensive technology, gold taps or even provide caviar facials, it may just be a case of varying the operating hours, and opening a little earlier in the day, offering a children’s spa area (so that the young ones can be entertained while mum has a hour to herself), or the ability to charge ones ‘mobile devises’ during treatments.

If you have a hip upbeat hotel, why is the spa quiet and dark? If you have a traditional hotel, why is the spa modern and contemporary?

10.1.3. Allie Hembree Martin / Public Relations Manager / International SPA Association 1. What are major trends and directions in the current spa industry?

Spas are still dominant markets in the wellness industry and interests in corporate wellness are increasingly growing, especially in the resort and hotel spas. In term of consumers’ groups, males, teens, and millennials are visiting spas more than before. There are other trends as follows: integrated services, organic and natural products and treatments, technological developments of skincare, on demand spa services, the growth of online booking services, shorter treatments, and social media promotion.

2. How are millennial consumers different from traditional consumers in perception, behaviors, and preferences?

The most referred motivator of millennial consumers is relaxation. However, millennials have different reasons to visit spas according to genders. While female millennials mainly receive spa treatments for indulgence, male consumers demand to alleviate their pains and illnesses.

Millennial spa-goers desire refreshments, complimentary Wi-Fi, and customized services. While the younger female generation considers complimentary toiletries as incentives for further visits, male consumers prefer contemplation rooms.

121 Distinct millennial traits can be found in the change of male consumers’ preferences in beautification. Compared to the past, manicure and pedicure treatments, as well as facial care, are popular with younger male consumers.

There are interesting findings now regarding millennial consumers’ preferences and expectations for technology. Millennials desire to use technology in the spa as they are immersed in their smart devices so much. However, younger spa-goers use phone or in person for booking their treatments rather than websites, apps, and social media. Also, millennial spa-goers occasionally want to be free from a technology environment, called a ‘technology time-out’.

3. What percentage of spa users account for tourists and local residents?

Not Sure.

4. What are pros and cons of urban hotel spas compared to resort spas, spa boutiques, and etc.?

The resort and hotel spas provide a variety of treatment and service options such as body treatments, package treatments for couples and wedding parties, salon services, fitness, and retail services, including skin care, cosmetic, and nail care products compared to day spas because of their larger sizes. All resort and hotel spas have their own official websites, but day spas offer more online booking services than resort and hotel spas.

5. What do you expect for the future directions of the spa industry?

Offering new treatments and products continuously is important to maintain spa business. Not only products and treatments but also branding and community partnerships will enhance the spa industry.

6. What do you expect for the future directions of urban hotel spas?

Not Sure.

7. What would you suggest for creating innovative spa environment and experience?

Not Sure.

8. What would you suggest for a successful partnership with a brand spa in an urban hotel spa?

Not Sure.

10.1.4. Jeremy McCarthy / Group Director of Spa & Wellness / Mandarin Oriental 1. What are major trends and directions in the current spa industry?

Trends include psychological wellbeing, shorter, results-oriented treatments, more diversification of spa concepts, sound therapy, and mindfulness-based treatments and services.

2. Who are your core consumers? Ex. The overview of real spa-visitors.

The spa-going consumer is a pretty broad spectrum. Not too young, not too old (maybe 30-60,) affluent, 60% female, and value wellness.

122 3. What do spa-goers expect for treatments, activities, and special services in their spa experiences?

The #1 selling treatment in the spa is a massage. Most consumers want a good massage with a skilled therapist who also has some emotional intelligence to create a safe space for the guest to feel comfortable. The facilities should support the experience and provide the right ambience and perhaps additional experiences to aid in physical and mental rejuvenation.

4. How are millennial consumers different from traditional consumers in perception, behaviors, and preferences?

The main difference is the pace of life. Younger clients are more time pressured and prefer treatments that are shorter, with less “ritual� and have direct results. Also, they are more reluctant to give up their technology when they come into the spa. It becomes an extension of who they are.

5. What percentage of spa users account for tourists and local residents?

This varies a lot by location. Some of our hotels in urban city centers (such as New York and Hong Kong) are about 70% local. In remote resort locations like Sanya and Bodrum it is almost 100% tourist.

6. What are pros and cons of urban hotel spas compared to resort spas, spa boutiques, and etc.?

The pro of an urban hotel spa is it is in your neighborhood (much more accessible.)

7. What do you expect for the future directions of the spa industry?

See trends above.

8. What do you expect for the future directions of urban hotel spas?

See trends above.

9. What would you suggest for creating innovative spa environment and experience?

Most spas are very similar to one another. Being innovative means trying something new that no one else is doing. Experiment.

10. How important is a spa to your hotel and why?

Very important. We believe our guests value wellness and seek wellness experiences when they are traveling. Spa users tend to stay longer in our hotels, and spend more not only in the spa but on their room and food & beverage.

11. What would you suggest for a successful partnership with a brand spa in an urban hotel spa?

Alignment of brand values and a close operating relationship.

10.1.5. Todd Hewitt / Corporate Director Spa, Health Clubs, and Recreation / Shangri-La Hotels and Resorts 1. What are major trends and directions in the current spa industry?

Treatments that have a wellness component are the major trends. Many spas are trying to include components about personal well being and improving quality of life. Also shorter treatments are quite popular in urban areas. Ones the achieve quick results for people on the go with little time for pampering Growing increase in use of spas by men as well.

123 2. Who are your core consumers? Ex. The overview of real spa-visitors.

Spa visitors tend to be people with some disposable income and they choose to spend it on themselves. Around the world, the majority of spa treatments are for massage - 70% of treatments performed worldwide tend to be for massage treatments.

3. What do spa-goers expect for treatments, activities, and special services in their spa experiences?

Ideally they are looking for someone who listens to their issues and is skilled in addressing them. Clean facilities and high quality products used in treatments are important to them. They are not necessarily looking for five star facilities. Most consumers are also looking for guest recognition when they are a frequent guest.

4. How are millennial consumers different from traditional consumers in perception, behaviors, and preferences?

Millennial consumers want to know that the products being used are making a difference in the world such as using free trade sourced suppliers. They also want quick result treatments and possible products to use at home to continue the experience. They also expect more recycled packaging and are environmentally aware.

5. What percentage of spa users account for tourists and local residents?

Depending upon the location. Most urban properties will see at least 50% local guests. Resorts tend to be all resort guests 6. What are pros and cons of urban hotel spas compared to resort spas, spa boutiques, and etc.?

Resorts typically have a captive audience. And little competition the more remote that they are. Urban hotels should actively seek non-hotel guests if they wish to remain financially viable as hotel occupancies can fluctuate and may be all business people who have little time to visit the spa.

7. What do you expect for the future directions of the spa industry?

I expect more dramatic results especially for skincare. I also expect skincare equipment to get smaller and smaller in size so the units can be quite portable. I also see more at home treatments being performed like companies such as zeal which is the uber of spas.

8. What do you expect for the future directions of urban hotel spas?

Offering shorter services. Less facilities to enjoy. More focus on personal issues and wellbeing.

9. What would you suggest for creating innovative spa environment and experience?

Anything that is self-guided. Sleeping pods. Meditation programs. Treatments that allow the guest to completely decide what they wish to do 10. How important is a spa to your hotel and why?

Spas are considered a staple for all hotels and resorts today. You are not competitive if you don’t have a spa no matter how big or small it is.

11. What would you suggest for a successful partnership with a brand spa in an urban hotel spa?

Excellent customer service is my number one requirement. Being able to train staff frequently is mandatory. And I don’t want to see the products available online for retail sales from many many websites. I want products that are made specifically for spas alone. And I don’t want to see those products in every other spa.

10.2 Comparison of competitors 10.2.1 Competitors of hotel spas

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130 10.2.2 Competitors of beauty brand spas

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