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Wellness Industry 2016-05-04

How Indian spa industry perched for a soaring take-off though franchising

Spa franchise is becoming hot market with profit margins in the spa industry as high as 60-65 per cent. With 25 spa centres that includes even franchisees.

How Indian spa industry perched for a soaring take-off though franchising

After years of exclusive operation of company-owned clubs, franchising was a natural evolution for Indian spa industry. The biggest disruption which is shaping growth of spa industry in the major cities in India contributing to premium spa boutiques, often opens in hotels and high-born vicinities.

Housing a number of business opportunities to pursue along the wellness continuum, Indian spa industry is relatively less exposed in comparison with salon business. While some opportunities will require long-term effort and investment, spa franchise small adjustments made by owners and investors to their service offerings and re-examine their franchisees with a new, wellness-oriented viewpoint.

According to industry veteran and beauty expert, Shahnaz Husain said, “With over 700 spas predicted to open doors in the next two years, there's no doubt that the spa industry in India is growing fast. Several companies are busy devising major expansion plans to reap in huge profit margins. With the extended global spa economy now estimated to be worth $255 billion, there has never been a better time for medical tourism in India. India will continue to be a hot spot for medical tourists that seek travel services that incorporate diverse wellness packages, including those that couple medical procedures with spa indulgences, Ayurvedic treatments or cultural immersion experiences.”

Franchising as a medium

In the last two years, we have seen over a dozen of spa chains operating in the Indian wellness space, exhausting every possible potential to spread their reach. Growing organically in a country like India is challenging as every nook and corner has a potent competitor in the form of day spa or Spalon (salon with spa facilities).

Aiming to crack quick returns with rapid growth, Indian spa leaders like Aura Thai spa, The Four Fountain spa, O2 spa, Sevenseas spa and Moksha spa are all taking franchisee route to grow their market presence.

“The spa market is exciting, room for lot of innovation and customer satisfaction to a whole new level. Only the ones with creativity and passion will make most out of this delicate industry,” defined Arpit Sharma, MD,

Tighter concepts flexible returns

As consumers are turning aware and much conscious of their spa experience in terms of selecting the therapy or pampering options, tighter and attractive concepts is a must to woo them. Today, customers’ are not looking for an exclusive massage option; rather they keen on investing in a concept that sells an overall tranquil experience.

Investment required

Investment in a Spa facility may range from Rs15-20 Lakh to Rs2 crore. The franchisee must have a detailed plan as to where to invest and how much to invest.

“The franchise investment costs varies from brands to brand and depend on the services offered, the location you chosen, current cost of property, costs incurred on hiring people, the quality and range of products and equipments used,’ said Nikhil Gupta, a faculty member of Aithein Spa Training Institute, Bengaluru. Breaking even may take about 2 to 3 years.

Outcome

The spa business plan must lay out in detail what all would be required for the day to day operations. These details include the services you will be offering and the equipments and products you need to purchase for the same.

Also, one needs to determine how many employees need and at what salaries. On an average, a unit level franchisee gives 30-40 per cent of return while a multi level franchisee builds 15-20 per cent returns.

India is generating approximately $600 million annually through spa industry alone. Thus, taking franchise as a medium to grow in spa business, much development is foreseen in couple of years to come.

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