Indicators Are Not Moving! Why?

The Residential Spa, the Latest Luxury Living Trend

By Alexandra Ilyashov

“Residents of luxury buildings want tools for healthy living at their fingertips. They...want to live in a place where they don’t have to leave home to maintain a healthy lifestyle.”

In less than three decades, the spa industry has grown from 50 spas to more than 22,000 across the U.S. While the traditional spa categories defined by ISPA stand the test of time, a new category is taking the spa industry by storm—the residential spa.

From hybrids with a hotel component or local membership to exclusive private spas operated as loss leaders, luxury residences are upping the ante for wellness amenities—catering to a new type of spa-goer focused on individualized programming and a healthy lifestyle.

“Owners and developers are asking us to push the envelope in terms of wellness experiences,” says Jeremy McCarthy, group director of spa & wellness at Mandarin Oriental. “Over the past decade, our owners understand this important part of a residential development because it is about the lifestyle. Exclusive access to unique experiences drives the sales of these residential developments.

Defining the Residential Spa Big City Wellness

New York and Miami are the indisputable hubs for residential spas—with activity in secondary markets like Chicago, Atlanta, San Francisco and Charleston. Wendy Bosalavage, president and chief revenue officer of LIVunLtd, manages wellness amenities in 60 luxury residences in New York City. “Almost every property we manage has at least one treatment room and extensive wellness services and amenities.

Developers recognize how important it is to have the amenities that increase the value of what they can get per square foot in either a rental or condominium environment.”

Arch Amenities manages 15 spas in luxury residences in Miami. “Developers started telling us back in 2017 that wellness was the direction to be competitive. Miami has become a hotbed for New Yorkers that are coming down from their luxury penthouse apartments and they expect the same amenities that they would have in the Northeast. We are working with a lot of new units being built and pretty much all of them have a spa and fitness component,” says Warren.

Residential spas are spa facilities located in the building where one lives. Located primarily in big city luxury high-rises, they run the gamut from a treatment room or two, to full-service spas. The majority are exclusive for resident use and managed by the homeowner’s association, HOA (loss leader), whereas a few are open to hotel guests and the local community (profit center).

Residential spas that cater exclusively to residents traditionally pay a management company to operate the spa—a cost covered by the HOA fees. “Some of our luxury places in Miami have 12 residents in the dead of summer, but there still must be a director there,” says Catherine Warren, vice president of strategic partnerships for Arch Amenities, which manages 70 spas and 260 other wellness, recreation and amenities spaces.

Mandarin Oriental is an example of a mixed-use development that integrates hotel guests, residents and local members. “Many of our new hotels have a residential component, and they all have world class wellness amenities,” says McCarthy. “We don’t just want a hotel with a spa and fitness center—we want the hotel to be a hub of the local community, with a thriving membership and a full-fledged sports club.”

Another example of a hybrid concept is Auberge Beach Residences in Fort Lauderdale, Florida, a residence with a standalone spa on the first floor. One wing is devoted to a BioStation center, where residents and the local community can get Botox and fillers, blood work, IV infusions, PRP and hormone therapy to optimize wellness. “The spa operates as a revenue center and is open to the public. It is a free-standing entity because the HOA does not do the assessments and are not contributing to anything with the spa. The Spa at Auberge Beach caters to 20 percent residents and 80 percent from outside the building,” says Spa Director Linda Higgs.

Discerning Dwellers

Residents of luxury buildings want tools for healthy living at their fingertips. They want to be educated and have new experiences. People want to live in a place where they don’t have to leave home to maintain a healthy lifestyle. privacy over socialization. “The upper echelon is looking for privacy and discretion—especially our units that have celebrities, sports stars and international aristocrats,” says Warren. According to our experts, residential spa-goers and transient spa guests are like apples and oranges.

“They are very different audiences looking for different experiences,” says McCarthy. “The biggest difference, at least for us, is our residents are looking for high levels of privacy and services exclusively tailored to their needs. It is much more individualized, much more bespoke than a hotel guest who is just visiting and doesn’t necessarily know what they want. They want to browse the menu. They want to meet with the people. It’s a much more social and exploratory experience.”

So, what services are these discerning dwellers digging into? Like any spa, massage is far and away the most-re-quested, most-offered service. “Massage is popular with all ages, from as young as 16 to people in their 70s,” says Warren. “LIVunLtd has tripled our massage business in the past four months,” says Bosalavage. “Our clients understand all the positive benefits of massage and it is their ‘goto’ treatment on a regular basis.”

Beauty services like hair and makeup are also popular, as Residents love their “glam squad.” “Our salons have done very well. Residents like to get their hair blown out in the privacy of their own home before they go out,” says Warren. Both Arch Amenities and LIVunLtd are adding unstaffed salon spaces for personal stylists and guest celebrity hairdressers.

The salon at Auberge Beach Spa rents space to celebrity stylist Eric Allen Davis. “He sets his own pricing and has his own clientele,” says Higgs. “Now these clients are buying retail, having their nails done here and getting facials and massages. So it was the best thing ever.”

Jeremy McCarthy stresses that each project is unique and must bring experiences that are location specific. “People live in a particular area because there’s a certain lifestyle associated with that area. You can’t just think about residences in terms of the residents themselves or the accommodations, it’s more about how does living in that building help people create the kind of lifestyle they want. They want convenient access to fitness facilities and wellbeing experiences that help them live their best life whether they are living in that city year-round or visiting a second or third home.

Despite Hard Work, My Key Performance Indicators Are Not Moving! Why?

We've got a pickle. Tonya Dunn, a spa professional, wants to know why her Customer Experience efforts aren't moving the numbers. I am sharing her pickle, because I am sure some of you have the same problem. We all need to move the numbers, as it were, so it's a familiar business problem, and the advice will be widely applicable.

Let's Start With Reference Points

Reference Points describe what we use to compare one thing to another. This theory is helpful because we always evaluate things by comparing them to something else. That's how our mind works for everything, including Customer Experiences.

No experience is good or bad unless you compare it to something else? So, suppose we want to know why our Customer Experience scores are not improving and why our customers are responding positively to objective improvements that we've made. In that case, part of the problem might be that we don't know their reference point.

It is essential to know what customers use for comparison. It could be our previous performance or our direct competitors. It might be some experience they had in a completely different industry. So we need to know what that Reference Point is. Moreover, there are two Reference Points here, the customers' and Tonya's companies.

These are not right or wrong. Each entity uses different perspectives to evaluate an experience. Most organizations, don't look at competition from a customer satisfaction perspective. Most don't know how their Net Promoter Score® (NPS) stacks up against their nearest three competitors.

However, comparing the competition's NPS is essential because your customers might be doing that. So, even if you have performed better than you did last month and score way lower than the competition regularly, customers might not be ready to up their evaluation of you yet.

However, this comparison to the competition works the other way, too. For example, if someone moved to my area and wanted my advice about a WiFi company, I would tell them to choose one over the other. My NPS score for the WiFi company I recommended would still be low; they are not great. However, I would, in reality, recommend them because they were marginally better than the other one, which was loads worse.

Making Experiences Easy to Evaluate

The mention of politics reminds me of another theory, it's the Evaluability Heuristic. You'll remember that heuristic means a shortcut for decision-making. With the Evaluability Heuristic, we view a complex decision and make it simpler by using a metric that is easy to evaluate. So, for example, with politicians, people sometimes vote for the candidate that would be more fun to have a glass of wine with rather than examining their stand on social and economic issues or, their voting record for the past ten years. In this case, the candidate's likability matters more than all that, and it's because it's easier to judge.

In Tonya's case, they might have made improvements in the areas of the spa experience that regular people can't evaluate. So, those improvements have yet to affect their NPS. But, finding a way to make it straight forward for customers to assess the experience might help.

Other Factors Affecting Tonya's Pickle

Some other factors might affect Tonya's results. It could be that they are measuring the wrong things. If you are familiar with the model for customercentricity, Naïve to Natural, then I would describe them as Transactional, which isn't the least customercentric. Still, it is only the next level up from it. The company is very process and quality driven, which is fine but doesn't consider the emotions of the business. Getting into emotions would move them to the next level of customer centricity, Enlightened.

One of the impediments to progress was their current scores were very high in the metrics they used to measure performance. They couldn't see that they needed to change anything else because they were getting nearly 100 percent on these metrics, so it didn't seem worth spending resources to improve. However, they weren't measuring customer emotions. If they had been, they would have seen they had enormous potential for improvement.

My point with this story is that there are different levels. It could be that Tonya's company is measuring its performance on metrics that are too basic to see an NPS move. For example, if a hotel asks you if they provided a bed or if the room was clean, you might say yes, but not change your NPS evaluation of them. Why? You expect a room you pay for to be clean and have a bed. However, you might not expect a cocktail hour, free high-speed internet, a way to use your Netflix on the TV, etc.These are next-level hotel experiences that matter to you. Getting those things might change your score. In Tonya's pickle, it could be that things are not moving because they are measuring things that don't move that needle for customers. Going for improvement there might also be a waste of time because it's already great. Getting it perfect will probably not be worth the time and resources needed for such a marginal improvement. Another factor might be that Tonya's company is measuring the right thing in its self-evaluation of improvement, but the methodology is flawed. For example, the company might be using the wrong idea or aspect of the experience to track progress. That idea or part might not drive value for customers. Or it could be getting the number wrong, so you don't have an accurate assessment.

If you don't measure what moves the NPS needle, you have a problem with your methodology. The improvement you make should be in areas that customers value the most. Providing those things will show in any metric you measure, from NPS to revenue to customer emotions. Finding what those things are is always tied to emotions.

So, What Should Tonya Do about Her Pickle?

To answer Tanya's question about her pickle, what should she do? We have a few things: Determine what improves your experience from the customer's perspective: This requires understanding customers' reference points.

• If you don't know what they use to compare you, you can't identify where your opportunities are. • Ensure you measure the right things: Do the metrics you use to drive the outcomes you want in the marketplace? If not, change the measurement to get an accurate read of where you are. • Provide what customers really want: If you improve areas that don't matter (or don't matter enough) to customers, then you spend valuable resources where you shouldn't. Make sure that the improvement area you identified is something that matters to customers and would change their perception of your organization.