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Topic Report (C) JETRO,2006

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Topic Report (C) JETRO,2006 ...

    -Business opportunity forSPAindustry- Overview

    The number of Japanese hotels that introduced SPA facilities as a ways to attract guests has been

    increasing. The number of Japanese clients who seek Relaxation has risen substantially, which contributed

    to a rise in demand. A continuous stream of investment by foreign SPA companies into the Japanese market

    has been uninterrupted. Also, local governments are keen to increase the number of tourists to their areas by

    introducing SPA facilities. There is considerable growth potential for SPA related business in Japan if factors

    such as ensuring stability of highly qualified human resources are duly addressed.

1. More attention of foreign investors to SPA market in Japan

    1Essential facility for luxury hotels

    Since 2002, many luxury hotels have opened or have been renovated in Tokyo and other big cities,

    and most of these hotels have introduced SPA facilities to enhance their competitiveness (Table 1).

(Table 1)Spa facilities located in main hotel in Tokyo area

    Four Seasons Hotel Marunouchi?Tokyo Marunouchi 2002 Spa & Fitness Grand Hyatt Roppngi 2003 Nagomi Spa & Fitness Royal Park Shiodome Tower Shiodome 2003 Mandara Spa Strings Hotel by Intercontinental Tokyo Shinagawa 2003 Lunatua Tokyo Prince Hotel Park Tower Shiba 2005 Spa & Fitness "Strelitzia Garden" Conrad Tokyo Shiodome 2005 Mizuki Spa Mandarin Oriental Nihonbashi 2005 The Spa at Mandarin Oriental Tokyo The Peninsula Tokyo Hibiya 2007 Spa (plan) The Ritz Carton Roppongi 2008 Spa (plan) Hotel Okura Toranomon 1962 Grand Comfprt Floor (Since 2005) Hotel New Othani Akasaka 1964 Amor Spa & Sweet (Since 2005) Yokohama Grand Intercontinental Hotel Yokohama 1991 SPA Bay Window (Since 2005)

    YU, The SPA at Four Seasons (Since Four Seasons Hotel Chinzanso Mejiro 1992 2005)

    Source: Information has been gathered from web site of each hotel by JETRO

    With the increased number of Japanese who have traveled abroad, more have experienced Spa

    treatment. As a result, the demand for the type of Spa treatment that uses water has been rapidly expanding.

    In addition, the idea of providing general SPA service at hotels has been spreading among many international

    luxury hotel chains. In light of the changes in consumers taste, many newly opened hotels offer SPA facilities.

Japanese prestigious hotels are also undergoing extensive renovation to introduce SPA facilities.

2Entry of foreign investments

    For the hotels which have introduced SPA facilities, some operated on their own, some imported

    knowledge and machineries from overseas and some tied up with proven foreign brand. Table 2 shows the

    famous examples of Japanese luxurious hotels which collaterally introduced famous foreign SPA brand. For

    example, Mandara Spa from Indonesia set up at Royal Park Shiodome Tower, or Banyan Tree Spa from

    Singapore that set up at Sheraton Grande Ocean Resort in Miyazaki Pref. Aside from these, there are many

    other type of candidates that are SPA salon or technical know-how providers or products suppliers.

    Companies from Singapore are especially keen on investing in Japan. In Singapore, where SPA has

    been spreading faster in domestic market, it‟s government promotes domestic companies to invest in foreign

    countries, in which some already did in Japan. Mr. Chun, Director of IE Singapore talked about the

    attractiveness of Japanese market, In Japan, we have a ready market since Japan already has a hot spring

    culture, hence there high demand for relaxation. Japanese people need to be released from their stressful

    society. Also, due to a progressively aging society, people are very more interested in preventive medical care

    or spend high quality golden years. Therefore more foreign investment into Japanese market can be expected

    in the future.

(Table 2) Major Foreign SPA Invested into Japan and Related Companies

    NISSEN ESTATE LAFORE HARAJUKU, AZAMINO, ST. GREGORY SPA SPA (H FORCE CO., LTD.) TOKYO BAY

    BANYAN TREE SPA - SPA PHOENIX SEAGIYA RESORT

    SINGAPORE SPA CARE JAPAN CO., PERSONNEL THE ASPARA SPA HACCHOBORI LTD. TRAINING

    SJ INTERNATIONAL CO., ESSENCE VALE SPA DAIBA LTD.

    TAMAN SARI ROYAL - SPA LAFORE ZAO RESORT SPA HERITAGE SPA INDONESIA ROYAL PARK SHIODOME INDONESIA SHISEIDO CO., LTD. SPA TOWER

    THERMES MARINS DU THALASSO SYSTEM TECHNICAL MINAMI BOSO, YOKOHAMA, FRANCE PACIFIQUE JAPAN CO., LTD. COOPERATION GAMAGORI Source : Information has been gathered from individual homepages and press information by JETRO

2. Japanese Spa Market indicates high potential of development

    The concept of SPA has just started to spread in Japan in 2003, and there is no industry categorized

    as Spa industry yet. For this reason, it is difficult to obtain statistical fact such as market size, turnover, and

    the number of employees of the entire SPA businesses. There is a definition of SPA defined by each related

    association. But as a business category, a wide range of business can be defined being part of a Spa industry.

    Most of service business that supply relaxation such as those relating to esthetic, healing, fitness, massage or hot spas are considered part of the SPA industry. (Table 3)

    The size of Spa related businesses has been expanding annually, so is their number of employees

    (Table4). Searching the word SPA through internet telephone directory, more than 5,000 numbers of

    companies are hit. Not only Spa facilities but also wholesaler of amenity product or machineries will be hit on

    the internet as well. Spa business deals with a wide range of industry, product, and human resources, and it

    shows a great deal of promise for further development as a market.

    (Billion yen) (Table 3) SPA Related Market Size

    450

    400

    350

    300

    250

    200

    150

    100

    50

    0

    Esthetic Healing Massage Hot Spa Fitness

(Table 4 ) Overview of Spa-Related Industry

    (Medical check, Medical consultation, Health related information system, Sport, Nutrition

    management,

    Health product distribution)

    Market Size : 12 trillion yen / Number of employee : 2 million

    (Source : Health service industry creation laboratory report, METI)

Turnover : 397 billion yen / Number of users : 40 million

    (Source : Survey on Recreation demand and industry trend, Free time design association)

Numbers of facilities : 27,074 (Ordinary public bath:7,130, Bath with private bathroom:1,343,

    HealthCenter:2,287, Sauna:2,169, Others:14,145

    (Source The numbers of Living and Health Business Facility, MHLW

Number of facilities : 1,503 / Employee: 64,475 / Turnover : 371.8 billion yen

    Rmks: Facility with no pool is excluded

    (Source : Survey on special service industry, METI)

Number of facilities : 5,877 / Employee : 47,794 / Turnover : 234.3 billion yen

    (Source : Survey on special service industry, METI)

Enrollment : 174,249

    (Source : Foundation for Training and Licensure Examination in Anma-Massage-Acupressure,

    Acupuncture and Moxibustion)

Numbers : 5,232

    Rmks : Totaled the number which hit by searching with the word Spa in the internet. Hot spring, accommodation, Spa related product/machinery distributor, Constructor is included Source :Town page

    The SPA market‟s potential is reflected in the data of trend of Spa users. Private Consumption Integrated Estimates reported by Cabinet office shows the continuous recovery of private consumption rate

    (Table 5). Also, according to the White paper of Leisure published by Japan Productivity Center for

    Socio-Economic Development, it shows a slight year-on-year increase in time and spending on leisure since

    2004 (Table6). The survey done on Baby-boomer generation who start their retirement around 2007 shows

    they tend to prefer spending their spare time on Healthy, Natural and Suburbs centered activities. Spa facilities which provide not only relaxation but also medical treatment, or supply Spa with resort environment

    is estimated to increase. Since Spa business contains factors which meet the demand of baby boomers,

    consumers interests on Spa is estimated to increase exponentially. With the changes of consumers needs,

    local governments have started to utilize Spas for area revitalization. Seminars have been organized in each

    area with consideration of the introduction of Spa. In Okinawa pref. they have started up plans to promote the

    formation of cluster for health related industry (food, resort and healthcare), and they show Spas as a prime of

    local revitalization.

    (Table 5) Private Consumption Integrated estimates

    115.0

    (Year2000=100)

    110.0

    105.0

    100.0

    95.0

    90.094Q1

    95Q1 96Q1 (Source : Cabinet Office) 97Q1

    98Q1

    99Q1(Table 6) Increase Ration of Leisure Time & Expanse 00Q135 30 01Q1

    02Q130 25 Leisure Expense (%) 03Q1

    04Q0125 Leisure Time (%) 20 05Q120 06Q0115 07Q0115

    10 10

    5 5

    0 0 Year 91 93 95 97 99 01 03 05

    (Source : Japan Productivity Center for Socio-Economic Development

    3. Unavoidable challenges for Spa expansion

    (1) Development of laws and securing human resources

    There are some challenges for the Spa to be developed in Japan in the future. The first challenge is a

    development of law. As mentioned earlier, Spa has not been categorized as individual industry yet, so the

    legislative system has not been established yet. For example, at some Spa facility, the Public Bath Houses

    Law has been applied. This is due to the fact that the service is supplied by using water with bathtub. The law

    has been established in 1948 targeting public bath, sauna, esthetic salon which is attached to sport facilities

    such as hot spring health center, athletic gymnasium. There are many restrictions under this law. Treatment

    for both woman and men at the same room is prohibited, and this is not suitable for supplying Spa services.

On the other hand, at other Spa facilities located in the hotel, Inns and Hotels Law is applied and be is

    excluded from the restriction under the Public Bath Houses Law. Development of appropriate law system for

    Spa as industry is necessary for the spread of Spa.

    To secure stable qualified human resources is another challenge. Some still misunderstand Spa

    therapist as a sexual servant since the concept of Spa still has not been spread correctly. It made securing

    human resources difficult. Also, the rapid growth of market causes remarkable gap between demand and

    supply. Spa owners have difficulty headhunting highly qualified therapist or their independence, and it

    causes low fixation of personnel.

    Even under the shortage of human resources condition, bringing in human resources from overseas

    has not been allowed under the current immigration law yet. Under the JTEPA negotiation, both countries

    have agreed to review and discuss issues regarding the acceptance of Spa therapist and care taker. METI

    (Ministry of Economy, Trade and Industry) has done a Survey on acceptance of Thai Spa service specialist.

    Once the acceptance of Spa therapist has been in the place, it should facilitate the securing of therapists who

    can provide actual Thai services.

     For foreign companies, pairing up with an appropriate partner for investment is the greatest

    challenge. Even though they have a proven track record on Spa management technique, they rarely have the

    know-how how to develop their business in the Japanese market. For the expansion of foreign investment,

    local governments are required to provide information such as related regulations, characteristic of market, or

    detailed financial information about potential company as a partner.

2Challenges of private Sectors for Spa therapist education

    Some private companies has started to work on education for human resources. Spa management

    consultant, Pacific hospitality group, has opened Spa collage in Tokyo, Osaka and Okinawa in 2003. President,

    Mr. Hori mentioned about the reason of establishment of college in Okinawa that, Regarding the expansion of Spa market, Education and Circumstances is a crucial factor. Through his business experience as Spa consultant, he has acknowledged the importance of securing highly qualified human resources and the

    importance of stable technique level. Okinawa has been selected for its circumstance surrounding Spa as a

    resort spot. For the tourists, they can see results during their stay such as getting slimmer or a reduced blood

    sugar level by staying long term.

    Spa Care Japan Co., Ltd, manages Singaporean Spa brand, The Aspara Spa has established a

    therapist training center named Cosmoprof International in Tokyo in Nov. 2005. The company made a license

    agreement with this Singapore operator, Spa Care International Co., Ltd., so the graduates can receive

    CIBTAC and international licenses. In April 2005, Thalassa Shima which operates thalassa therapy in Mie

    pref. has opened International Spa Academy in Ginza, Tokyo.

    Under the current situation that the acceptance of therapist from foreign countries is difficult, efforts

    to train qualified human resources locally is a must. Mr. Hori has indicated that Spa is a business offering hospitality, so in this regard, Japanese has a strong advantage.‟” Mr. Chun also mentioned that The

    customers ask for not only treatment but also for high level of service, such as advice towards a holistic

approach to life style. So the communication skill of individual therapist is also an important factor. In

    Singapore or Thailand, national qualification system has been set up for a Spa therapist. They have also

    established high level educational institutes. If Spa expansion are to continue, cooperation between both

    government and private company is necessary.

4. Key to success for the Spa business

    The key for the investment of Spa to succeed in Japan is that the company must be able to provide service and facilities that is suitable for the regional participants to settle and do business. Having a sense of

    cooperation in revitalizing the region is also the key to success. In addition to give apriority to a local

    employment, contribution to the local economy by using local product is important. Same as other service

    industry, study about targeting group and access to the destination is also necessary. There are many forms of

    Spa, such as hotel Spa, destination Spa, day Spa or club Spa, and investors have alternatives to establish

    their business plan that is matches their condition. In this context, Spa business can be the market with

    tremendous amount of potential.

    Among industry participants, incoming foreign investment is rather welcomed because they believe that the entry of foreign Spa may contribute to spread Spa culture in Japan. For foreign Spas, the possibility

    for the operation to proceed smoothly is rather high if they set up a partnership with local operator. Once they

    succeed in developing services which can capitalize on the area characteristic, the Spa business can contribute

    by bringing in more tourists to the region and revitalize the local economy.

(Reference) Leisure Industry Monthly Edition (Sep. 2005)

    Hotel Ryokan Monthly Edition (Dec. 2005)

    …………………………………………………………..

Source : Topic report, JETRO (Sep. 2006)

    Reported by Misako Ito, Japan Economic Information Section, JETRO

    Translated by : Ms. Yoshie Hanaguri

    Date : Nov. 26, 2007

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