Simon Pardoe - Marketing & Business Development

With all the economic doom and gloom being bandied about in the media, you’d think the world was coming to the end.  Well, OK, it might be soon!  But in the meantime, my client – The Healthy Holiday Company – is having a rip roaring start to the year.  Last week produced the highest ever week of bookings, the best ever single day of bookings, and – taking the month of January to date as a whole – sales are up 52% on last year.  Another record.  We know, from talking to other Tour Operators, that they are experiencing similar business at the moment, but nobody else is telling us that they are over 50% up on last year.  The median figure appears to be nearer 30%.  So, it looks like our carefully planned and targeted New Year promotions are really paying off.

This continues the upward trend in sales at The Healthy Holiday Company, with turnover for calendar year 2011 up over 30% on 2010, with all of the brands contributing strongly to performance.  This is very exciting as we are about to launch a new luxury tailor-made healthy holiday service that we anticipate contributing directly to the bottom line in the coming year.  The existing brands – in:spa retreats, Fitscape fitness holidays and destination yoga holidays are all fixed date offerings.  In other words, if the dates don’t suit you or if a particular trip is fully booked, we have to offer the potential client different dates.  However, the new brand – to be called The Healthy Holiday Company – will no longer be the name of the holding company but will become a consumer facing brand in its own right.  This launches in February and we expect it to have instant impact, courtesy of the 12,000 people we now have on the database, and the similar number of unique visitors that visit our websites each month.

It has taken over a year to put all the necessary agreements and expert ingredients in place for the launch of The Healthy Holiday Company website, and everyone is very excited about the prospects.  There will be loads of amazing holidays on offer for both adults and families, such as ski safaris in the Italian Dolomites, mountain biking in the Atlas Mountains, luxury villas in Marrakech and Cape Town, spa retreats to Bali, wellness holidays to Thailand, golf tours to South Africa, surfing in Portugal, yoga in India, dude ranches in Montana, desert safaris in Dubai, detox retreats in Austria, Spain and Germany, sailing in Croatia, white water rafting down the Zambezi, multi activity holidays in Mauritius etc. etc.

If you would like to be notified of when the new site goes live, please click here

I’ve just returned from a trip to southern Spain to play golf for a few days at Valderama with friends, but stayed on for a couple of extra days to check out some potential new properties for my client The Healthy Holiday Company.  However, only one of these was genuinely worth investigating:  Shanti Som.  It’s a most extraordinary place; a little slice of Bali in Andalusia.  Their idea is: why bother to fly long haul to south east Asia when you can jump on a short haul flight to Malaga and experience much the same thing?

Once you step through the doors of this boutique 14 bedroom residence, you enter another world.  Its stylish and elegant design, high beamed ceilings, thatched roof-tops, tinkling water and liberal sprinkling of giant Buddhas all create the sense of being on another continent.  It’s bizarre, but delightfully welcoming and instantly calming.

Tucked away in a shallow valley, surrounded by rolling hills and open countryside, Shanti Som lets you escape the hustle and bustle of modern life and immerse yourself in all things healthy and peaceful.  The food is delicious, nutritious and healthy; the spa offers an excellent array of treatments and therapies; the yoga pavillion is a triumph; the hillside pool is a tranquil oasis and the bedrooms are supremely comfortable, and all with stunning en suite shower rooms.  In addition to the 12 standard deluxe bedrooms, there are two larger suites, both with spacious wrap-around terraces.

As it’s only recently opened, Shanti Som is clearly struggling to generate business at the moment.  So much so that I swiftly agreed that ‘destination yoga’ (The Healthy Holiday Company’s specialist yoga holiday brand) would host a 5 night retreat there over New Year.  As a result, Liz Lark will be teaching guests on this retreat, with morning and evening classes every day.  Prices will start at £745 per person sharing, to include 5 nights accommodation, brunch and dinner every day, all yoga classes, and free use of the sauna, steam room and pool.

We plan to establish several more destination yoga weeks at Shanti Som during 2012.

The market for the new wave of “budget” gyms in Britain looks like it’s poised for muscular growth, as the health and fitness club sector is expected to expand by almost 10 per cent in the next five years.

The market is forecast to be worth £2.7 billion this year, 17 per cent higher than five years ago, according to Mintel, while membership numbers have risen by 15 per cent over the same period. About 7.3 million people, or 11.9 per cent of the population, are members of a private or local authority gym (according to the Fitness Industry Association).

The pressure on consumers’ disposable income has paved the way for budget gym chains, which typically charge about £15 a month, far less than even mid-market chains, such as Fitness First and Virgin Active.

There are around 55 budget gyms in Britain out of a total of about 2,650 clubs. One of the higher-profile ventures is easyGym, set up by Sir Stelios Haji-Ioannou, the easyJet founder, which has opened two clubs in Slough and Wood Green, North London, and plans to open ten annually from next year.

Meanwhile, Pure Gym recently raised £9 million from Barclays and private investors to nearly double its estate to 28 by early 2012. It charges £24.99 a month with no contract for gyms that are open 24 hours a day.

David Stalker, of the Fitness Industry Association, said that the rise of budget chains could attract existing members from other chains and put pressure on established players to be “very precise” about their market position and offering.

The British gym market continues to be highly fragmented, with the top seven operators accounting for only 23 per cent of clubs and 39 per cent of members, according to Mintel, which says that there is significant scope for consolidation.  Here’s how the top seven shape up:

Whilst it is something that my client, The Healthy Holiday Company already knows,  it’s good to see that it is being endorsed by third party research:  sporting holidays are destined to become a winning trend.

According to the latest survey of the World Travel Monitor, commissioned by ITB Berlin, over the last five years there has been a double-digit increase in sporting holidays among European tourists, which has even overtaken cruises, which five years ago ranked ahead of sporting holidays. Germans in particular are keenest on sports, and account for 42 per cent of the nine million sporting holidays taken by Europeans abroad. At 14 per cent the Dutch rank second. In other European markets sporting holidays make up only six per cent or less.

Among sporting holidaymakers the most popular destination is Austria, which among Europeans attracts 24 per cent of the market, followed by Italy and Germany, which each account for 11 per cent. During the last five years Germans also preferred Austria for testing their sporting limits. At 42 per cent Austria ranks ahead of Italy (18 per cent) and Switzerland (14 per cent).

The most popular activities among European sporting holidaymakers are hiking (38 per cent) and cycling tours (23 per cent). They are followed in third by motor sports (car, motorcycle and motorboat racing) at 14 per cent. At ten per cent golf ranks fourth in the sporting popularity stakes. Among German sporting holidaymakers hiking (34 per cent) and cycling (25 per cent) are the leaders among the top ten most popular sporting activities. Nine per cent of German sporting holidaymakers prefer golf.

Dr. Martin Buck, director of the Competence Center Travel and Logistics at Messe Berlin: ”Sporting holidays are a niche segment with a serious potential for tourism in the future. A growing awareness of one’s body and mind means that people are increasingly keen to improve their health when on vacation.“

What is striking is that sporting holidaymakers belong to the wealthier parts of society and as such are a much targeted segment of the market. European sporting holidaymakers average 43 years of age, and most of them live in households without children. More men than women are attracted to sports when they are on holiday. At 45 years of age, German sporting holidaymakers may be a little older than the European average, but in all other respects they are no different than other European citizens.

I have just returned from a brief trip to France visiting two leading spas and a privately owned chateau, as part of a fact finding trip for my client: The Healthy Holiday Company.  My first visit was to Chateau Dumas (pictured), about 45 minutes north of Toulouse.  Located on top of a hill with panoramic 360 degree views of rolling countryside and medieval towns and villages in the distance, I will be recommending that this comfortable, elegant Chateau be added to the company’s portfolio of properties for 2012 as a destination yoga venue.  The beautiful, oak beamed yoga studio is light and airy and just a short stroll across the Chateau’s formal gardens from the main building. There are currently 12 bedrooms, ranging from large suites to smaller studio rooms, and – by next Spring – 3 or 4 new bedrooms will be added in the delightful gate house.

The 18th century Chateau was purchased by an English couple six years ago and been lovingly restored and updated. The bedrooms all now have sleek, contemporary bath or shower rooms, and the feel of the place is like that of a large privately owned country house. Which, effectively, is what it is.

We look forward to formally introducing this terrific new addition to our detination yoga portfolio in a few weeks time, once all the paperwork etc. has been completed.

I also visited two exceptional spas.  The first, Les Sources de Caudalie, is located in the heart of the Bordeaux wine region on the Chateau Smith Haut Lafitte estate.  The spa is only 11 years old but has been so painstakingly built using reclaimed materials that it feels as it has been there for centuries.  The accommodation is super luxurious – there are 40 bedrooms, of which half are suites, and all have wonderful views of the surrounding countryside.  The spa (with 22 treatment rooms and an indoor pool) uses bespoke Caudalie treatments and creams which use as their base ingredient the skin of the pips of the grapes, and is the world’s first vinotherapie spa.  The ethos of the property is luxury pampering and pleasure.  So, more for relaxation and indulgence rather than slimming or detoxing.

I also visited Les Pres d’Eugenie which is about 150kms south of Bordeaux near Pau.  This is a long established Relais & Chateaux hotel with 80 bedrooms, a 3 star Michelin restaurant, a traditional spa and a medical spa, set in 25 acres of well maintained gardens.  Apart from the benefit of exceptional spa treatments, based around both relaxation and slimming, the 3 star restaurant is the magic ingredient as the chefs create outstanding gourmet meals with very few calories.  It’s called cuisine minceur and each day’s meals come to about 1,100 calories, including breakfast.  And a glass of wine!

The reason for visiting the spas is that The Healthy Holiday Company is about to launch a new bespoke healthy holiday service that will include a selection of the world’s top spas.  Now there will be two in France in the collection!

Some interesting observations from World Travel Monitor, commissioned by ITB Berlin, and all good news for my specialist travel client: The Healthy Holiday Company.  It’s luxury health, fitness and detox brand – in:spa retreats – is the most directly relevant to World Travel Monitor‘s research.

German citizens are becoming more and more aware of the importance of staying healthy and energetic. Increasingly, they are taking health vacations to reduce everyday stress or to stay fit for their jobs. Over the past five years holidays at wellness and spa resorts have risen by 30 per cent.

Germans are especially interested in health vacations: at 3.3 million vacations, equivalent to 4. 6 per cent of all trips abroad, Germans are more interested in foreign health and medical tourism than their European neighbours. Currently, health and medical travel accounts for a total of 9.4 million trips or 2.4 per cent of all European travel abroad. Across Europe, over the past five years health vacations have increased by 38 per cent. Medical tourism has also risen by 24 per cent.

Martin Buck, the director of the Competence Centre Travel and Logistics at Messe Berlin: “Everywhere in Europe health vacations, which help to prevent society-related illnesses, are becoming more and more popular. This is a big opportunity for organizers, hotels and destinations to expand and improve their services.“

Germans and Russians are much keener to take health vacations than their European neighbours. Whereas the German market for health vacations abroad is approximately six times the size of Russia’s, with German citizens medical tourism accounts for only 22 per cent more. The French market is the third largest for foreign health trips, while Holland’s is the third largest for medical tourism abroad.

Among German citizens the most popular foreign destination for health trips is Spain, followed by Italy and Austria. The countries most visited for medical reasons are Poland, the Czech Republic and Hungary. In Europe as a whole, the most popular countries for health trips are Spain, Italy and Austria, while Hungary, Germany and the Czech Republic are the leading destinations for medical tourism.

Women prefer cure leave to wellness vacations
According to the World Travel Monitor’s survey, socio-demographics also play a part. At an average age of 48, Europeans taking health vacations are younger than people travelling for medical reasons, who are 53. German travellers in both categories are older than the European average. People taking health vacations are 52 and those travelling for medical reasons are 61. Women prefer to travel for medical reasons rather than take health vacations. However they outnumber their male counterparts in both categories.

Massages less popular with Germans
Europeans say that when taking health vacations they prefer relaxing (50 per cent), followed by walking / hiking and swimming (43 per cent each). Among Germans, the most popular activities are walking / hiking (48 per cent), relaxing (47 per cent), followed by swimming (44 per cent). Germans are slightly keener on wellness programmes (30 per cent) than their European neighbours (26 per cent). By contrast, massages are less popular with Germans (15 per cent) than with Europeans as a whole (26 per cent).

Russia and China: a small, but growing share of the market
At growth rates of slightly under 100 per cent and 100 per cent plus respectively, at 0.4 million and 0.3 million trips each in 2010, at three per cent each of the holiday market in all categories, Russia and China are developing into attractive markets for health vacations, particularly for their neighbouring countries.

2007 was the last great year for almost all tour operators, including my client The Healthy Holiday Company.  2008 was pretty good, but only to the extent that the advance bookings made in the go go days of 2007 were still being redeemed.  Then everything came crashing down along with Lehman Brothers and the world plunged into a banking crisis and almost all consumers suddenly stopped spending.  So, 2008 and 2009 were dire, and there was a little bit of an up-tick in 2010.  Indeed, The Healthy Holiday Company returned to profitability.  But what’s happening in 2011?  Sales to end June 2011 were the same as the whole of 2010.  The obvious question is: why?  Apart from the simple point that we believe we have a selection of great holiday packages at attractive prices, we think there are six significant reasons…

First:  the strategic decision we took in 2008 to invest in launching two new niche consumer brands (fitscape – for exceptional fitness holidays at around £1,500 per person per week; and destination yoga for superior yoga holidays at approx. £900 per person per week) to complement the long standing (since 2003)  in:spa retreats brand (specializing in luxury health, fitness and detox retreats at around £2,500 per person per week).  Each brand targets a different market at a different price point, giving The Healthy Holiday Company a broader market reach and allowing our existing customers to trade up or down within our price points / holiday offerings to suit their requirements.

Second:  it takes time for new brands to become sufficiently exposed in the market as regards the all important ‘word of mouth’ introductions.  It’s now 2 years.  Alongside this, and equally importantly, it takes about the same length of time (unless you have very deep pockets) for Search Engine Optimisation on Google to really start delivering results for a company’s key words and phrases.  For example, destination yoga now appears on page 1 of Google for searches for ‘yoga holidays’ and ‘fitness holidays’ searches now return fitscape on page 1 of Google.

Third:  customer loyalty.  Approximately 33% of sales are to guests who have been on one or more of our holidays / holiday brands in the past.  This is true for each of the last 5 years.  So for every three new guests we attract in any given year, we can be sure that at least one will book another holiday with us again in the same or the following year.

Fourth:  almost all of our customers are in the higher socio-economic categories.  Whilst they, like everyone else, got thoroughly spooked in the early to mid part of the banking crisis / recession, they didn’t lose their (mostly private sector) jobs and actually found their costs of living (such as mortgage rates) decreasing or staying flat.  So, by 2011, with as much money or more as they had before, our customers are bored of not having a good time and not taking as much holiday as they would like, and with increasing confidence that the economy is moving in the right direction (or, at least, is in better shape than it has been in recent years) – are now choosing to spend their money on looking after themselves on a healthy holiday in the sunshine.  This brings us nicely to the fifth point…

Fifth: health and holidays go very well together, particularly amongst the more affluent 35 year old and upwards age groups.

Sixth:  the holiday companies that appear to be doing best are the specialist niche operators.  And The Healthy Holiday Company is certainly one of those!

After writing my blog on 9 July (please see below) about Fitness First’s plans for a new budget gym brand called Klick Fitness, I thought I would investigate further why Fitness First decided to go it alone with a new brand rather than hiving off the 10 gyms it had earmarked for overhaul to Fitspace or another of the budget gym operators, who typically charge between £12 and £19 per month for membership.  Remember: 5 years ago Fitness First handed over 5 poorly performing facilities to Fitspace in return for a 30% stake in Fitspace.

Earlier this week, I visited the Fitspace facilities off  Holloway Road in north London and their club in Mitcham, Surrey.  If they are similar to the other Fitspace clubs, then I would suggest that the end is nigh for Fitspace or they are going to have to invest substantial sums in overhauling and upgrading their facilities in order to be able to compete with all the new – and far superior – budget gyms that are springing up everywhere.  Fitspace clubs are rather dank and smelly, rather dark and drab, and with grubby changing and shower facilities.  Yet, unless you sign up to an 18 month contract (at £12 per month), the subscriptions are £19 per month.  Compared to The Gym Group clubs, who charge very similar prices, and I would score (on a scale of 1 to 10)  between 6 and 8, Fitspace would score around 3.  Hardly a good score in an increasingly competitive market!

So, my bet is that Fitness First have decided that Fitspace don’t have the capital or, perhaps, the inclination to invest in upgrading their clubs to match the competition.  And, rather than assist in funding Fitspace via their 30% equity, Fitness First have decided to go it alone and invest, as they say, around £700,000 per club to convert 10 of their existing Fitness First clubs to the new Klick Fitness format.  It will be interesting to visit some Klick Fitness clubs in the near future to see how they score on my 1 to 10 scale, and to see whether they are a competitive match for the likes of The Gym Group or even Pure Gyms (who I would score at around 5 out of 10, i.e. mid way between The Gym Group and Fitspace).

The bottom line is that Fitness First have elected to go it alone and enter the budget gym market with Klick.  They will have had access to all the details of Fitspace’s financial and operational performance, and (understandably) think they can do a better job.  As my visit to Fitspace’s premises in north London and Mitcham was deeply underwhelming, I would say that Fitness First have made the right decision and I would think that this leaves Fitspace in some difficulty.  If not now, probably soon.  Unless they invest significantly in up-grading their current gyms.

Fitness First is about to enter the low-cost gym market for the second time.  First time round was 5 years ago when it sold a small number of clubs to Fitspace – the first low cost gym group – and took a 30% stake in the company.  Presumably that shareholding has allowed them to keep close tabs on Fitspace’s performance and now, instead of off loading a few more badly performing Fitness First clubs to Fitspace again, it has decided to enter the budget market itself.  This would clearly suggest that Fitness First likes what it has seen at Fitspace and has decided it can do it better.

Colin Waggett, Fitness First’s CEO commented in The Times on 2 July:  “Our business is performing very satisfactorily in London, in particular, but it’s more challenging elsewhere.  This is really a bit of R & D addressing that.”  The plan is to close 10 Fitness First clubs, mostly located in the North and Midlands, spend approximately £700,000 refitting each facility and then rebranding them as Klick Fitness.  Founder members would pay just £9.99 per month; about a third of what their existing members are paying.  This subscription is expected to rise to around £15 per month after the launch of each new Klick club.

As part of this new low cost formula, the number of FTEs (full time equivalent staff) will be reduced from about 15 per club to just four.   All this, of course, is part of the company’s programme of beefing up its UK business prior to floatation, forecast for later this year and probably to happen in Singapore (to reflect the global revenue shift from west to east).  The group now has 435 clubs around the world and intends to focus on faster growing markets such as Asia and Europe’s larger cities.

It’s interesting to note that several low cost chains have risen in the wake of Fitspace’s original concept, under such names as the Gym Group, Fitness4Less, Pure and (earlier this year) Kiss Gyms and, most recently with Sir Stelios’s easyGym in Slough which opened a couple of weeks ago.  This brings the total to around 50 low cost clubs.  I expect many more in the coming months!