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Omni Hotels Gets Serious About the Spa Business; Adds Corporate Spa Director,
Launches its Own Branded Spa -- Mokara
By Suzanne Marta, The Dallas Morning NewsMcClatchy-Tribune Regional News

Feb. 4, 2008 - Omni Hotels is getting more serious about the spa business.

The Irving-based hotel owner has brought on a corporate spa director and has launched its own brand -- called Mokara -- in an effort to drive higher revenues from hotel guests and compete more effectively for group meetings.

With its first Mokara open adjacent to its hotel in Las Colinas, Omni plans to open four additional locations this year at properties under construction in Fort Worth and near Houston's Galleria.

Spas at its existing Denver and Orlando, Fla., hotels will be converted into Mokaras this year.

Omni also plans to convert its existing spas in Tucson, Ariz., and downtown Houston next year. The company expects to add more Mokara locations as it develops new projects.

It's an important move for Omni, whose business depends on attracting high-end corporate travelers and vacationers who are increasingly demanding hotels that offer spa services such as massages and facials.

"We want to be able to respond to that at the caliber they're looking for," Omni spokeswoman Caryn Kboudi said.

Once considered an extra for hotels catering to corporate travelers, spas have become an important business as upscale properties increasingly rely on them as a marketing tool in addition to a way to drive revenue, said Bruce Baltin, a senior vice president for PKF Consulting in Los Angeles.

"Spas are becoming more and more entrenched as a necessity," he said.

Development trends underscore that point. Around 40 percent of luxury and upscale hotel projects under development in the U.S. include spa facilities, according to a 2006 report by PricewaterhouseCoopers.

Omni has had spas either in or associated with its properties for years, but like many hotel operators, the spas were operated independently by third parties or, in some cases, the hotel.

Even among hotel-operated spas, there weren't any common standards, or even group purchasing for spa products or merchandise.

In many cases, the existing spas were generically called "The Spa at the Omni." By introducing the Mokara brand, Omni officials hope to raise the profile of its spa and attract more repeat business from both hotel guests across its locations and also from area residents.

"The spa is an experience that people relish and get excited about," Ms. Kboudi said. "We wanted the brand identity to help drive that."

Susie Ellis, president of SpaFinder Inc. in New York, said more hotels are branding their spas these days as they increasingly rely on them to draw customers.

By developing a spa brand, a hotel can better communicate its offering and increase awareness with customers.

"Brands have a personality and a culture and set an expectation," Ms. Ellis said. "It's become a very high priority for consumers, even business travelers."

For years, hotels simply outsourced their spas, relying on the expertise of third-party operators to keep the business going.

In recent years, that tack has changed, as hoteliers see greater value -- and greater profits -- in running their own spas.

Spa profits grew 11.3 percent between 2005 and 2006, outpacing revenue growth of 9.7 percent, according to a recently study by PKF Hospitality Research. During the same period, total hotel revenues grew 8.2 percent, and revenues by other hotel departments grew 5.9 percent.

Mr. Baltin said a well-run hotel spa can help boost a hotel's performance when it comes to raising room rates and occupancy levels, and by attracting a wider pool of potential customers. Spas have become especially important for the crowded resort market, where a well-known spa can "differentiate one hotel from another," Mr. Baltin said.

At the luxury level, hotels with spas enjoyed a $76 pricing premium among peers without them during 2007, according to Smith Travel Research.

Spas have been a fast-growing business. The industry grew from $10.7 billion in revenue in 2003 to $15.7 billion last year, according to SpaFinder. During the same period, revenues from U.S. hotel and resort spas grew from $2.1 billion to $3.1 billion, according to SpaFinder.

Omni's spa business is also growing. This year, based on a "same store" sales forecast, the company predicts revenues will climb 13 percent to $7.2 million.

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