Gary Henkin’s path to global spa business leader has been a circuitous one. As a child, his most dearly held ambition was not to run a multi-million dollar company but to follow in his father’s footsteps and become a doctor. It took him two years of medical school to realise his calling lay elsewhere.
After eventually completing a BSc, he spent the next few years indulging in his true passion: teaching tennis at country clubs in his native Washington DC, and playing competitively. It was this that planted the seed for WTS. “I was never a good enough player to make it on tour,” he says. “But I’d seen so many failed operations… I felt there was a need for a more business-like approach to managing tennis and racquets sports facilities.”
In January 1973, aged 28, Henkin founded a small company to provide turnkey management services to local tennis facilities. Its name, Washington Tennis Services, was apt but arguably unambitious and 39 years later, the moniker is no longer quite as fitting.
Now named WTS International, the privately owned company employs 2,000 people worldwide and, although it still offers tennis services, up to 65 per cent of its revenues are generated through spa management and consulting, with high-profile clients including Ritz-Carlton, Wyndham Worldwide and Trump. And while up to 80 per cent of its business currently comes from within the US, with the remainder from overseas, Henkin expects, “in the next two to three years for that to look more like 60-40 or 50-50.”
Organic growth
So how exactly does a small tennis operator become a global spa business? According to Henkin, he wasn’t initially looking to diversify. “For the first 16 years we were very focused on tennis,” he says. “Then in the late 80s, fitness facilities began popping up in hotels. And we felt that our approach – hiring and training great people, financial management, marketing and promotions, programme development, maintenance and retail sales – was applicable to a different space.”
WTS’ first fitness project was the opening of a 10,000sq ft (929sq m) health club within a hotel and office complex in Washington DC. Despite the company’s lack of experience in the sector, it was a great success and proved to be a springboard to similar projects across the US.
Their move into the spa sector in the late 90s was similarly organic, beginning with the management contract for a failing spa and fitness centre at a small hotel in the US Virgin Islands. “Operationally and financially it wasn’t the easiest start,” says Henkin. “But we managed to turn it around in both areas. And with that we took on additional accounts in the US Virgin Islands, and ultimately back home.”
Today, WTS projects range from opening hotel spas for Trump in New York, Chicago, Las Vegas and Honolulu to developing a proprietary spa brand for Wyndham Worldwide. Henkin adds: “We also have a whole portfolio of small to moderately sized spas, some of which have just two or three treatment rooms. A spa doesn’t have to be big to be profitable, or a wonderful, relaxing space.”
Under the radar
Although WTS also offers feasibility studies, plus brand and concept development, its three largest service areas are design consultation, pre-opening and management. Yet in contrast with many spa operators, the company prides itself on operating under the radar. “From an operative standpoint, we actually become an integrated part of our client’s [property],” says Henkin. “To the guest, we’re invisible.”
While WTS’ overseas growth is driven almost exclusively by new-build spas, an increasing number of its US contracts involve taking on the management of existing – and often under-performing – facilities, which according to Henkin presents unique obstacles: “It’s more challenging not only because of design constraints, but also people constraints. You’re picking up the baggage of a failing operation and there’s a whole re-education process that has to happen. It’s one thing to scale a wall and leap over it, it’s another thing to run through the wall… and sometimes transitions are like running through a wall.”
What WTS brings to these operations is a focus on profitability that was lacking when they opened. “Spas were put into hotels and resorts years ago mainly as an amenity,” says Henkin. “In today’s world, we hardly speak to a hotel or resort that isn’t interested in their spa making profit; and to make profit spas have to be operated as businesses.”
To make sure facilities see black ink, WTS tracks everything from average treatment prices and revenue per treatment room to capture rates. Percentage of revenue generated by retail is particularly important, says Henkin, and for hotel spas percentage of external traffic is also crucial. “The average length of stay in urban hotels is generally less than 1.5 days, and the challenge of getting those people to go to the spa when their time is so precious is enormous,” he says. “So if you’re not proactively marketing to a non-guest clientele as well as internally, your spa may never be profitable.”
Global expansion
For its first 35 years, WTS operated solely in US territory, and the decision to go abroad was initially one of necessity. “Because virtually all new-builds shut down in the US [in the economic collapse], it gently pushed us to test the waters overseas,” says Henkin. “It turned out there was a significant interest, and we’re now happily ensconced in places like Asia, Africa and the Middle East.”
China, in particular, has quickly become a key market for WTS – in just over a year, it has opened a luxury day spa near Shanghai and has a further 11 projects in the works. “The market there is thirsty for a company that can be a one-stop shop for design, pre-opening and management,” says Henkin. To be successful in the region, however, he is keenly aware of the need to be on the ground, and to this end the company will open a regional office in Shanghai early in 2012.
Elsewhere, the company has just launched its first spa in Australia – at Hayman, a luxury resort on the Great Barrier Reef – and also its first spa in Europe: the Acqua di Parma Blu Mediterraneo Spa at an exclusive yacht club in Sardinia. In coming months, WTS hopes to build its presence in Asia, Europe and Latin America in particular.
Helping to drive the company’s global expansion will be a recently announced tie-up with HVS, one of the world’s leading consulting and services organisations in the hospitality and leisure industries. Under the agreement, WTS will manage a new division called HVS Spa & Leisure Services in a straightforward strategic partnership – neither company is investing in the other, but while HVS benefits from WTS’ spa expertise, WTS benefits from HVS’ extensive global reach.
So far, so positive – but how is WTS coping with the staffing and other operational challenges that go hand in hand with rapid growth? “Yes, our spa service area is growing quickly,” says Henkin. “But we have a long history in the leisure industry… so our problem isn’t not having enough people – we have more great people who want to represent us than we have jobs. We have a reputation for being a very solid, secure brand, which is very supportive of its staff. I think [that] has been the catalyst for the hundreds of applications we process each year.” The company also recruits through recommendations from staff and clients, links with universities and participation in industry events such as ISPA.
Among WTS’ initiatives to retain staff are training opportunities such as WTS University, a business-training scheme for spa managers. Uniquely, it also encourages its management staff to support each other through a proprietary online system known as the Knowledge Network. If, for example, a spa director is looking for a fresh approach to seasonal merchandising, they only need enter a question and, within minutes, their peers will have responded with best practice examples and ideas.
Industry shake-out
As the spa industry continues to grow apace, especially with the advent of inexpensive franchise models (see sb11/3 p22), Henkin believes market saturation is a real threat: “There is potential for an over-built situation, much as there was for many years in the health and fitness sector… Certain markets are seeing that even now [and] that problem will be exacerbated over time.”
In this environment, he argues, there is an even greater need for spas to deliver more than just a promise. “Five or six years ago, revenue was up, margins were up and there was very little competition,” says Henkin. “The economy was great and there was lots of order-taking. Today all that has changed. If you don’t have viable marketing and programming, and great management and staff delivering great services all of the time, your spa will not make it. Some spas are going to go out of business… it’s happening now.”
Henkin is confident, however, that WTS spas won’t be among the casualties. “I’m very blessed to [be supported by] a group of extraordinary people who work exceptionally hard,” he says. “It’s a joy for me to come to work, and I’m not sure everyone who’s been in the same business for almost four decades can say the same.”
