Partnering/Branding/Operating: The Dilemma


Hotels aligning themselves with other brands seems all the rage at the moment despite its risky potential.

Take for instance the unlikely partnership between Bally Total Fitness and Hilton Hotels announced a few months ago. Hilton guests will be able to work out with a Bally personal trainer at the hotel or at a local Bally. Bally also designed an in-room exercise program for Hilton guests. I can't help but wonder about the thought process that led to this partnership decision.

Hilton Hotels prides itself on luxury, service and upscale properties. Bally, on the other hand, is a low-cost fitness provider and, therefore, a low service provider. Historically, Bally Total Fitness has targeted the 18- to 25-year-old market in its television ads. Additionally, Bally is currently under investigation with the Securities and Exchange Commission and will have to re-state financials going back a number of years.

Unfortunately, if you don't control the brand, you risk being tarnished by what is not in your control despite the intentions and potential. This is especially true when talking about the health club and spa industries. Brands in these industries haven't been around for a long time, and no one knows what they will look like in the future.

When I speak to real estate and hotel professionals who aren't familiar with the health club industry, they sometimes confuse Sports Club Co. (whose clubs go by Sports Club/LA) with LA Fitness — so how strong is branding in the health club industry? It doesn't compare to the hotel industry. It seems everyone is for sale, so when a new owner comes in, will the brand have the same direction? Will they care about their properties located in hotels as much as they care for their larger, more profitable properties?

The risk also exists when you align yourself with a line of equipment (although maybe not as much now since there has been so much consolidation in the industry). Maybe you were with Flex — oops, now it's Star Trac — or you were with Trotter, but now it's Cybex, or maybe you were with Body Masters, but now it has filed bankruptcy. Can you imagine how franchisees would feel if you made them buy a particular brand of equipment and that company went out of business? Corporate had better do its homework.

Spas and hotel chains have also formed partnerships. Starwood bought Bliss for its W hotels — nice match. For the reported $25 million purchase price, I would love to see the effect on occupancy and how the spa affected that. The deal, however, may have been more to own a stand-alone profit center, deliver a superior room amenity with soaps and shampoo, and build a package that would justify a higher room rate. One exec from the Bliss and Starwood organization said that his goal was that when guests check into a W, they know that they also get all of these other brands. Is the brand of the hotel not strong enough on its own? Is this what travelers want? They were extremely successful in developing their own hotel brand; I was surprised that they didn't develop their own spa brand.

Regent seems to have developed a relationship with Guerlain. Now I understand that LVMH (prior owner of Bliss) wants to put that brand up for sale. The perfume division may be separate from the spa division, but whatever direction the new owner of the perfume division takes will definitely affect the perception of the spa brand. Other hotel chains are reviewing brands in the spa industry to develop strategic relationships — again, risky when you have no control over the other brand.

Look at Elizabeth Arden, a long-standing brand in the spa industry that was purchased by North Castle Partners not long ago. The Wall Street Journal ran a story in January about some of the troubles North Castle Partners has had, especially when it purchased another large salon chain and became somewhat integrated and separate at the same time. Arden became very corporate with standard operating procedures. The staff didn't agree with some of these changes, such as discouraging spa workers from talking directly to the customer. The article quotes a former Arden customer who now uses smaller, independently owned salons/spas as saying, “The independents have a much friendlier environment.”

It appears that working with a brand is not the home run some people think it is. With brands, especially in the spa business, you have to look at the next generation of spa visitors and how — or if — they will relate to an aging brand when so many new players keep entering the market. Will the brands keep up, or will they have to reinvent themselves like Arden is trying to do with its new Red Door spas?

One solution may be for hotels to develop their own brands that they can control, something Fairmont Hotels did with Willow Stream. Perhaps more hotels will try this in the future.

Glenn Colarossi is the president of Colarossi Spa & Health Club Consulting & Management. He has worked on projects throughout the world for five-star clients. He can be reached at 203-357-7555 or at

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