Friday, October 26, 2007
The Red Square Economic Index
Have you checked the Red Square Economic Index (RSEI) lately?
Real estate is down 99%, hotels and resorts are up 99% and spas are up 70%. And while I'm certainly no Alan Greenspan, I do see my small business as a crude barometer of the economy.
When I started 10 years ago, my biggest clients by far were high-end real estate firms, residential builders and interior designers. Aside from real estate-related clients, I might have shot just one spa and one hotel in those early years. (Spas and hotels probably overlooked me since they seemed to prefer the cold, sterile images resembling hospital rooms and crime scene photography more than anything else.)
Jumping ahead to 2007, I haven't heard from a realtor nor builder in the past 24 months. But in that same time period, I've shot about 10 resorts and six spas.
So, what does the RSEI show for the short-term?
Despite the irrational exuberance of the early part of the decade, everyone knows the real estate market has been depressed and this sector's promotional dollars are spread thin. (Instead of descriptors like "ultra-exclusive luxury enclave," realtors are now opting for cheaper adjectives like "nice neighborhood.") Consumers are equally scared when it comes to real estate but seem quite content with spending a few thousand on a 5-day luxury vacation so the hospitality sector is flourishing. Home builders are worried that they might have to sit on their creations for a few months before they sell but resorts know their bookings months in advance, making them much more comfortable with spending on marketing.
What does the index predict for the long-term?
With a few more resort shoots on our schedule before the end of 2007, we forsee continued opportunity in the hospitality market. But the real growth will come from the spa and healthclub industry.
While a hotel guest might spend $400 to stay in a nice room from 3pm to 11am the next day, a spa can make that in two hours with one couple's massage/pedicure package. And with more hotels realizing the potential of the spa industry (including the neglected men's market), they're applying bigger budgets in design, equipment, staff and, you guessed it...marketing.
We just shot Rosewood's beautiful ESPA at Acqualina and were thrilled to find dark woods and halogen lighting in most areas——a welcomed relief from the accountant-friendly headache-inducing florescents that many spas surprisingly use. The Bisazza-inspired mosaic tile in the ladies' ice bath shown above is further proof that spas are finally paying for real interior design talent, which translates into real dollars when the soothing atmosphere makes people come back for more.
Since distribution channels like Travelocity, SpaFinder and others rely heavily on photographic images to separate the good from the mediocre, I can predict a sharp spike in the RSEI relative to the spa industry.
Stay tuned for our next RSEI report due out in 2017. By then, the real estate market will bounce back and our mailboxes will once again be filled with ultra-exclusive adjectives.