spa ala MeridianSpa

Filed in archive Entrepreneurship on October 31, 2004

I've been watching the development of a Hamburg based Wellness and Spa chain called Meridian Spa for some time now. Hamburg is one of the most competitive places for fitness and wellness centers in Europe. It features steady bad weather during the winter months, has one of the highest average GDPs in all European cities and many heath-aware Europeans.

Many "fitness only" chains are competing in the marketplace providing mostly running and exercising opportunity with a basic sauna for a subscription rate of 30 -40 EUR/ month. Within this environment Meridian Spa has successfully conquered the premium niche by combining fitness and wellness in a spa environment. The huge complexes features extensive training options on multiple levels, 5-7 saunas, pool, massage, solarium, and cafeteria's alls filled with premium services.

You might say too expensive to finance but the huge sunk costs in the centers seem to pay off finally as members virtually storm the centers in the beginning of the cold half of the year looking for light and refreshing warmth. The subscription rate for Meridian Spa's hovers around EUR 89 per month/ member. The interesting fact is that the subscription fees (irrespective of any actual usage) are deployed industry-wide and pretty much accepted by customers.

Considering each spa attracts around 5000 members - a center collects EUR 5 million per year in member fees. Building the complex might be extensive but bank loans are usually readily available for real estate projects. It's not so easy for me to determine the running costs (service personnel, water and energy costs) but assuming the center "burns" EUR 5000 per day this comes to EUR 1.85 million. So there still seems to be enough profit to repay the loans from the recurring revenues. The chain just ventured out to Berlin recently. So watch out for openings in your city...

And btw if you happen to be in Hamburg in winter don't miss taking half a day out in Meridian Spa you won't be disappointed...