Espa: taking on the world

SELLING A MINORITY SHARE TO A DUBAI-BASED COMPANY HAS OPENED UP NEW MARKETS FOR ESPA.  ANNETTE HANFORD REPORTS

Following the recent sale of a 40% stake in Espa to Dubai-based Istithmar World Capital, you'd be forgiven for thinking Susan Harmsworth would be relinquishing some of her responsibilities as chief executive, and taking a step back from the spa product, treatment and design company she founded.

However, this could not be further from the truth, as she's now working harder than ever. The company's globalisation might mean there are more people employed, but Susan (left) - who is still very involved in spa design and product development - says they still continue to need leadership and teaching.

Until now, Susan regularly declined offers from companies wanting to buy or invest in her business. "Running at double-digit growth, we felt we could have run another couple of years without taking investment. However, we felt if we were to take outside investment, it would be because we wanted to get bigger and expand globally."

There is a huge boom in the spa sector, with many more players coming into the market, but many, she says, don't have the experience to succeed. "There is a lot of damage being done to the industry, huge mistakes with capital spend and white elephants being built.

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THE RIGHT PROJECT

"However, latterly, we were turning down projects we shouldn't have been, either because they were geographically difficult or we didn't have the right staffing in that part of the world. We were also approached by several skincare companies worldwide, but I felt Espa would have got swallowed-up and maybe compromised. I wasn't interested in selling the company, so when Istithmar approached us, I originally said no."

With upmarket medical facilities already within its portfolio, Istithmar wanted a spa company to complement its wellness and health aspect. 

"Subsequently, I was asked if I would consider selling a minority share, and that's what we did. One of the main reasons for taking the investment was because I felt Espa needed to take the opportunity of where it was as a company - we were regarded as probably the most advanced spa company in the world in terms of profile, type of partners we have contracts with, and our structure within the company. There are very few companies that do what we do." 

Signing the deal has lead Espa to about 30 projects throughout Africa, The Middle East, Asia, and America. 

"Because we are going global, we need to open warehousing and training schools in all the markets.  We already have minor hubs in Hong Kong, San Francisco, and Miami, and we are opening Dubai as we speak. We have warehousing in Atlanta in the US, and we will have, by the end of this year, in Dubai and Singapore as well, which means we can do global distribution. We've already got our licensing for China, Russia and Japan, so much of the investment was to grow that side.

"We are also expanding our manufacturing here in the UK.  There will be a new factory in Somerset four times the size of the original one. Our distribution worldwide is now 55 countries.

"Most of our global growth is with Espa managed spas. We now have 70 under construction around the world. It's very spread out -there are eight in China, 10 in India, along with South America projects. Eastern Europe is also very busy for us - Latvia, Lithuania, Croatia, and Romania - we've probably got another 20 in that part of the world and a further 10 in the US. About 90% of them will be managed, branded spas, where we also look after the management.

NEWEST MARKETS

"We manage all the projects we design. We don't do one without the other. We will still do product-only accounts occasionally, but they have to meet our criteria, since we found the consumer was getting confused with standards. 

"Because we are called in to do concepts right at the beginning, we're automatically in the newest markets. The global growth is China, India, Russia and Eastern Europe - we are already doing that.  The newest markets coming up are places like Kazakhstan, Turkey, South America, certainly Costa Rica, Dominican Republic and Panama. The Africa business is interesting too, areas like Zanzibar, Djibouti, and South Africa. 

"Looking at our existing markets, the UK turnover - where we started - is excellent. I think the quality of UK operations is really going up. 

"Going forward, standards are going to be the big problem.  However, we don't have a problem with recruiting therapists because they all want the training and they all know the brand. For example, we have a lot of openings coming up in Dubai, so we thought we'd research the market and place a small ad. We had 700 local applicants, all of a really good calibre. 

"To combat another foreseeable problem - a lack of good spa directors - we've set up our own school and spa directors' course. At the moment training is here in the UK. However, as our schools and hubs get established globally, I'm sure we will roll them out."

It's not the spa business per se that does it for Susan, but meeting interesting people around the globe. "Whether it's for PR and being interviewed by a journalist or meeting a chemist for product development, it's fascinating. It could be discovering the culture of a therapist in the middle-of-nowhere in an obscure country, or a design meeting with an architect, it's all so interesting. I really don't get bored."

PICTURES: Susan Harmsworth; ESPA products

INTERIORS: The Peninsula Spa by ESPA in Bangkok, Thailand