The global wellness market has experienced significant growth in recent years. To capitalise on this trend, the public and private sectors in Malaysia are investing in infrastructure and local capacity to facilitate ongoing expansion.
Malaysia is a global leader in the wellness space and the country hosts a significant proportion of world-class wellness facilities. The treatment techniques, architecture, training, standards, and approaches used, which, as a whole, effectively constitute the Malaysian brand, are frequently taken as a reference point by health and wellness operators and developers from all over the world. In fact, distinct international companies are actively deploying the image of a tranquil oriental spa as a driver for consumers. Moreover, Malaysia has pursued a strategy of heavy investment in promoting the wellness industry, primarily via web-based media, as well as at prominent international exhibitions and conferences.
The global wellness sector continues to grow and is presently worth approximately US$3.7 trillion. In Malaysia, the health and wellness sector is already a billion-dollar industry and is projected to expand further in the coming years. The country has become a leading growth market for wellness tourism trips, with tourism spending and visits in this segment having grown at an average annual rate of 17 per cent from 2013 to 2015. Indeed, this economic potential has led the Malaysian Government to position healthcare more broadly as one of the country’s 12 National Key Economic Areas (NKEAs). Within the wellness industry, national authorities are placing particular emphasis on the spa business, which is expected to contribute approximately MYR400 million to the country’s gross national income by 2020 while creating 3,500 new jobs.
Data from the Global Wellness Institute shows that the Malaysian wellness tourism market is projected to grow at a rate of 12.8 per cent between 2012 and 2017 (see fig. 1). Despite this expansion, it is important that the country focuses on development to ensure that it mitigates regional competition from countries with strong growth rates in this sector, particularly Thailand and Indonesia.
Although a global front runner, the health and wellness industry in Malaysia is still in a nascent stage. The market is fragmented, with over 150 spa facilities which are either operated by local players or hotel and resort chains.
To provide a breakdown of the industry, 48 per cent of spa revenue is generated by massage services, with spa owners identifying a trend towards traditional massage treatment. According to PwC, approximately half of spa visitors are international tourists: 64 per cent of whom are female and 36 per cent male.
At present, a high proportion of day spas are local businesses and the number of these franchises is growing rapidly. Day spa membership is commonly in the form of prepaid packages, which is seen as crucial for maintaining cash flow. As most entities are small and low budget operations, quality has been highlighted as a potential hindrance to growth.
In contrast, the growth of destination spas, which are spa businesses located in resorts and hotels, has been driven by the increasing number of hotels in Malaysia. Users of destination spas are largely hotel patrons, as well as individuals with outside membership arrangements. Furthermore, local businesses are emerging in this market, as they are able to apply local knowledge to brand development.
Challenges and changes
The Malaysian wellness industry is facing a number of challenges, particularly in terms of combatting a negative perception of the industry. Many Malaysians, especially among the older generation, still associate spas with the sex industry. This is exacerbated by the fact that many wellness centres are not regulated, which, in turn, perpetuates the belief that spas are not professionally managed. The negative perception also hampers recruitment, due to the stigma attached to the industry.
However, the Malaysian National Spa Council, which is comprised of members from the public and private sector, was set up in 2011 to address these concerns and elevate the nation’s spas to comply with international standards. The Council has developed an official criteria rating for spas that is now used by the Ministry of Tourism and Culture to promote quality spas to tourists and potential investors.
As highlighted, another challenge is regional competition for international consumers. Thailand is positioning itself as the ‘Spa Capital of Asia’ and is one of the top ten wellness tourism markets in the Asia-Pacific region. Wellness constitutes one of the four main sectors of the Thai tourism industry, with the number of wellness trips to the country reaching 9.7 million in 2015.
One issue inherently related to local competition is the wellness workforce. Due to many factors, including industry perception, the Malaysian spa industry relies predominantly on foreign labour, whereas its Thai and Indonesian counterparts principally employ local workers.
Another problem facing the industry relates to bureaucratic obstacles resulting from well-intended efforts to regulate the sector. Certain stakeholders have suggested that guidelines and rules that inform the licensing process are, in fact, hindering industry growth. In order to represent their interests, Malaysia’s spa and wellness community created AMSPA, the Association of Malaysian Spas, in 2004, to champion the spa industry and highlight its main ongoing challenges.
Finally, Malaysia lacks a recognisable brand in the field of massage, unlike a number of its neighbouring competitors. ‘Products’ such as the Thai massage, Balinese massage or Hilot massage from the Philippines are globally reknowned. As a consequence, this has been identified as a key development area.
The wellness industry is becoming more sophisticated and is increasingly integrating with new lifestyle property developments. Consequently, Iskandar Investment Bhd has created the Healthcare & Wellness Cluster to capitalise on related opportunities. The 210-acre Medini Integrated Wellness Capital, developed by Eastern & Oriental, is a fully integrated community featuring a wide array of residential configurations, 18 acres of commercial development and a 12.5-acre wellness sanctuary, all bordered by a mangrove forest.
Complementing the Medini Integrated Wellness Capital is a 4.6-acre urban wellness center located between the Mall of Medini and Gleneagles Medini Hospital. This development will include commercial retail establishments favouring wellness-related concepts, an urban wellness spa and corporate training retreats.
Additional developments include a Lifestyles of Health and Sustainability (LOHAS) project, named Boga Valley, which, when complete, will comprise a wellness retreat with an array of treatments. Developers also plan to establish a centre of excellence to provide training to the medical fraternity in the fields of stem cell research and biotechnology.
Such endeavours reflect the growing opportunities for new and existing operators in Malaysia to attract wellness patients and consumers, not only from within the country, but also from other regional and global markets.
An outlook for the future
With the increasing demand on healthcare services across Malaysia, consumers are looking more actively towards alternative means of maintaining their health and wellness. Thus, spending growth for wellness treatments in Malaysia is predicted to continue, driven by both internal and external factors.
The external factors include growing demand from foreign nationals travelling to Malaysia for medical tourism (see fig. 2), which will, undoubtedly, give rise to increased wellness spending. Internal factors relate primarily to rising household income in Malaysia (see fig. 3), coupled with the increase in so-called ‘Western lifestyle diseases’.
The Malaysian Government is also supporting the growth of this sector. As stated, healthcare is an NKEA with investment and policy prioritised in this area, and a number of other wellness projects are planned in line with the Economic Transformation Programme. Furthermore, the Malaysian Healthcare Travel Council (MHTC), a government-backed entity, offers information on integrated wellness packages and other services and is mandated to facilitate industry growth and ensure visitors have a seamless end-to-end experience.
Commitments to regional integration, as well as the aspirations of Southeast Asian governments to grow medical tourism, have resulted in a regional relaxation of regulatory restrictions to attract foreign investment. Malaysia has already built an international reputation as a medical tourism hub, with particular emphasis in specific countries. For example, the country remains the most visited medical tourism destination by UK patients, with 8.5 per cent of all British medical tourists travelling to Malaysia for treatment.
The challenge for health and wellness providers in Malaysia relates to economics, as well as service delivery; participants must manage a supply of limited resources, while adhering to an optimal service delivery model. With increasing dual demands relating to financial sustainability and growth, it is pertinent that the service portfolios of health and wellness organisations provide the foundation to revise and optimise their service strategy. Health and wellness providers should look at their services and assess whether they are offering appropriate wellness practices that equate to consumer demand. Moreover, new entrants to the sector should undertake a complete market assessment to determine the most efficient pathway to follow.