Upper Austrian Thermal Spa Strategy 2010

The state of Upper Austria (OÖ) has restructured its investments and has, with the founding of the company “Upper Austrian Thermenholding GmbH” and with a wide ranging offensive within its touristic operations achieved the basis for implementing a coordinated integrated concept which is fit for the future within the health tourism arena.

Since the 1st January 2006, Markus Achleitner has been active as Managing Director of the Upper Austrian Thermenholding GmbH and has created the “UPPER AUSTRIAN THERMAL SPA STRATEGY 2010” as a guideline for the conceptional re-positioning of the three operations. This is based on an analysis of the three locations as well as already available location studies and basic parameters, and a comprehensive analysis of the market and competitive situation (as produced by the tourism consultant Edinger Tourismusberatung).

The starting position is as follows:

• The Upper Austrian Thermenholding GmbH includes the Eurothermen Bad Schallerbach (thermal spa), the Tassilo Kurbetriebe Bad Hall (health resort) and the Kaiser-Therme Bad Ischl (thermal spa)
• Three locations – with principally the same constellation each – thermal spa – hotel – therapy centre – in Bad Hall also a health resort
• Until now, there has been an individual location-related running of the three individual operations
• Bad Schallerbach has already been successfully repositioned; the other two locations need to be more strongly repositioned as regards services, also structurally
• Regressive developments in the social-security supported curative health resort sector together with a stronger dependency within the population and lack of private touristic alternative services
• Product & market based aging of the operations in question to be alleviated by a completely new re-conception for both locations together with an investment programme
• Intense national and international competition force exceptional solutions
• Business and regional economic responsibility of the health operations in the state of Upper Austria in a regional context as leading infrastructures necessitate a special responsibility by the state of Upper Austria for courageous proprietary development
• Company data of the three operations
  of the Upper Austrian Thermenholding GmbH 2006:
  ~ Company with approx. 615 members of staff
  ~ 33 m. euro total turnover
  ~ 33 m. euro total turnover
  ~ 330,000 therapies per year
  ~ 170,000 overnight stays

2.1.1. Demand Situation and Development

Increasing health consciousness in a wide segment of the population, together with the resolution to actively do more for ones own health is coupled with the individual’s willingness to spend more on their health. Without forgetting the general discrepancy between resolution and action, a stable demand for health tourism holidays can be supposed. How these demands, however, are going to become apparent is not yet clear as in addition to the tourist competition; there are also the non-touristic substitutes.

In the classic thermal spa regions of the Burgenland and the Steiermark (Styria), a stable market at best can be counted upon due to the local cannibalisation process among candidates (as well as through the competition from Hungarian and Slovakian thermal spa resorts).

2.1.2. Competitive Situation

The health & thermal spa tourism in Austria has in recent years shown a constantly growing competitive situation in general as well as for all kinds of services with concurrent increase in demand (exception: demand stagnation of 2003). In particular in the area of “thermal spa resorts & hotel spas”, the supply in Austria has grown tremendously.

2.1.3. Positioning and Target Group

• On the whole, on the Austrian health market there are only a few prominent touristic products / providers. It is also odd that approx 75% of the Austrian thermal spa visitors are day guests which points towards the only partly effective attraction of overnight stays in this large segment of the market
• Most of the thermal spas in Austria promote the destination and not the product process.
• Apart from the thermal spa resort Bad Blumau with its accent on international guests, the Austrian thermal spas are for the most part visited by Austrian guests
• In general, there is hardly any conclusive positioning in the thermal spa segment for Austria – one exemplary consistent health specialisation beyond the thermal spa segment is not apparent on the market at the moment

2.1.4. Positioning of the Operations of the Upper Austrian Thermenholding in the Competitive Comparison

• The operations of the Upper Austrian Thermenholding are predominantly directed towards “seniors”, in the touristic/recreational economic context as “traditional health resorts” locations with the disadvantage that they are not able to build upon a modern health profile
• While in the territory of the Eurothermen Bad Schallerbach and Bad Zell, the deferred product and image correction has already been started and implemented, such a “modern” attractive positioning for the locations Bad Hall and Bad Ischl is still outstanding
• The credibility within the health competence segment of the three operations is, however, very high due to longstanding experience in this segment and thus a good basis for specialisation in the corresponding health segment

With the recreational swimming pools, there are differing types to choose from:

• Outdoor water parks
• Fun pools (many water attractions such as slides)
• Tropical swimming pools (fun pools with luscious tropical greenery)
• Thermal spa fun pools (fun pools with thermal spa water)
• Thermal adventure pools (wellness bathing pools)

2.2.1 Water Parks

Water parks are usually outdoor facilities and one evolutionary step further than the conventional beach and outdoor swimming pool complexes. According to the norms laid down by the European Water Park and Recreational Swimming Pool Association (Europäischen Wasserpark- und Freizeitbäderverbandes - EWA) a so called outdoor water park must include:

• at least 3 water slides
• various water game areas
• at least 5 further water attractions (such as Lazy River, Wild River, hot whirl pool tubs, etc.)
• in addition to this, at least 2 – 3 pools with a minimum area of 1,000 m2

In the case of direct access to a lake or a beach, the pools can be omitted. The success of a water park depends upon the different age groups able to use the various water attractions together and also separately and that there is no target-group conflicts within such a water park. Water parks are gradually taking the place of the traditional outdoor swimming pools.

2.2.2 Indoor Water Parks / Fun Pools

Due to the climatic changes in central Europe and in the northern parts of the USA and Canada, these recreational swimming pools have developed along the lines of the large outdoor park programmes, in a more concentrated form. Inside the building, there are slides of all forms and sizes, water game areas, hot whirl pool tubs, etc. on offer. In addition to this, there are often intricate decorative themes such as Mexican or tropical.

The minimum equipment criteria for these kinds of fun pools are laid down by the regulations of the EWA:

• at least one slide 50 m in length
• at least 5 various water attractions
• various sauna complexes
• numerous pools with a minimum area of 700 m2
• an integrated architectural concept, which differs fundamentally in its execution as well as in the use of materials from conventional sport swimming pools
• thematic decor (e.g. tropical)
• large dimensioned relaxation and sunbathing areas
• gastronomic services in the bathing area
• wave machine or Wild River/Lazy River
• outdoor swimming pools
• solariums
• water temperature of at least 27°C.

The largest indoor water park in Europe is the Aquaboulevard in Paris, followed by Tropicana Rotterdam. In Germany, the blub in Berlin, the Maya Mare in Halle, the Monte Mare Swimming Pools, the Aquatoll Neckarsulm, the Atlantis in Neu-Ulm and the Laguna Badeland in Weil am Rhein are the most profitable in the trade.

2.2.3 Thermal Adventure Pools

Thermal adventure pools are swimming pools, which represent an evolutionary step on from the traditional curative thermal spa baths and are regarded by many as being the only economically viable business form. As a rule, the thermal adventure pools have a theme-based décor (such as the Taunus-Therme in Bad Homburg with its Japanese style) and adhere to a policy based upon an integral recuperation for body and soul. A further criterion for thermal adventure pools is a water temperature between 32°C and 38°C. Slides are mostly not included in thermal adventure pools, instead, relaxation and air jet loungers, numerous hot whirl pool tubs, fitness facilities, health seminar rooms and wide ranging sauna complexes.

Thermal adventure pools are on the whole not family swimming pools and mostly allow children only from a certain age onwards (e.g. from 14 onwards). The minimum equipment criteria for these kinds of fun pools are laid down by the regulations of the EWA:

• numerous pools with thermal spa water and a total pool area of at least 700 m2
• pool forms, not based on sport swimming pools but rather on more natural forms such as bathing coves and lagoons
• hot whirl pool tubs
• gastronomic services integrated into the bathing area
• complex specialist decor and an integrated architectural concept, supporting the set health-oriented and therapeutic targets
• at least 5 different, relaxation-oriented water attractions (air jet loungers, etc.)
• a wide range of solariums
• at least 4 types of sauna

As with all recreational facilities, swimming pools are subject to a relatively short life span (and becoming increasingly shorter). When in Germany, many swimming pools were erected according to the framework of the “Golden Plan”, and which were well-attended in the beginning, interest rapidly declined and today, these swimming pools have great problems keeping attendance figures up. Most of the attendance figures are a fraction of what they were when the facilities were opened.

This also applies for recreational swimming pools. They have to position themselves very quickly on the market and renew their range of services within increasingly shorter periods of time. Here, there is also a loss of interest if the regular customers are not kept in a “good mood” by continuous investments.

2.4.1 Basic Parameters for the Market-Related Development of the Austrian Wellness and Health Tourism

Socio-demographic, economic, societal as well as a branch induced developments create the basic parameters for future developments in health tourism in Austria. The following sketches the principle factors or developments which can be viewed as crucial for the market for the years to come.

2.4.1.1 Socio-Demographic Developments

Results:

• The target group “Seniors” is growing dramatically while the new-generation target groups (families with children, youth, etc.) are shrinking. The demographic changes in the last few years have resulted in a significant change in the touristic demand in seniors (60+): in this group in Germany, for example, a growth increase of 84% has been registered between 1972 and 2004
• People over 50 years of age have in comparison more readily available income (debts mostly paid off) at the same time are active and have discovered their “new-found egoism” (spending their money on themselves rather than saving up for their heirs – “the healthy young seniors”)
• The goal or lifestyle groups of the over 60s count as being the growth segment for the entire branch as, due to a growing life expectancy, higher spending power and increase in activity for this target group, the highest growth for the entire tourism branch has been prognosed (source: F.U.R. Reiseanalyse 2004)
• Increase – also forced – own responsibility by the individual due to two current developments: (e.g. Germany): Prevention Legislation; Austria: the public services are constantly being reduced on the one hand and on the other the taking over of health services by private insurance companies
• The relocation to city areas (care provision infrastructure) is happening in many areas, leading to a dramatic change in the living and working world of these proportions of society. One result is the change in recreational and holiday wishes; there is an increased demand for “experiences” with an “outside world” character
• The increasing singlisation of society leads to an increase of 1-2 person households at all age levels. Urbanisation, individualisation and singlisation demand recreational products which deal with emotional levels (harmony, social contact, etc.) and require especially adapted offers with individualised service/choices

2.4.1.2 Societal Changes

Results:

• Health, social contacts and recreation are the most important factors in life planning (more and more people are living in social isolation)
• Health /wellness, communication and recreational/entertainment products are being identified in countless studies as growth branches
• Health remains a “negative experience”: Health is only found to be of value in cases of illness, the preventional motivation is in larger portions of society rather unimportant
• New, pc-caused illnesses are on the rise: Complaints of the back, the musculoskeletal system, the eyes, increased illnesses in the hands such as Carpal Tunnel Syndrome, Chronic Fatigue Syndrome
• The changing role of the woman in society (increased proportion of childless women, in particular academics, working empty nesters, an increase in women living alone, also in the group 40++) is leading to a further increase in significance of “women” as a target group, whereby product modifications in tourism are urgently required
• The increase in consumer polarisation between experience/consumer and minimalism/functionality (situative decisions) is leading to a disappearance of middle-of-the-road offers and services
• The demand for as large a possible range of offers, available short-term (time economy, multi-optionality) is rising
• Changes in the living and working environment is leading to an increase in longing and the search for a contrasting world (such as city/nature) and alternating experiences (activity/passivity)
• The discrepancy between population layers having “a wealth of time” (with less readily available spending power) and monetary wealth (with little time) is growing
• Increase in orientation towards quality (source: F.U.R. Reiseanalyse 2004) is not only significant for the high price segment but also for the bargain hunters. This trend is strengthened by discount outlets. Due to the numerous intensive drops in user prices in many segments, the price awareness of customers has risen dramatically, connected at the same time to expectations of high quality
• Low-cost carriers and cheap holiday deals are leading to a further rise in mobility at reduced costs. The interest in holidays providing relaxation, recuperation, activity and a health dimension as well as education and culture has risen significantly between 1999-2002 (source: F.U.R. Reiseanalyse 2004)
The constantly rising level of education has a positive effect upon the number of holiday-makers in general

» Structure of the Tourism Market (GIF | 37 kb)

• Upper Austria adheres to starting an offensive growth strategy for the sector “Tourism and Recreational Economy” (T&R) and coordinates all necessary basic parameters for this in the areas of organisation, product development, marketing and financing
• High priority in all future developmental measures for the commercial “resident tourism”.
• Upper Austria recognises that “economic tourism“ is an elemental mainstay of the touristic added value, which in turn is an active support and can be further extended
• Upper Austria adheres to a necessary concentration of power on selected core themes which can be developed, coordinated and positioned competitively according to the most modern standards
• Upper Austria adheres to the necessity of development, attraction (and of the management) for the defined core themes of elemental infrastructures as a framework for an only thus possible development of the touristic superstructures (businesses) in the periphery
• Upper Austria forces the integrated product development and close cooperation, also regards marketing, between the tourist economy and public/private carriers (train/bus/excursion and cabin shipping/flights)

Goal Dimensions (GIF | 61 kb)

3.3.1 Growth Strategy

The “courageous” over proportional growth aspirations of the sectors tourism and recreational economy in Upper Austria, defined as the goal, requires a correspondingly attuned growth strategy on the basis of a focussed development of market oriented promising products/themes.

• A integrated range of tourist services is created from a number of clearly delineated and market oriented product/market combinations
• Products in the tourism segment can, from a macro-economic point of view, be classified as “themes”, which can be transported to the defined goal markets. From a macro-economic point of view, these themes are, according to specific target groups or marketing channel expectations, then transformed into concrete (useable/purchasable) individual products which in turn as a whole represent the “range” of the corresponding theme
• With this in mind, Upper Austria needs first to define those products/themes/markets with/upon which the implementation of the defined growth strategy on the basis of expected market growth per theme, as well as the necessary supply requirements available / to be accomplished for this need to be achieved
• Therefore, such themes need to be focussed upon with which, due to the recognisable market and competitive development as well as the available or attainable supply requirements in Upper Austria, the implementation of a growth strategy is possible at all

» Strategy T&R Upper Austria 2003 - 2010 (GIF | 26 kb)
» T&R Strategy Upper Austria 2003 - 2010 (GIF | 39 kb)
» Core Themes with National U.S.P. claim (GIF | 51 kb)
» Qualification of the Upper Austria Suprastructures 2003 - 2010 (GIF | 98 kb)

Upgrading /Relaunch of (Existing) Health Centres

• Close cooperation with medical specialists/doctors/therapists in the product development
• Infrastructural renewal and extension of the infrastructures (therapy and wellness areas) in the existing five traditional health centres
• Explicit and clearly differentiated (re)positioning of existing five traditional health destinations to one another and to the competition
• Development of niche competences in the areas of holistic medicine, health, exercise, fitness, dietary, education, psychology, etc.
• Specialised and individualised physical & mental fitness programmes with medical-therapeutic competence, with theme and target-group encompassing health offers (exercise, fitness, dietary, medicine, etc.)
• Intense guest care (fitness, dietary consultation, etc.) using competent fitness coaches

Development and Common Marketing of 20 to 30 Businesses with Adequate Wellness - Fitness Hardware as "Wellness – Supply Group"

• Forced further development, specialization, professionalisation
• Strategic cooperation with thematic partners (clinics, universities, service centres, etc.)
• Organised standard programmes for target groups
• Special programmes for competence niches (single events)
• Eventisation of the theme by networking with MICE

The Upper Austrian Thermenholding GmbH sees its task in the strategic integral management of the three operations in Bad Ischl, Bad Hall and Bad Schallerbach as well as the coordinated conceptional re-positioning of the three locations in the framework of the Upper Austrian Thermal Spa Offensive, along the lines of the already successfully implemented investments in Bad Schallerbach, the investments Bad Ischl and Bad Hall too will now follow – involving the management of the locations.

The Upper Austrian Thermal Spa Strategy 2010 establishes the principle points in the areas

• ORGANISATION & ECONOMIC VIABILITY
• CONCEPTION & RE-POSITIONING
• INFRASTRUCTURAL LOCATION DEVELOPMENT

And serves as a clear development concept for owners and management, upon which basis the decisions with regard to the management of the companies and the coming investment activity will be decided. Following headings represent the agendas of the Upper Austrian Thermenholding GmbH:

Cooperation, Synergies, Optimisation, Controlling, Strategy, Concept, Positioning, Integral Range of Products

• Definition holding structure with clear allocation of tasks on twofold management level:
  ”Holding-Management” & “Operative Location Management”
• Holding organisation to secure expertise and management synergies during implementation
• Location check and creation of an operative economic consolidation plan based on proceeds increase and cost reductions through increase in efficiency in Bad Hall and Bad Ischl
• Benchmarking on all levels (in the company comparison of the three locations)
• Potential in the conditioning in sales, marketing, distribution, etc.? “Best-practice = holding-level“
• Comprehensive controlling via implementation of a unified cost billing, together with standard reporting as a basis for the operative controlling
• Efficiency increase through optimisation, cooperation and usage of synergies via task bundling in the area of marketing, organisation, quality management and project management
• Creation of clear mutually tuned marketing & distribution concepts
• Reinforcement of the internal company communication via staff newsletter “Upper Austrian ThermenNews“, shared homepage www.ooethermen.at etc.

• Development of the three locations into a professional tourism company with superior health competence
• Creation of economically viable company concepts for each location
• Repositioning of the locations through “innovation“ instead of “renovation“
• Connection of the various partial ranges of offers into comprehensive touristic facilities --> resort building
• Comprehensive company concentration upon the private health tourism market
• Due to the various types of natural healing substances in the three operations, a completely differing positioning within the health area to take place? No cannibalism, rather an extension of three highly specialised health competence centres, above all in the following areas:

  Bad Ischl	saline & salt	respiratory tract, skin
  Bad Schallerbach	sulphurous thermal spa water	supporting apparatus and musculoskeletal system
  Bad Hall	iodine saline	cardio vascular system, eyes

• With this comes a competent range and depth of offers – the medical based preservation of health within the corresponding special area will become the product-based exclusive feature
• In addition, acquisition of a top level holiday ambience together with attractive range of wellness, relaxation and hotel offers
• All 3 operations are characterised by a top location with magnificent parkland complex whist having central location, whereby an enlivenment of the town and its infrastructure due to the influx of guests will occur
• Attaining of new goal or guest groups as an extension to the existing guest structure by rejuvenating the range of offers
• Increasing the number of off-season visitors by creating offers valid all year round.
• Development of a concept for centralised quality management for health tourism based on research and development together with a training programme?
• Upper Austrian Paracelsus Gesellschaft

• Based on the conception, for every location, a master plan with a medium-term perspective is to be produced
• Production of a technical status report on the existing objects
• Development of a economically efficient and, according to conception, required space and function programme
• 2006: Planning of both projects in Bad Hall and Bad Ischl and the development of the projects until building completion
• Building commencement: 1st half of 2007 – Building time: approx. 2 years each
• 2006 – 2009 planning & building of the “Botanica 2009” – Upper Austria Garden Festival in Bad Schallerbach
• With this, there exists a clear owner commitment towards a consistent self-development of the touristic control operation

• Thermal spa offensive to be successfully implemented and completed by 2009
• Repositioning of the operations and direction towards private guests market together with a relaunch of the locations from traditional to modern touristic health resorts and businesses.
• Upper Austrian Thermenholding with its three operations to be made into a professional and profit-making tourism company by 2010