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Global Hot Springs Forum Breakout Discussion Forums: Global Hot Springs Monday, October 7, 2013 Grand Ballroom Facilitator: Charles Davidson, Founder and co-owner, Peninsula Hot Springs, Australia Panelists: Yoshiharu Hoshino, President, Hoshino Resorts Co., Ltd, Japan Peggy Liong, Group Executive Director, Mission Hills Group, China Tomonori Maruyama, Chief Research & Manager at the Research Institue, Mitsui Knowledge Industry Co., Ltd, Japan Marion Schneider, CEO and co-owner, Toskanaworld GmbH, Germany Peter Sharplin, General Manager, Queen Elizabeth Health, New Zealand

The Global Hot Springs Forum was designed to provide both an introduction to this industry segment and an outline of the opportunities and avenues for potential global cooperation and growth. The forum was divided into three components. The first included four brief presentations by industry representatives. The second outlined some global industry initiatives that could be good for industry growth and evolution. The third was an open discussion. Charles Davidson, Founder, co-owner Peninsula Hot Springs (Australia) provided an introduction to the forum and a global overview of the industry. Davidson advised that hot springs are to be found in almost every nation of the globe. This phenomenon occurs as the centre of the earth is approximately 6,000°C and the heat radiates out. On average the temperature rises 4°C for each 100 meters one goes into the ground anywhere around the earth. Broadly speaking there are three main cultural approaches to the use of hot springs including: relaxation and connection with the natural environment (Asian); medical/health based treatments (Europe) and spiritual and religious connections (India and indigenous cultures). Globalization in the hot springs market is seeing a blurring in these distinctions.

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Davidson provided an estimate of the global hot springs market size, based on statistics from Japan, China and Europe, at $US50.4 billion in 2011. It was noted that this figure was similar to the total GSWS estimated global spa market size of $60.3 billion in 2010. In 2011 there were 3,108 hot springs regions in Japan and 13,754 hot springs accommodation businesses. One of the most popular hot springs facilities in Japan, Oedo Onsen, had an annual turnover of US$160 million in 2011. Total Japanese industry turnover was US$11.86 billion in 2011. The Chinese industry has 3,100 registered hot springs facilities in 2011 with a total industry-estimated turnover of US$11.52 billion. Europe has more than 1,000 hot springs venues with an estimated annual turnover of US$19.03 billion in 2011

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Tomonori Maruyama, Chief Research Consultant and Manager, Mitsui Knowledge Industry (Japan), provided a presentation on the topic, ‘Business innovation in the Japanese Hot Springs Market’. He advised that the hot springs day and overnight facilities represented 54.9% of total spa service market in Japan. Maruyama presented the programs and services of Hoshino Resorts as a case example of innovation. Hoshino resorts provide four key elements of wellness including healing, beauty, health and food. They have three main wellness programs, a ‘Diet Cure’, ‘Mental Cure’ and ‘Stress Cure’. Drawing on his own experience on the three day Diet Cure Maruyama showed that he lost 2.1 kg. 94.1% of participants in this program lose an average of 2.2 kg. The key elements of this program is chewing food more completely (50 x), meditation before breakfast and including rice as a greater percentage of every meal. The new eating and breathing habits learnt during this program saw a continuation of benefits with a further 2 kg lost over the three months after its completion. The Hoshinoya Mental Cure program focuses on slowing down and spending time on aesthetic practices, self-awareness and the experience of medicinal food, tea and hot springs bathing. Central to mental cure is developing a connection of self to culture and the environment achieved through visits to a Zen Temple, traditional incense house, receiving acupuncture and practicing meditation in the morning.

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Maruyama verified the effects of the program by electroencephalograph, the results of which showed a significant improvement in levels of meditation and brain-wave attention. His finding showed a positive case example for Ryokans as wellness destinations.

Maruyama suggested a co-innovation model for the development of wellness programs and new services utilizing evidence from hot springs scientists and working with doctors, IT consultants and journalists. Yoshiharu Hoshino, CEO, Hoshino Resorts, (Japan) provided an overview of the REIT (Real Estate Investment Trust) that his hot springs hotel group is using as a financial vehicle for national and international growth. Hoshino Resorts operates 30 hotels in Japan under three brands, Hoshinoya (a high end Japanese hotel with old/new flair), Kai (traditional hot springs Ryokan inns) and Resonare (with a family focus). The REIT is helping with expansion into Bali and Marunouchi in the centre of Tokyo. Hoshino maintained that collaboration between different industries is important to encourage innovation within the spa business. He advised that the work they are doing with Mitsui Knowledge Industries is a key component of their innovation strategy.

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Peter Sharplin, General Manager, QE Health, (New Zealand) presented on the clinical evidence for Balneotherapy, which he defined as the practice of soaking in thermal mineral waters which contain at least 1 gram per litre of minerals and are usually at a temperature of around 35°C. Sharplin provided a framework by introducing the evidenced based medical research hierarchy (pyramid) with systematic reviews at the pinnacle. He presented a large number of systematic reviews into Balneotherapy and focussed on the most recent two major reviews, Bender et al 2013 and Falagas et al 2009. Falagas looked at a wide coverage of clinical conditions while Bender focuses on musculoskeletal conditions. In the review of 25 studies Falagas et al’s findings showed 100% positive outcomes for clinical improvement, pain improvement and quality of life improvement with over 85% of the findings considered statistically significant. The Bender review concluded ‘that balneotherapy with Hungarian thermal water is an effective remedy for lower back pain, as well as knee and hand osteoarthritis.’

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An observational study in Italy, NAIADE, collected data from 23,680 clients at 297 certified Italian Spa centers with a follow-up after one year. This study showed a major reduction in hospitalizations, sick days off work, and pharmacological drug use. Sharplin recommended more high-quality large studies comparing balneotherapy with active treatments such as pain drugs. He also suggested studies in psoriasis and other non non-musculoskeletal health conditions.

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Global industry initiatives Before opening the floor up to questions Charles Davidson introduced three initiatives that could be used to raise the profile and awareness of the global hot springs industry: (1) Global Hot Springs Logo A standardized hot springs logo has been utilized by the Japanese industry for well over a hundred years and has been taken up by many hot springs in Korea and some in China, New Zealand, United States, Australia and other countries. This symbol is available to be used, free of charge, by hot springs from any country. It provides a means to communicate to consumers, beyond any language barrier, that the location has real hot springs. The symbol will be available for download from the GSWS web site. It can also be copied from here:

(2) Hot Springs View Dials In the new age of global marketing the best way for an industry to grow is to work cooperatively to be found on-line and to encourage word of mouth referrals. View dials help generate global referral networks that can be physical (bronze view dials) or digital (with active web links between hot springs).

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View dials have been created for eight countries, and can be generated for any country or individual hot springs wanting to connect with both the domestic and international hot springs industry. Countries for which view dials have been created include: Australia, Canada, France, India, Iran, Japan, New Zealand and United States. How to use the interactive Hot Springs view dial: You will see that each arrow that goes from the center map to the outside circle represents a hot springs property. The name of the hot springs property is given on the arrow as is the distance and directions from your starting point ("datum point") to other hot springs all over the globe. The "datum point" hot springs is marked in red on the maps.

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(3) Global Hot Springs Industry Philanthropy In many developed nations of the world hot springs play an important role in the provision of recreation and wellbeing services. Communities around which hot springs are found are enhanced by a significant flow-on economic benefit (economic multiplier) as people stay, eat and play longer as a direct result of the hot springs presence. As globalization of the hot springs industry evolves there is an opportunity for leading hot springs companies and countries to assist developing nations in harnessing the natural gift of hot springs in community development. A small financial and skills contribution by leading hot springs companies could help establish hot springs in developing nations, thereby fostering international understanding and global community. A number of potential hot springs sites were identified in developing nations including:

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Open Discussion Forum Peggy Liong, Group Executive Director, Mission Hills, China, currently the biggest spa and hot springs resort of the world, provided a brief on the significant sustainability initiatives incorporated into the design and operations of Mission Hills. James White, a Hot Springs Research and Development Consultant, James D White Ltd, New Zealand, provided an update on the “Global Best Practices in the Hot Springs Industry” research project he is engaged to complete over 2013-14. This involves extensive research of hot springs bathing facilities and practices throughout China, Japan, United States, Canada, India, New Zealand, Australia, Europe and the Middle East. The outcome will be the identification of key physical, cultural, ethical, operational and regulatory elements required for commercially sustainable hot springs business development and growth. These findings will then be applied to specific businesses in Rotorua, New Zealand, and Victoria, Australia to facilitate industry and economic growth. In Victoria the findings will provide a blueprint (guide) for the future development of the industry across the State. The research undertaken to date throughout Australasia, Asia and North America has identified significant diversity around what features constitute a successful hot springs bathing facility. Facilities offering a simple bathing experience (change rooms, showers and hot springs pool or bath), with a primary focus on cleansing and relaxation, are usually providing a secondary support service that often complements other tourism activities. In this segment there is a low tolerance for price variation and the cost of entering the facilities is low. When bathing becomes an iconic or primary activity facilities appear less bound to culturally expected bathing prices and are able to achieve significantly higher than average customer spends. An iconic or primary activity facility achieves this by providing some sort of bathing journey, often by incorporating a collection of popular global bathing features and or a diverse range of complementary fun, non-bathing entertainment features. “The Global Best Practices in the Hot Springs Industry” research has been collaboratively funded by private and public sector businesses from New Zealand and Australia. The last stage of the research includes European and Middle Eastern and will be undertaken in early 2014. Subject to finding suitable additional funding the research could be extended to include South America and Africa to give it a truly global perspective.

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This project will enable its funders to understand the diversity of global hot springs bathing practices and how businesses throughout the world are harnessing opportunities to achieve sustainable commercial returns from their investment in hot springs facilities. Marion Schneider, Founder and CEO, Toskanaworld, Germany discussed the need to find clarity in relation to definitions of hot springs and other key terms relating to them. Referring to Peter Sharplin’s paper on the evidence for balneology, Schneider suggested that the existing key evidence-based studies conducted in various languages should be evaluated and important ones translated into multiple languages such as English, Chinese, Japanese and German to make them available to the global hot springs community. Laszlo Puczko, Co-founder Xellum, suggested that the large body of research work by the Hungarian spa industry should be used as a key source of base data for the definitions in the global hot springs industry. Professor Marc Cohen, leader of the postgraduate wellness programs at RMIT University in Australia, commented that most research to date has been on balneotherapy and treatment of disease but that little is known about consumers’ motivations for using hot springs for wellbeing. He suggested that an electronic global survey of existing hot spring patrons could be conducted to obtain data on demographics, frequency of visits, amounts spent, reasons for going (relaxation, social, culture, nature, specific health issues, etc.), perceived benefits, risks, expectations, etc. Prof Cohen further suggested that the Hot Springs Industry could get together to support a competitive PhD scholarship (this requires a commitment of around $30K/yr for 3 years) to support hot springs research. Potential scholars from any university could then submit research proposals and a committee (made up of the funders) would select the best candidate. This would support ongoing strategic research into hot springs as well as help develop highly educated and articulate individuals to promote this research. Charles Davidson 30 October 2013