Michael Lahm [00:00:20]: Hi, I am Michael Lahm, I am the Vice President and Chief Operating Officer of TLEE Spas, and for me, it’s a matter of focus.
Kelly Kovack [00:00:33]: The global wellness economy was a $4.5 trillion market in 2018, representing 5.3% of global economic output and growing. I’m Kelly Kovack, founder of Beauty Matter. Wellness has become a dominant lifestyle value that is profoundly changing consumer behavior, evolving categories and markets, and mainstreaming concepts and modalities and products that were once considered fringe. The spa industry has been preaching beauty from the inside out for decades; the rest of us are just catching up. The spa economy has seen a dramatic increase as consumers are drawn to self-care in response to hectic, over-connected lifestyles. Michael Lahm has been on the forefront of the spa industry since his role as the managing director of Bliss at its inception in 1996. Known for exquisite taste and insatiable curiosity, he combines operational and development expertise within a broad spectrum of the spa, beauty, and hospitality landscape. Today, Michael is the COO of TLEE spas, conceiving and implementing new spa and wellness experiences from concept through completion.
So, Michael, thanks for joining us today.
Michael Lahm [00:01:54]: My pleasure.
Kelly Kovack [00:01:55]: So, I feel like we have to give our listeners a little bit of context about our relationship, because it goes back a long time, probably longer than we care to admit.
Michael Lahm [00:02:08]: Yeah, I would say so, absolutely.
Kelly Kovack [00:02:10]: I mean, actually, if I think about it, you were one of the first people I met moving to New York, and we both met working on the sales floor of Bergdorf Goodman.
Michael Lahm [00:02:24]: Yes, indeed.
Kelly Kovack [00:02:25]: And, you are really sort of how I fell into the beauty industry.
Michael Lahm [00:02:28]: That’s so interesting. I guess so, I mean, yes, that’s – as things happened back in the day.
Kelly Kovack [00:02:35]: Yeah, because I was in fashion, and we were both in our 20s, sort of kind of going from job to job, figuring out what we didn’t want to do in our lives, and you were – had taken on a new job to run what was going to be the Bliss Spa.
Michael Lahm [00:02:55]: Right. Originally, let’s face it, yes. So, that was sort of an interesting happenstance. A friend of mine was actually seeing Marcia for facials, Marcia being the founder of Bliss, and at the time – I didn’t last as long as Kelly did at Bergdorf, for lots of reasons, so I was in the hospitality business running front office, and it was in the context of speaking with Marcia during our treatments, talked about coming to work for her and really just sort of managing the skincare studio, which eventually morphed into kind of a full-scale kind of urban day spa called Bliss, so yes, that’s how we both got into this industry.
Kelly Kovack [00:03:39]: Yeah, you know, I think it’s also – I think for both of us, was kind of this defining decision that kind of has led us onto the path that we had, and I don’t really even, I mean, I can speak for myself, for me, I’m like, I didn’t know if it was going to work out or not because I had never worked in beauty, there was no such thing as a catalogue where you sold beauty products. I know when we were talking about Bliss, we were just hoping that people would make appointments, because it was, you know, I think Marcia is a visionary. She really kind of upended the spa industry.
Michael Lahm [00:04:18]: Yeah, I think it’s her kind of vision that she stuck to and executed on, and I think it was, you know, a drive like no other. I think those two kind of aspects of her personality really are what kind of made Bliss what it is, and it was the time and place too, right?
Kelly Kovack [00:04:33]: Exactly. You know, I think it was right time, right place.
Michael Lahm [00:04:37]: It was the go-go ‘90s.
Kelly Kovack [00:04:39]: Yeah, it was also like the right group of people. We were all sort of around the same age. I think what Marcia was building, like we just got it, inherently, and we just sort of…
Michael Lahm [00:04:52]: Rolled up our sleeves and did our best to try to make it happen.
Kelly Kovack [00:04:57]: Yeah, that was in 1996, so now I’ve totally outed us.
Michael Lahm [00:04:59]: We’ve aged ourselves, I know. Oh well.
Kelly Kovack [00:05:01]: It was pre-internet, you know, and when I think of the word “disruption,” which gets thrown around so much, I find myself kind of outing my age repeatedly, because when we were at Bliss, Bliss was the ultimate disruptor, you know? It’s like, I got told, “You can’t sell anything through a catalogue,” and we created a new distribution channel that didn’t exist before, and sort of almost set up the internet, like when we made the transition to sell online. It was a totally new distribution.
Michael Lahm [00:05:39]: Yeah, because originally it was a pure phone order proposition. I remember putting the stamps on and doing the wafer seals.
Kelly Kovack [00:05:47]: I mean, some of the stories of things like, I talked about a bunch of 20-somethings that like…I think sometimes, being naïve, if we knew what we were doing, we probably wouldn’t have done half of the things that kind of made Bliss what it was, and also from the spa side, I think it’s really interesting to have the historical perspective, but like, can you share sort of, you know, what it was like, in that time and place, in the spa industry?
Michael Lahm [00:06:20]: Sure. So, we are going back to 1996, and we are going to a pre-internet era, and I think from a spa standpoint, what existed at that time, more or less, would be some of those big marquee destination spas ala Canyon Ranch or Golden Door, things like that, as well as urban sort of, kind of old lady-ish, Elizabeth Arden, Georgia Clinger…
Kelly Kovack [00:06:45]: Kind of queen for a day…
Michael Lahm [00:06:47]: Right, these sort of like, kind of glorified beauty parlors, and I’m sure there were a whole lot of interesting healing art centers around New York as there still are today, but I mean, really, there was nothing like it, and I think we’ve talked about it as well, what Marcia was so smart about too, was taking out the fussiness or the sort of importance or the sort of seriousness and kind of making it light-hearted and fun, even looking at her own issues around body image and weight, and just kind of…
Kelly Kovack [00:07:22]: Issues that every woman has, she sort of like went at them head on.
Michael Lahm [00:07:27]: Right, and sort of said, “You know what? It’s not about that.” So, I mean, in a certain way, you know, the whole idea of being happy, living your best life, all of these things, I mean, I can sort of attribute it, you know, she really did – she nailed it, she really did.
Kelly Kovack [00:07:44]: Yeah, she did, and you know, I also think it is, when you think of kind of where we are today, you know, when people say, “Oh, indie brands are a trend,” it makes me want to scream, because I’m like, I think indie brands are just part of a business cycle, and they’re not new; I mean, we lived through sort of another incarnation of the rise of indie brands that had sort of a profound impact on the industry. Crème de la Mer was one product. All you needed was one product, and there was Mindy Grimes with the flip chart of the burns, you know.
Michael Lahm [00:08:22]: Yeah, and the Miracle Bras, yeah.
Kelly Kovack [00:08:24]: And the Miracle Bras. Steela was mascara and a couple lip glosses. Nars was a start-up. Kiehl’s was a start-up. So, it’s this idea that indie brands are some kind of new disruptive force, is, I think, a fallacy, but I think what is different is that Bliss was self-funded and cash flowed. There was no venture money, there were no angel investors.
Michael Lahm [00:08:56]: There were no outsiders telling Marcia, or anyone for that matter, what to do. Yeah.
Kelly Kovack [00:09:00]: You know, it’s like, we spent what we earned, and…
Michael Lahm [00:09:05]: And more so. Yeah, yeah.
Kelly Kovack [00:09:07]: Yeah, and there’s a freedom that comes with bootstrapping with your own money that changes sort of once there’s a lot of money around, but, so, you know, for our listeners, that’s sort of our, I guess, start in the industry.
Michael Lahm [00:09:23]: Yeah, combined trajectory into beauty, or and spa.
Kelly Kovack [00:09:26]: You know, and you stayed in…you sort of stayed in the sort of spa realm, and I kind of went into more branding, but you know, I think one of the things that is interesting to me is kind of how spas have evolved, so I think we went from sort of like these beauty salon, sort of mean esthetician, kind of scolding you, which is sort of a Bliss, that kind of destigmatized all of that, made it urban and cool and hip. To fast-forward, I think we’ve almost seen the deconstruction of that.
Michael Lahm [00:10:13]: Oh yeah, sure. I mean, I think there was a time, as well, when I started moving into more of the hospitality/spa space, and the kind of message and takeaway was really about pampering and status and relaxation and kind of these much more softer, sort of benefits, or reasons for being, and if you kind of look now, in this whole rise of wellness, is the new spa, right? It’s just what people are looking for now is really for solutions to kind of perform at a higher level. It’s really not about bragging rights any longer, it’s really about finding those kind of services and products and people, talent, that help you to live the best life that you can be.
Kelly Kovack [00:11:03]: You know, I find it very interesting that it was almost like a one-stop shop, you know, at Bliss. People would come and get their – yeah, they would have their facial appointments, they’d come in for sort brows, they’d come in for nails, and sometimes they’d do it all in one shot, sometimes it would be kind of one-off treatments, but where we are now is we have these hyper-focused solutions, so hay day for no-nonsense skincare, and it’s really fascinating, because there are these very kind of niche treatments that people kind of piece together.
Michael Lahm [00:11:45]: Well, and not to mention in the fitness space, because you know, the work that we do in hospitality has increasingly more and more of a focus on fitness and active movement. I mean, we are in ground zero here of every kind of boutique, niche angle on fitness that you can get, and, by the same token, I think as well as in more of the personal care services as well. And yeah, I think – we keep on hearing, there was supposed to be this big consolidation. That never has really happened, and I don’t know if the same holds true in beauty, but I think the reason, because at the end of the day, it’s kind of a big mix of ingredients, the spa experience, and it revolves really around the therapist, around the service provider, and you can’t automate that. So, there’s always going to be this sort of variation, if you will, in that experience. There’s just no way to standardize it.
Kelly Kovack [00:12:44]: So, can you tell us a little bit about the work that you do? Because it’s, you know, you’re working on much larger, sort of resort projects.
Michael Lahm [00:12:55]: Sure. Hospitality projects, in general, lots of resorts, some urban, but I would say 70% of our business is new resort development in the luxury space. So, we get brought on by either ownership groups, the operators, you know, the brands, or the interior design companies, and we are brought on as part of a very large team of development consultants to really sort of initially, whether it’s conceive of sort of an idea of an experience, or to really start looking at kind of the site and site planning and that kind of thing, but really to start to figure out what sort of experience makes sense given the location, given the target audience, given the brand if there is one involved. So, from that, we start to kind of work really in three different channels, if you will: we’re working on the built environment, collaborating with architects and interior designers, primarily; we’re looking at the programming, the menu and/or the service offerings; and then we’re also looking at the operational, kind of implementation phase of things. So, we love to be involved in projects that are turnkey; that oftentimes does not happen for a variety of reasons, and we’re, I think, the best outcomes come when we are handholding the process through a development cycle that starts with really design and construction, the brand is – say it’s a Four Seasons, say it’s an addition, they are kind of at an arms’ distance from what’s going on, and they really only get involved when the property is ready to launch. So, we kind of see ourselves as kind of the experience architects, if you will, that are really kind of like the glue to make sure that the vision that was originally articulated and brought into is fully executed at the end.
Kelly Kovack [00:14:55]: And, how long – what is the timeline for that process? It’s really long, isn’t it?
Michael Lahm [00:14:59]: Totally varies. Well, it can be, I mean, depending on where it is and the complexity around entitlements and approvals, construction. I would say by the time we get involved in a project, to launch, it’s generally in the three year, two-to-three-year timeframe.
Kelly Kovack [00:15:15]: And, you know, I think, at least from sort of an end user, it seems that the role of sort of spa and fitness and wellness, it’s gone from being a nice to have, and it almost felt like, at some point, spas in the fitness center were sort of like window dressing; you had to have one…
Michael Lahm [00:15:37]: And they were totally siloed for a very long time.
Kelly Kovack [00:15:40]: Yeah, and no one ever really used them, but you had to use them. They were kind of looked at as a loss leader.
Michael Lahm [00:15:47]: And/or a sort of, you know, a ratings requirement, really.
Kelly Kovack [00:15:52]: Right. But, recently I was reading some statistics, and sort of the spa and fitness component is becoming a profit center, now.
Michael Lahm [00:16:01]: Yeah, I mean, I think this is one of the things that when we get into projects, we sort of, it’s our obligation to educate our clients that spas make money. They’re not going to make the kind of money that Bliss did, because that can never happen again for lots of reasons.
Kelly Kovack [00:16:16]: It was an anomaly.
Michael Lahm [00:16:17]: But, they absolutely should be profit centers, and not only that, but we do have access to data that you know, spas also drive ADR and they drive occupancy when they’re doing well. So, there is sort of a direct contribution to the bottom line, and indirect, and of course, then there’s also just the softer draw of having, you know, a best-in-class sort of wellness proposition, especially among kind of affluent North American people.
Kelly Kovack [00:16:49]: I also read in urban areas, that the guests for a hotel property, well not really resort, it’d be a hotel, are actually locals.
Michael Lahm [00:16:59]: Oh yeah. Well, and a lot – I mean, a lot of resort development now is mixed use, so there is a sizeable residential component. So, there’s this built-in community piece, so you have hotel guests, you have members, if you will, of a kind of homeowner club/community, and then of course, depending on where it is, you have local business, so you’re looking at those three different types of audience streams.
Kelly Kovack [00:17:26]: You know, I think that there is definitely more of an integration of wellness. You’re not getting just sort of massages and facials…
Michael Lahm [00:17:36]: Like chocolate butter and things like that. We’re off that now.
Kelly Kovack [00:17:39]: This like – or pumpkin spice…
Michael Lahm [00:17:41]: Tied to a holiday theme. Let’s hope not.
Kelly Kovack [00:17:42]: Exactly. But, I think spa offerings have become incredibly sophisticated. I guess it’s come with sort of this rise of self-care, and I think we’ve moved past the “recreate a spa at home” moment, where I think people are much more sophisticated about sort of wellness and how they go about it.
Michael Lahm [00:18:05]: Well, look at skincare, kind of where we come from, right? I mean, really, where all of that innovation is is really filtering into spas from medical, really just all of the non-invasive technology has completely shifted the game, and I think spas, the good ones, look at that opportunity, but also making sure that they’re not losing the high-touch piece of it, because at the end of the day, if someone is coming to a resort destination, they are looking to have an experience that is lovely and feels great and it’s sort of soulful, they’re not looking for the bang-bang-bang, I mean, that’s really more of a sort of day spa or even kind of urban proposition.
Kelly Kovack [00:18:45]: Right. You know, I think one of the things that has always been interesting to me, you know, I’m always chasing trends and trying to figure out where they start, but so many of the trends that we see in – let’s say skincare and body care, were happening in spas ten, twenty years ago.
Michael Lahm [00:19:14]: Oils. Think about body oils.
Kelly Kovack [00:19:15]: Well, think about oils, think about – or even if you think about brands like Barbara Close at Naturopathica or Brenda Brock from Farmaesthetics, so many of these brands are 20 years old, and they were preaching the clean, green, essential oils, and they all actually had spas. So, they had built sort of their own distribution. And now, you kind of fast-forward, and it’s become mainstream, and I feel like even with technology, so like Bliss was like ground zero for the oxygen facial, microderm abrasion. So, I kind of feel like the spa has always been kind of, in some cases, on the fringe with like essential oils that have also now become mainstream, or even, I don’t know, there’s a million examples.
Michael Lahm [00:20:14]: Energetic bodywork, which has been such a – I mean, the most woo-woo thing that is, I think, in 2020 is really hitting critical mass.
Kelly Kovack [00:20:22]: Yeah, or even what is it, the sound healing.
Michael Lahm [00:20:27]: Sound healing of many guises, yeah.
Kelly Kovack [00:20:29]: So, what are – if we believe that spa is sort of an incubator of kind of these kind of fringe wellness and beauty trends that go mainstream, like what’s happening in the spa world now that people are sort of like, “that’s so weird,” but you believe is important? I just feel like in the spa world, there is a more…not an esoteric approach to wellness, but it’s sort of this higher-level almost academic approach to beauty, and a more holistic approach.
Michael Lahm [00:21:07]: Yeah, I mean, I think things that in the industry that we’re talking about, trends, or just kind of really where the conversation is going, is in mental wellness. Blame it on 24/7 digital culture, and it’s not necessarily speaking to it from a psychological perspective, it’s really more about kind of brain hacking. So, there’s this resurgence in flotation therapy, and I have to tell you, I was a bit of a doubting Thomas and I went into one of those sessions, and it was powerful.
Kelly Kovack [00:21:39]: I have to tell you, when I left Bliss, went to Amsterdam for a week, so this is 20 years ago, and I did one of those flotation things 20 years ago, and I remember it being – first of all, I thought they were going to forget about me, which is what usually happens when you’re in a very vulnerable space, but it is interesting that it was around.
Michael Lahm [00:22:08]: Yeah, and it permeates. Meditation is the new yoga, right? But, we’re also looking at sort of guided meditation things or technology boosts. I have brought in – we worked on Equinox, and that was the anti-spa. They wanted nothing to do with traditional spa.
Kelly Kovack [00:22:22]: The new property by Hudson.
Michael Lahm [00:22:23]: The Hudson Yards hotel, yes, and bringing in sound therapy as part of an extreme circuit that included cryotherapy, infrared sauna, this sort of sound table that really creates – it sort of mimics four hours of sleep in a 20-minute sequence. So, I think that what’s really innovating is these kind of technology tools, and there’s also, I think, it’s because the innovation is there, but it’s also responding to just a structural issue in the spa industry, which is, there’s a shortage of therapists.
Kelly Kovack [00:23:00]: Really?
Michael Lahm [00:23:01]: Yes, and it’s never – especially in certain markets. So, the consumer is looking for deeper experiences, more diverse. We, as developers of those sort of experiences, are doing the same, because we’re really looking at broadening the offering beyond what happens in a private treatment room, so that’s also where fitness and outdoor adventure and all of this sort of community-building stuff, it’s all kind of happening because of the response to…people are really freaked out, stressed out, burned out, because everyone is always on.
Kelly Kovack [00:23:35]: Well, you know, I always find it interesting, the Global Wellness Institute, I think they’re so brilliant in sort of the trends they surface. I mean, I feel like they surface trends like two, three years in advance.
Michael Lahm [00:23:50]: They definitely do a great job with that.
Kelly Kovack [00:23:53]: And, one of the things – I think it wasn’t last year, it was the year before, they were talking about mushrooms, and not only sort of the adaptogen sort of aspect of mushrooms, but the more sort of psychoactive, and I know that there’s sort of – there’s not a lot of them, but I know that there are resorts that are incorporating sort of that element.
Michael Lahm [00:24:20]: Oh yeah, I mean, CBD, THC, I don’t think we’re going to have that in the big brands, for obvious reasons, but certainly in kind of more interesting, independent properties in places where it is legal and very much adopted, I can see that happening very quickly. I mean, we went – remember that time we went to Two Bunch Palm…
Kelly Kovack [00:24:40]: Yes.
Michael Lahm [00:24:40]: It was like an incentive. So, you know, we come from this urban model of just kind of riding the wave, then we go there and we’re like, “What has happened here?” But, the owner of Two Bunch Palms wants to do an onsite dispensary. I don’t know, you know, if there’s regulations and things that are preventing that, but it’s funny how you look back on our history and we thought, “What is this?” Those are the kinds of places though, that really…I mean, it’s not the prettiest facility…
Kelly Kovack [00:25:11]: No, but you know, I have…I have often talked about that property because there’s something really unique about it, like they were kind of marching to their own drummer. It was not glamorous, I think I got a salt scrub with like, a box of Epsom salt…
Michael Lahm [00:25:27]: I’m pretty sure, and they still have those like sitting…
Kelly Kovack [00:25:30]: The I Love Lucy like steam cabinets. But, there was something sort of like, kind of special about it.
Michael Lahm [00:25:38]: Yeah. I think their two ingredients there is the mineral water, and that, I think, talk about what’s old is new, that’s super exciting for us. If we can get more projects where there is actual geothermal water as opposed to municipal water, and also, that place was sacred. In history, it really had a role, and you feel it. That is not so tangible, but yeah, there is something really special about that place.
Kelly Kovack [00:26:04]: Where are – and, I know this is completely subjective, but, where, like, in the world, do you think are – or, if you had to name sort of like top five sort of resort destination spas that they’re doing something different and creating experiences?
Michael Lahm [00:26:24]: Well, North American spas, I think we really are more on – with the exception of a Canyon Ranch, it’s still very lifestyle driven, so you’re on vacation, per se, but you want to have amazing services, workout hard, but also have great food and have cocktails. You know, there are places now, like in Asia, which they used to be quite, sort of high-touch and a bit more…they’re bringing in medical, they’re bringing in cosmetic dermatology, places like [unclear 00:26:56], and I’m also interested in the cultures like in Alpine Resorts, the culture, contrast bathing, but they’re bringing in that medical approach as well. There’s so many different models now. I think Americans, you know, if I can say it, I think we do the luxury resort thing really well, I don’t think we’re as good in the integrative kind, and that might have something to do with our healthcare system and things like that. And, I also think we talked about this earlier, but you know, I think people need to focus, to not try to be everything, case in point. I mean, most resort projects that we do now, we really discourage kind of these big beauty salon components, because A, there’s no staff, and that’s just not really what people are after. That kind of work, that kind of personal care stuff, really happens in their home, in their regular lives.
Kelly Kovack [00:27:52]: Or, you can sort of get it on demand, even if you’re…
Michael Lahm [00:27:55]: Exactly, and the operator can do that, too. They can kind of call up the local glam squad, if you will. So, yeah, I think having a really strong sense of focus and doing whatever you do well, and not trying to be, you know, like The Cheesecake Factory of spa with a million different service offerings that are largely the same.
Kelly Kovack [00:28:14]: Well, and also, you’re dealing with – you’re dealing with luxury properties that are sort of site-specific, and also, you’re dealing with, you know, massive budgets. Like, you have to be thinking of things with sort of a long-term view when the rest of the world is on short-term thinking. Do you find it hard to sort of convince people to sort of think of things with a permanence to them, rather than sort of what’s trendy now?
Michael Lahm [00:28:47]: Yeah, I mean, I think that’s our responsibility, and it’s as simple as when designing treatment rooms, we are not going to give you a very specific kind of special use kind of room, like a Vichy, for instance. They’re awkward, they don’t necessarily – if they’re not done properly, they’re really uncomfortable. So, we always look at multi-purpose functionality, or spaces that can be adapted to different uses, and yeah, I mean, if we’re going to make a big push for some expensive, whether it’s pools and hydrothermal components, they have to be relevant for the long-haul, and they have to return for at least, I would say a 12to 15-year kind of timespan.
Kelly Kovack [00:29:29]: You know, what do you think has been sort of the biggest change in the industry, sort of in the past 20 years? What’s been the biggest change, and what sort of is foundational and hasn’t changed at all?
Michael Lahm [00:29:41]: I think like the view of the sort of affluent audience of how important – I mean, just what a necessity they feel, that their physical health, their physical fitness, their physical appearance, and their kind of mental state, I mean, the priority placed on it, that, to me, was not a conversation or front-of-mind to many people back in the day, it was really just how skinny you could be. I think people want to really – are searching for ways to kind of maximize their life, to kind of preserve longevity, to kind of stay in the game, so I think the rational has changed quite a bit. There are endless amounts of outlets now, and of course with the internet, you can research and find out so many things, it almost, I feel like, is sort of an information overload.
