AUGUST 28, 2024
The Explosive Growth of Six Senses: A Double-Edged Sword for Brand Equity?
Photo Credit: Six Senses Ibiza
Over the past 12 months, hospitality sector has shown resilience. IHG's luxury and lifestyle properties have performed strongly, with global RevPAR up 3% in Q2 2024. The group reported a 12% increase in operating profit and a similar rise in adjusted EPS. The numbers support IHG’s push on the growing demand for luxury properties, especially in emerging markets.
As IHG Hotels & Resorts set its eyes on the US and celebrates growth in MLAC, Six Senses stands out as a flagship brand in this expansion. With IHG's luxury portfolio set to more than double in the coming years, the Six Senses entry into these markets offers an opportunity to underscore its core offering of spiritual wellness programming that aligns deeply with the region's rich natural and cultural heritage.
From A niche player to A global frontier Six Senses, once a niche player in the wellness-focused luxury resort market, has seen exponential growth since its acquisition by IHG in 2019. With 26 properties currently operating and another 43 in the pipeline, the brand is aggressively expanding. Its ambitious strategy offers the potential for increased market share and revenue, particularly in the lucrative US.
The brand was originally started by two founders Eva Malmström Shivdasani and Sonu Shivdasani in 1995. A beautiful detail that echoes the hotel’s mission and concept to this day is in its logo. It originates from the blessing marks made by the fingertips of Buddhist monks in Thailand. Our three primary senses of sound, sight and touch are positioned at the base of the pyramid. The second tier represents unanimity of taste and smell. The top of the logo represents our sixth (and maybe the most important one?) sense - intuition.
In 2012, the couple sold the Six Senses resort and management contracts, together with related IP rights, to Pegasus Capital Advisors. From there in 2019, Six Senses became part of the IHG family of brands. While this trajectory is impressive and in line with the worldwide interest in wellness concepts, it raises also critical considerations about maintaining brand integrity, continuing to differentiate from competitors, and ensuring long-term financial viability.
BRAND EQUITY VERSUS RAPID EXPANSION
Authentic programming has historically allowed the brand to command premium pricing and attract a loyal, affluent customer base. However, the current expansion strategy—aiming to nearly triple the portfolio and develop properties in key urban locations—could dilute brand equity and reputation built over decades. The addition of urban properties (with planned openings in London in 2025 and Lisbon in 2026) and larger resorts in the US may stretch the brand too thin, potentially compromising the very qualities that set Six Senses apart.
CEO Neil Jacobs (ex Starwood Capital) has addressed these concerns in several interviews, reassuring stakeholders that the brand is not just chasing growth for growth’s sake and emphasizing a "less is more" approach. Yet, with a pipeline of 43 new properties and the brand being owned by a publicly traded company, the risk of departing from its roots seems in fact quite possible. While the focus on securing "extraordinary properties" is commendable and makes sense from the investors POV , the challenge lies in maintaining the same level of curation, privacy, exclusiveness, and quality across a much larger portfolio.
Six Senses acquired the property in 2022 and since, the development has stalled because of community pushback.
Photo credit: New York Post
Six Senses Grenada features 56 room and 7 villas, where guests can enjoy forest baths.
Photo credit: Condé Nast
Six Senses London, 110 rooms and 14 residences. Reflecting on the location, the spa interiors will be reminiscent of London’s Underground stations. Guests will also will be able to enjoy a 20 meter indoor pool. While the property is stunning, it is a departure from the usual design and offering.
Photo credit: Six Senses
MARKET POSITIONING
Six Senses has always been a trendsetter in the luxury wellness space, and its recent focus on spirituality as a growth area addresses consumer interest in services that support the body mind connection. The introduction of non-religious spiritual programs cater to the brand's fastest-growing demographic—American tourists—who increasingly seek to unwind in productive and meaningful ways during their travels. This focus not only differentiates Six Senses from other luxury brands but also positions it well to capitalize on the next-gen wellness offering.
However, the brand's expansion into the US, where it previously had no presence, comes with some challenges. First, the US market is quite saturated with luxury hotel brands, and Six Senses will need to navigate this competitive landscape. The brand's success will depend on its ability to replicate the distinctive experiences it offers in more exotic locations while adapting to the tastes of demanding American consumers. Tough balance to strike. From a financial perspective, the rapid expansion of Six Senses banks on the idea that the double-digit wellness tourism growth is not just a trend but a fundamental shift in how we consume hospitality.
Additionally, vocal opposition from local communities complicates the brand's expansion efforts and could lead to costly delays or even cancellations. This is very much the case with with what would have been the brand's first property in the U.S. In 2022, Six Senses purchased the gorgeous 230-acre Hudson Valley property from entrepreneurs Chid and Georgie Badiel Liberty for $13.7 million. However, as of today, the project is stalled (and potentially will be even canceled) due to the county ruling against the development, citing its negative impact on the environment and the community’s rural character. Let’s see how this unfolds over the next few months.
Proposed development in Hudson Valley, featuring extensive grounds and emphasis on farm to table concepts.
BUT NOT ALL IS ROCKY…
The recent opening of Six Senses La Sagesse in Grenada marks a significant milestone for the brand. Situated on the scenic beach, this resort offers its guests an immersive experience within 56 private pool suites and 15 villas designed to reflect the resort's ethos of harmony with nature. The development emphasizes sustainability and local community engagement, with farm-to-table dining, a spa that utilizes the island’s fragrant spices for their medicinal properties, and culinary offering that highlights the bold flavors. Sounds like paradise.
Looking ahead, Six Senses plans to further establish its presence in the MLAC market with the upcoming openings of Six Senses Grand Bahama and Six Senses Xala (which I will write more about in the coming months), both positioned for completion by 2026. These projects represent more than expansion of the footprint, but an opportunity to reinforce the brand’s core philosophy and holistic wellness programming. While I look forward to seeing their London property, I think that the MLAC expansion makes much more sense, as it does not alienate the existing consumer base and signifies a continued commitment to creating properties that reflect the brand’s roots. The Six Senses Grand Bahama, for example, is expected to integrate the island's unique ecosystem into its design and offerings, providing guests with an experience that is ecologically mindful. I am not sure the same messaging can be achieved in London.
IHG is taking over the lifestyle luxury world with the opening of five new properties in 2024 alone, with a total of 32 properties in the immediate pipeline. Leanne Harwood, SVP and Managing Director for Luxury & Lifestyle Americas at IHG Hotels & Resorts, emphasized that this growth is a testament to the strong demand for IHG's diverse brand offerings.
