Hyatt Hotels & Resorts acquired Exhale Spa, a boutique fitness and spa brand, for an undisclosed amount. Exhale has grown from one studio in 2003 to 29 boutiques in 11 markets across the U.S. today.
This is Hyatt’s second acquisition in the wellness space. In January, it acquired Miraval Group, a wellness resort and spa company, for $215 million. Both deals are part of a larger strategy to invest in what Hyatt CEO refers to as “adjacent spaces.”
If you’re not familiar with the wellness industry, the appetite for workout studios and fitness classes has exploded in the last few years. And a lot of the interest has come from private equity firms. Remember when Great Hill Partners acquired YogaWorks for about $45 million? Or when L Catterton bought stakes in fitness chain Pure Barre and rival FlyWheel/FlyBarre Sports?
I spoke with Exhale CEO Annbeth Eschbach back in January, and even she called the boutique fitness space “saturated and confusing.”
Fitness “boutiques” like Exhale have erupted in popularity. The boutique fitness industry industry was valued between $6 billion and $7 billion in 2015 and expected to more than double by 2020, according to the Wall Street Journal.
Let me illustrate this by naming a few fitness brands just in the super-niche world of barre (a ballet-inspired workout): Pure Barre, Bar Method, FlyBarre, Physique 57, Barre3, The Barre Code, Cardio Barre, Pop Physique, and Xtend Barre. And these are not just one-off random little studios. These have multiple locations in the U.S. or abroad. “There’s 74% more barre inventory than there was a year ago in our market,” Eschbach said.
And then came the “tech disruptors,” which vowed to sort the clutter. Classpass, which has raised approximately $154 million in venture funding from investors including GV and General Catalyst, created a universal gym membership model by partnering with studios across the country to offer a significantly lower price for consumers. Fortë Fitness developed an on-demand video platform that live-streams workout classes from across the globe.
And Exhale was one of the first fitness companies to partner with both ClassPass and Fortë even though they threatened to cannibalize Eschbach’s business. Eschbach said earlier this year:
I’m currently studying the hotel industry and the way it got disrupted. Today, we sit here, and we are watching these forces at work. You cannot deny them, you can’t just sit around and wait for them to blow up. You need to embrace them, understand them, and figure out how to leverage them in a way that doesn’t hurt and take over your brand. [Read the full story here.]
I followed up with Eschbach yesterday following the acquisition to get a better understanding of why she decided to sell the company and what this means for the future of Exhale. It will operate as a standalone entity within Hyatt’s wellness category, and Eschbach will continue in her role as CEO and president.
“The Exhale experience is not bound by bricks and mortar and defined set space requirements,” she said. “Similarly, Hyatt’s novel vision is to engage with travelers beyond traditional hotel stays and that means we are part of a revolutionary path forward.”
It’s not just Hyatt. Other hotel companies, including giants like Marriott, are investing heavily in lifestyle brands in order retain old customers and attract new ones (read: millennials) who have flocked to Airbnb. But will these acquisitions be enough?
[“Source-fortune”]
