India’s nascent rejuvenation market only makes up a tiny sliver of the rapidly-growing physical wellness market. An industry body estimates that, as of next year, it will make up 2% of the overall market. Not much, admittedly. However, when you consider that the overall market is expected to be as big as Rs 1,50,000 crore ($20.8 billion) in 2020, that still leaves a cool Rs 3,000 crore ($415.3 million) on the table for India’s spa chains to slug it out over. And the first to truly lay claim to these spoils was India’s first, and currently the largest, spa chain—O2 Spa Salon.
In 2009, Ritesh Reddy Mastipuram, founder and managing director of O2 spa, started by acquiring the Shahnaz Husain Group’s Signature Salon and Spa in Novotel Hotel in Hyderabad. The same year, O2, then known as Masti Health and Beauty, became the first spa to get a space in the newly-privatised Hyderabad airport. By focusing on premium spa services, mostly for weary travellers in luxury hotels such as Hilton, Marriott, Radisson and Novotel along with airports, it grew to around 78 spas in seven years. It had everything going for it. Scale, as the largest spa chain in Asia, as well as a pan-India presence.
It boasted a unique standalone spa concept, nestled between popular luxury spa chains like Bangkok-headquartered Six Senses and the fragmented neighbourhood spa market. At this point, Mastipuram had the ambition to grow beyond airports and hotels to high streets, malls, railway stations, trains, tier-2 cities, and enter corporate wellness programmes. He even wanted to enter countries in Western Asia. The vision was to eventually become the largest wellness provider in the world, one that would have it all—hair and skin clinics, products, Ayurveda and yoga. Even a destination spa resort.
Enter BanyanTree Capital. A Mauritius-based Private Equity firm that invested $11 million in O2 in 2016, making it the first spa chain to get private equity. This was a milestone in the nascent Indian wellness sector and was just the push that O2 needed. But what goes up, must come down.
O2 did grow to over 120 spas in early 2018. It became the envy of every other Indian spa chain, like Mumbai-based Four Fountain and Gurugram-based Tattva Spa and Blue Terra Spa, who have struggled to get to even half the scale of O2.
And then in autumn this year, the bubble burst.
O2 began shuttering spas as it struggled to stay profitable, couldn’t pay salaries on time, saw an exodus of senior management, and talent began drying up.
