United We Stand

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LARRY GILES Chairman of the strategic planning committee, member of the HTC and president of Vita Spas

STEVE GORLIN Chairman of the HTC and owner of Gorlin Pools & Spas in Lakehurst, N.J.

LAUREN STACK APSP Liaison to the HTC and director of marketing promotion for APSP

It's no secret that 2006 was a difficult year for hot tub manufacturers and retailers alike. Anecdotally, sales numbers were down as much as 25 percent in some sectors of the industry, and while they may not have actually been that bad for everyone, it was still no picnic. Theories about this downturn vary, but the Hot Tub Council (HTC) of the Association of Pool and Spa Professionals (APSP) has been aware of the issue for some time, and in 2006, the HTC formed a strategic planning committee to address the downturn exclusively. "We realized we had to be a little more nimble in what we were doing, and the council only meets regularly three or four times a year, so we needed to be able to work in between," says Lauren Stack, the APSP liaison to the HTC and director of marketing promotion for the APSP. "The strategic planning committee is made up of officers, as well as the chairs of the four pillar committees (promotion, research, advocacy and education). With that smaller group we've been able to move things along." Leaders in both the HTC and the strategic planning committee offered AQUA some insight into what's causing the downtrend and what each organization, both together and separately, plan to do to turn it around.

What's Happening Here?

According to Stack, numbers are down across the board. "From my analysis, the market is down about 8 to 10 percent from last year," she says. "The APSP worked with key suppliers to the industry to create kind of a composite figure." She adds that 2005 was not kind to hot tub dealers either. "But that's on top of a decline from the year before, which wasn't as great, but it was maybe 4 percent off, so we've taken big hits, and we're not used to that."

Both Stack and Larry Giles, president of Vita Spas, chairman of the strategic planning committee and member of the HTC as well, had many theories about the downward trend.

Giles says it's hard to pinpoint a reason for the slump. "There's speculation everywhere, whether it be high fuel costs, whether it be interest rates going up," he says. "I think that we, as recreational product manufacturers, are the first ones to feel any downturn and we're the first ones to feel any upturn in the economy. Let's just face it — as much as we'd love for hot tubs to be a necessity, it's something we have to preach to people, that it is a necessity."

The slumping real estate market has also played a role, says Stack. "With second-home sales and vacation home sales being depressed — that hurts," she says. "But I also think that the hot tub category is no longer the centerpiece of the backyard. A lot of pictures in home magazines show the outdoor rooms. They show the fireplaces, they show the grills and everything else. But hot tubs really aren't prominent in that, and it's been the lack of a proactive push on the part of our industry to change that perception — that a hot tub is exactly what you need in your backyard to complete your outdoor living rooms, and that's kind of what we want to change, the minds of the consumers."

According to Stack, research completed last year by PK Data indicated three major barriers to purchase among potential consumers. "First was the initial price of the product," she says. "[Consumers] are kind of shocked if they're assuming they can get a hot tub for $3,000 or $4,000, and then they come in and realize it's more like $6,000 or $7,000 to get what they're looking for — that kind of scares people off. And then both the time and cost of maintenance."

Steve Gorlin, chairman of the HTC and owner of Gorlin Pools & Spas in Lakehurst, N.J., took a harder hit than the average numbers Stack found, with his store's sales down 20 percent from 2005. He agrees with Stack that the hot tub is no longer the backyard centerpiece, but feels there's another piece to the puzzle as well. "It's really a combination of things, I believe," he says. "I mentioned in a speech that I gave when I became the Hot Tub Council chairman that the backyard experience is really growing. All the other categories, outdoor kitchens, decks, anything associated with the backyard, have been going up. But hot tub sales have actually been declining.

"I think part of the reason behind that is sort of a negative connotation that's been associated with spotty customer service," says Giles. "People are feeling that the buying experience is kind of difficult at best, and after the sale, people feel that the service and the care is nonexistent."

Gorlin says that consumer perception of second-rate service is often, unfortunately, spot on. "I think it's an industry-wide problem, and consequently, if there are, for example, a lot of hot tubs that are sold in California, and consumers there have bad experiences, that's going to translate as a downturn in sales on the East Coast as well," he says. "So word spreads like wildfire, especially with the advent of the Internet.

"That kind of leads to my next point, and that is that there is a lack of communication to overcome these barriers. When people are thinking about hot tubs, some of the negative connotations that are out there are that hot tubs are not sanitary; they're difficult to clean; they're too expensive; nobody's going to use it; they're not suitable for children. It's a lack of communication on the industry's part to overcome those barriers, and also, there's a lack of credible information sources. So where does the consumer go in order to get authoritative information about hot tubs, and the benefits of hot tubs. There's a lack of that. And lastly, I would say that there's a lack of unity in the industry, in building hot tubs as a consumer-preferred category."

So, first of all, hot tubs are expensive. And consumers have limited discretionary income. These potential customers may not see the hot tub as essential to the backyard experience, and if they do purchase one, many of them find cost and time of maintenance, as well as retaining reliable service people, to be daunting tasks. They may also have some misperceptions about the cleanliness of hot tubs, and their suitability as a family product. The industry must, according to Stack, Giles and Gorlin, address all of these concerns in order to turn things around, and the only way to do that is by increasing both industry cooperation and funding for the effort.

Come Together

A three-pronged effort to increase hot tub sales is underway in the industry, with the APSP, HTC and strategic planning committee all playing a role. Of first and foremost importance to the HTC is building industry cooperation. "Well, teamwork through this whole thing is critical," says Gorlin. "Right now it's really important to me to get everyone working on the same page — we're all in this together. We're at a crossroads where decisions and actions that we take today are going to dictate what the future of the industry is going to be." Many manufacturers, he adds, are great at promoting their brands, but what the industry needs now is broad promotion and exposure.

The APSP, thus far, has been a facilitator of this cooperation. "[We try to] provide the forum by which the industry leaders can come together to create solutions," says Stack. Even with all these players firmly in the same corner, not much can be accomplished without one vital ingredient: money.

The lynchpin to generate some much-needed cash to promote hot tubs comes in the form of the strategic planning committee initiative, launched in late January, and formulated specifically to address the problem. "It was born maybe out of frustration in that the dues that come in from the HTC are not ever going to be enough to make an impact," says Giles. We can do studies, and we can do small programs, but we need $5 to $10 million dollars." In a broad sense, he says, the initiative is to serve as a sort of fundraising and service outline for the industry. Authors looked to the boating and RV industries for inspiration. "We're looking at how they took similar issues in their industries and addressed those, whether it be poor customer satisfaction at the dealer level, at the service level or at the product level," says Giles. "It's not just a simple funding initiative, it's also addressing some of the key areas where we feel that consumers either aren't coming back to buy a second time, or are just not looking at the product at all."

Funding The Initiative

Step two will be funding the initiative. The strategic planning committee feels that $10 million must be generated for the program to have an impact with consumers. "Because we're talking significant funds, we want all facets of the industry to be involved. Everyone needs to have a voice in how the money is raised and how it is spent," says Giles.

"We are working on building consensus. We've selected April 18 as the target date for bringing together the top manufacturers and suppliers to the industry together. The meeting will be professionally facilitated, and we hope to generate a lot of support for the industry initiative."

A funding task force will then be created to address questions such as how the industry will generate the funds and who will participate, says Giles. "The idea is to find a way that everyone benefits from this, so everyone will be willing to participate in it," he says. "The goal for the April meeting is to leave with the funding in place, with an agreement that the funds will be raised, and this is how we're going to do it."

With the meeting still in the future at press time, Giles didn't have concrete details as to how the money will actually be raised. "I can tell you what the other industries have done," he says. "The RV industry did it through a certification process, and they also generated funds as contributions through finance companies and things like that. The boating industry has done it by an assessment, an engine assessment. We're looking at how they did it, and ways that we can also do that in our industry."

Spending The Money

After the money is raised, step three will be spending it. The initiative's broad mission statement is "to develop and implement [ further] initiatives that promote and improve the hot tub experience, that lead to increased sales of hot tubs, related products and services." It will do that, according to Stack, by addressing each of the APSP's four pillars monetarily. "Once the initiative launches, the APSP would be the manager and facilitator of the work that goes into it," she says. "We know that it will be a multifaceted campaign — we want to include all of the four pillars of APSP, which are promotion, research, advocacy and education." The most obvious place to put money is in promotion, through both hottubliving.com and through ad campaigns that emphasize the hot tub as a backyard centerpiece, says Stack. "We want to drive people to the Web site, and to increase foot traffic for the dealers — to get people excited about the category and why they need it in their lives — which translates into people looking and buying.

"We've found, through the years, that people are aware of our category a lot more than they have been in the past," adds Stack. "In the late- and mid-1990s, when the industry was calling its product 'spas,' there really was a big disconnect between what we were advertising as our product and what the consumer thought it was, which was a hot tub. When we started advertising hot tubs we became more top-of-mind, and we grew great guns into the early part of the 2000s. And now, it's not so much awareness, but how do we get it into their backyard."

The next pillar, education, is being addressed through the creation of the certified hot tub technician manual, which took two years to write, and was a joint effort by the APSP Service Council education committee and the APSP Hot Tub Council education committee. With the manual published, increased funding will allow creation of classes to complement it, says Gorlin.

"One of the things I mentioned earlier is that consumers feel that their hot tub is an albatross and they can't find anybody to properly service it," he says. "It's important to get qualified, certified technicians all across the country that can overcome this problem."

The courses, lesson plans and PowerPoint presentations are all in development, he says, with some of the courses to be offered online, some at the national and regional shows, as well as at the NESPA educational facility or at the Foundation for Pool and Spa Industry Education (FPSIE) facility in Sacramento, Calif.

After the program is fully developed, consumers will be able to locate a certified hot tub technician on hottubliving.com. Manufacturers will be able to do the same, says Gorlin. "So now the certified technician is really marketing himself both to the consumer and to the industry, which gives him a reason to go to the program — it's not just to have a patch on his sleeve, but we're going to drive business to that technician, and then the hope is that we have certified technicians in enough areas all around the country to help overcome what is the perceived objection right now."

Money from the initiative will also allow for continued research — the third of the APSP pillars — into both the health benefits of hot tubs and consumer attitudes surrounding them. Says Stack, "We'd be looking at, once we launch into this, are we moving the needle at all. Are people thinking differently about our product. As for medical research, the APSP just concluded a study with the American Physical Therapy Association on the benefits of hot water therapy for knee-replacement patients. Increased funding would allow for both more studies generally, as well as making them more in-depth," adds Stack.

The final APSP pillar, advocacy, will benefit from increased funds by allowing the association to address legislative and regulatory issues adequately, says Stack. "There are things that come up that need to be addressed, and that's where APSP can kind of coordinate and spearhead the development of it," she says.

Though the APSP and HTC are already addressing many of the issues mentioned, little will change without more money. "What the initiative is going to do is give us the money to do it right," says Stack. "We've been limping along with minimal amounts to spend for the category, not enough to do promotion, let alone any of the other four pillars. So we're moving into an era, I hope, where we have this long-standing, self-funded, selfgenerating fund that can be used in a big way to move the needle."

With a funding mechanism hopefully in place for 2007, Stack says the APSP, the HTC and the strategic planning committee are excited to get started and spread the good word about hot tubs. "We're anxious to do good things for this category, because it's such a fun product, it's a great product for the consumer, and they need to hear the story."

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