Money-Growing: The Other Side of the Steamy Bathhouse

The past five decades were hard times for Moscow’s Russian bathhouses, says Andrei Patrushev, PR-director at Knight Frank. The 1960s saw the emergence of the Soviet bathhouse culture, with the quality of service leaving much to be desired and hygiene being achieved with the help of chlorine.

“The problem has been cured and is still being cured by numerous small privately-owned country-house baths. It was there that the Russian bathhouse tradition was preserved,” says Patrushev, who is not only a realty expert but also a true connoisseur of the Russian bath.

Classic Russian bathhouses are still alive and their services are in demand though they do not make much profit. “Preserving traditional Russian baths with elements of the bathhouse traditions of other countries, plus comprehensive face and body treatment – these are the general trends in the development of the bathhouse business,” says Larisa Levitina, director of the Izmailovo Bathhouse. But in order to boost profits bathhouses usually expand their range of entertainment services.

New Year Bathhouse Tradition

The Russian bathhouse has long ceased to be a place where people go merely to sweat and wash. This is proved by the fact that in summer when hot water supplies to Muscovites’ apartments are interrupted for repairs the number of guests at city bathhouses does not grow, on the contrary – it drops.

However, on the eve of various holidays, especially, New Year’s Eve, the number of requests to book rooms, or even the entire establishment, grows considerably. A variety of Web-sites offer catering for birthday parties, bachelor parties, corporate get-togethers, and, of course, New Year parties on bathhouse premises. On such nights the rates are two or three times higher than usual, but then not all bathhouses are open on New Year’s night.

Boris Kravchenko, director of the bathhouse and wellness center Na Dubninskoi, reported that by mid-November his company was receiving requests from clients wanting to book a sauna for New Year’s Eve. “But, on comparing the costs with the estimated proceeds we decided against taking such orders this year. This is a special service and even if we raise the rates it is not worth it,” Kravchenko explains. “Employees will have to be paid at increased rates, plus payment to security guards, driving guests home, etc.

“Besides, on that day people go [to the bathhouse] not to sweat but to celebrate and the consequences of their ‘merry-making’ may reduce the income from New Year sessions to zero. It would be necessary to spend a lot on 2-3 January to put things in order for ‘ordinary’ customers afterwards. As for catering for other parties, we welcome the tradition. It pays both financially and in terms of the bathhouse’s image.”

Bath Traditions

In addition to the popular Russian banya, Finnish baths and the Turkish hammam, Japanese and even Bali baths can be found in Moscow. The Japanese Ofuro bath is a deep tub filled with hot water or cedar sawdust, heated to 50 or 60 degrees Celsius.

Bali baths are similar to Georgian baths, with hot water from natural springs, but bath-house attendants are clad in sarongs and serve exotic fruit drinks, coffee and cacao to the customers. A session costs about 1,500 rubles per hour.

Infrared bath-houses are also available. One of the first such establishments opened recently in Sokol, northern Moscow. A one-hour session costs only 250 rubles, compared to 1,000-2,000 rubles charged by conventional saunas, where rooms are designed to accommodate 6 to 12 people. The infrared rooms are built for 1 to 8 people.

Valentina Zotova, director general of Valenkom, says that the infrared bath is “the 21st century sauna”. Infrared heat is absorbed evenly into the body, increasing circulation and oxygen supply to damaged tissues. Invented in Japan, infrared rooms have become especially popular in the US and Canada.

Also very popular is hot stone healing thermotherapy. Flat round stones are heated and attached to the human body, which helps to overcome winter depression. Villagers often sell such stones at the roadside.

Over the past two years some 300 privately-run saunas have opened in Moscow. It is no secret that many of the saunas that mushroomed across the capital from the early 1990s offered services of a dubious nature; that is why real bathhouses often find it hard to convince their clients that they are traditional saunas, and not brothels in disguise, says Andrei Patrushev.

One of the reasons that makes saunas much more popular than Russian baths is that saunas are milder. Russian baths, although the temperature in the steam room is lower, takes much more energy out of bathers. Drinking in a bathhouse means robbing oneself of half of the fun, while enjoying the steam in a state of intoxication raises the risk of fainting. People go to bathhouses to enjoy the steam, while those frequenting saunas are mostly interested in combining fun with alcohol.

But “saunas cannot vie with a real Russian banya. They are effectively two different cultures. Demand for the Russian bath still remains quite high,” says Aleksei Razorenov, a famous connoisseur of the Russian bath and a new generation stove maker, who owns the www.parilka.ru Web-site containing an impressive database on Moscow’s best bathhouses and saunas.

Bathhouse Problems

Recent years have seen a rapid decrease in the number of traditional Russian bathhouses with open halls for common use and private rooms. Today, there are only some 30 baths in Moscow, although a couple of years ago the capital had more than 50 of them.

In the wake of privatization in the 1990s some bathhouses were transformed into ordinary office buildings, like, for example, the Central and Teterinskiye Baths. Other bathing facilities remained closed for reconstruction for years.

Just such a fate befell Bogorodksiye Baths, closed down in 1996. According to a manager who refused to give his name, “the authorities ordered the privatization of bathhouses so as to get rid of extra problems, but the new owners never got down to work, opting for the re-sale of facilities instead.”

Moscow’s bathhouse business is anything but transparent. The methods to effectively evaluate it, if they exist, are strictly classified. The Moscow city government’s department for the consumer market refused to give exact figures of the turnover of Moscow public bathhouses, describing the information as a commercial secret.

However, government officials reported that as of today there are 45 bathhouses for public use in Moscow, of which six were built and reconstructed at the expense of the city budget; 39 baths are privately owned. 7 of those 39 are currently closed.

The city government had planned to build a bathhouse every year beginning from 1998, but so far only two have been built – the bathhouse and wellness center Na Dubninskoi on Dubninskaya Street and another one on Sholokhova Street, in Novoperedelkino District, commissioned four years ago.

They are standard buildings designed by the state-owned company Moskomproekt. During the development of a bathhouse center in Degunino the problems that arose during the construction of the Sholokhovskiye Baths were taken into consideration. The average level of capital investment in the construction of a standard public bathhouse is evaluated at approximately 50 to 60 million rubles, with a payback period of about 10 years.

Moscow’s general development plan adopted by the city government envisages the building of eight more such bathhouses. Next year the city authorities intend to invite bids from investors for the development of bathhouses in the Southeast Administrative District [okrug] – on Tsimlyanskaya Street, and in Saltykovskaya Street in the eastern Moscow district of Novokosino, the city government department for the consumer market reported.

The bathhouse and wellness center Na Dubninskoi in North Moscow, designed to accommodate 80 guests, was commissioned on 4 September 2004. The complex includes 7 steam rooms, Finnish saunas and 1 Russian bath; in the near future a hairdresser’s, public catering outlets, a fito-bar, massage parlors, beauty parlors, a gym, a solarium and a large swimming pool with a lift for the disabled will open there.

The center is being built at the expense of the city budget. The consumer market and services department runs the center, while the owner of the building is the city property department. However, the center’s managers are quite independent in their commercial activities.

The construction of the baths lasted for four years, says Boris Kravchenko, although with the help of modern construction know-how such facilities are usually built in 12 to 18 months. The interiors are designed in the hi-tech style, with plenty of open space, light, and a spacious patio decorated with natural palm trees.

The entrance to the steam-room section is equipped with turnstiles – similar to those in trams and trolleybuses. Upon entering the complex patrons receive a plastic card which gives them access to the baths. With the same card drinks and snacks can be ordered at the bar, as well as other services. The data is then sent to the computer, and accountants are able to follow the cash flow online.

The charges for visiting the Na Dubninskoi bathhouse are the lowest in Moscow – a 3-hour session is 160 rubles on weekdays and 200 rubles on weekends. Customers are offered a wide range of bathing accessories – from slippers for 100 rubles to eucalyptus branches for 150 rubles.

An official at the consumer market and services department admits that the construction of public bathhouses could be sped up if the authorities “examine the issue of reducing the cost of construction and restrict the number of customers who enjoy privileges.”

Indeed, quite a few people today are entitled to considerable discounts. They include ‘veterans of labor’, invalids, Chernobyl ‘veterans’, foster families with young children, among others. In line with a mayoral decree, all privately or state-owned bathhouses, have to grant discounts, for which they are subsequently reimbursed from the city budget.

Thus, the Izmailovo Baths cater for those on benefits from six districts in eastern Moscow. However, bathhouses do not always receive compensation from the city authorities on time. Boris Kravchenko recounts that the bathhouse at Dubninskaya signs agreements with the district authorities who provide all those receiving discounts with special cards entitling them to a 50 per cent discount on bathing. They are allowed to visit the bathhouse on Mondays, Tuesdays and Thursdays, from 8 a.m. to 3 p.m.

During those hours customers can use their right to a 50 per cent discount simply by producing a pension card. The district authority then pays another 50 per cent to the bathhouse from the city budget. “We have been working since September 2004, but we will not receive any compensation until after the New Year. Nonetheless, we continue to cater for those on benefits, although we suffer direct damages. You can call it a social order from the city,” Kravchenko said.

Top of the Bathhouse League

Sanduny, or the Sandunovsky Baths, is a place that has been frequented by bathhouse fans for hundreds of years. Moscow chronicler Vladimir Gilyarovsky dedicated an entire chapter to the baths in his book "Moscow and Muscovites." According to Gilyarovsky, the likes of Griboyedov and Pushkin steamed there.

Following the financial turmoil of the early 1990s Sanduny still remains the leader of Russian bathhouse business. And if comparing bathhouse market participants to football teams is appropriate, Sanduny is, undoubtedly, the leader of the premier league.

Sanduny offers a wide range of services of top quality, though prices are just as high – ladies are charged 400 rubles or more per visit, gentlemen – 800 rubles or more. “For many tourists Sanduny is another Moscow landmark, along with the Bolshoi Theatre, Red Square and the Tretyakovka [art gallery], and a visit to Sanduny is one of the key items on their agenda. There are quite a few Sanduny patrons among the Moscow elite, too. Even in the common hall you can meet newsmakers,” Andrei Patrushev says.

With Sanduny running an official Web-site, the post of a bathhouse system administrator does not sound as ridiculous as it first seems.

Aleksei Sorokin, the administrator of Sanduny, says that foreigners account for 20 to 30 per cent of all guests. They are not just Finns and Swedes – avid fans of bathing – but also French, Belgians, Britons, and others. Vacant seats are only available on weekdays; on Mondays pensioners are granted a discount of up to 50 per cent at the expense of the establishment.

The bathhouse also offers eight private sections, each comprising a cloakroom, a relaxation area, a parlor, a soaping room, a swimming pool and a steam room. The sections are designed to accommodate 2 to 16 people. Each section is uniquely furnished. Rates range from 1,200 to 3,700 rubles per hour, depending on the size of the section.

Each section has a bar where guests are offered a large variety of hot and cold snacks, juices, beer, wine, vodka, cigarettes and other victuals. Sanduny also runs a Russian and Caucasian cuisine restaurant, although, admits one of the employees, the most popular order is draught beer and shrimps.

Tied bundles of branches, known as veniks and used by bathers for thrashing each other’s backs in the steam room, are offered for sale both inside and outside the bathhouse building. A pensioner who introduced himself as Petrovich from Cherusti, sells oak and juniper branches at a price of 150 rubles per bundle. The old man complains that business has not been very good of late – he is lucky to sell just a couple of bundles a day.

The so-called public baths are not as luxurious. Washing oneself in the common hall at the Usachevskiye Baths costs 300 rubles for 2 hours; the rate is the same for men and women. Customers entitled to discounts are charged 50 per cent less, with the difference being compensated from the city budget. A bundle of branches is sold at 50 to 70 rubles, but prices are negotiable. A visit to the Donskiye Baths is even cheaper – 150 rubles on weekdays, 170 on weekends and holidays.

Bathhouse Profitability

It is commonly believed that making money from true bathhouse fanatics is impossible. “Such clients are ready to pay only for the steam itself, the quality of which cannot be measured with any state-set standards,” says Razorenov. Many directors of bathhouses agree with him and see the solution in expanding the range of additional services.

The most popular additional services offered at bathhouses are hairdresser’s saloons, beauty parlors with manicures and pedicures, express dry cleaner’s and clothing repair. And, of course, massage. A bathhouse without a massage parlor is a waste of money, bathhouse experts are convinced. The Izmailovo Baths offer a rather exotic type of massage – Tibetan massage with special copper chalices.

The bathhouse in Izmailovo comprises two sections to accommodate 36 and 18 guests and a deluxe-sauna, a hairdresser’s, a beauty parlor, and a solarium. The bars offer a variety of herbal teas, kvas, beer, etc. Vodka is not as popular as kvas and draught beer.

On the whole, additional services account for 15 to 20 per cent of the bathhouse’s total proceeds, says Larisa Levitina, director of Izmailovo, adding that in summer when attendance drops that share may go up to 30 per cent.

In Sanduny, says Sorokin, the services of the professional bath attendants are especially popular, as only a few Moscow bathhouses employ such high-skilled staff. Sorokin sets the rate of profitability of the bathhouse business at 3 to 5 per cent, with electricity and water supply being the largest expense items. A separate expense item is maintaining the historic landmark – Sanduny – in working order. The high humidity and heat do little to preserve the unique decorations of the rooms.

“It is true that the bathhouse business makes virtually no profit,” says Levitina. “We are lucky if profitability reaches 5 or 6 per cent, but usually it is lower. Apart from gas and water supply costs, a lot is spent on salaries. We employ about 30 people whose work day lasts from eight in the morning till ten at night.”

“The bathhouse and wellness center Na Dubninskoi has only just opened, and for the time being we have been offering no other services except bathing, although, in the future, of course, additional services will be offered,” says Kravchenko. “We have already purchased equipment for a massage parlor, a kitchen and a gym. It is still too early to estimate the profitability of the complex, but utility costs amount to 30 percent of the turnover.

“Everything in our bathhouse is powered with electricity, and water supply is not cheap nowadays either. Making huge profits in that sector is not really possible, but if you concentrate not on high rates but on the ‘turnover’, that is, to attract as many clients as possible, such a business can and must be profitable.”

Valentina Zotova believes that infrared saunas may bring maximum profits of 10 per cent. “This is due, first and foremost, to the low capacity of an infrared cubicle,” she explains. “Even at full capacity of ten hours we are not able to accept more than 15 people. Time is needed for cleaning and disinfections. Besides, the procedure is not yet really popular, which also affects our income. Although, people are starting to understand that sauna is a therapy, not a beer-vodka-girls type of entertainment.”

“Price and quality of service are two main factors crucial for a bathhouse’s profitability,” says Kravchenko. “Quality can be understood, among other things, as what kind of welcome you received, what kind of service you were offered in the steam room, how you were seen off. We seek to preserve the concept of a public, municipal bathhouse. But people still have to get rid of the Soviet-era stereotype that a city bathhouse is a dirty place and God-only-knows who goes there. If a bathhouse is clean and kept in good order as in a VIP-establishments people will gladly go there. After all, the main thing is that they enjoy the steam.”

Bathhouses Within Health Clubs

The city sees public bathhouses as part of the social infrastructure while investors consider them unprofitable and more willingly put up money in the development of fitness and entertainment centers with saunas, gyms and wellness centers, instead of waiting for years to receive payback on investing in a public bathhouse.

“Income from the bathhouse scarcely amounts to 5 per cent of the total receipts of our club,” says Olga Sorokina, head of SPA Energo-Fitness, a fitness center on the premises of the Kuntsevo residential estate. “Charges for visiting the Russian bath are not covered by the membership card and are paid separately, while Finnish and Turkish baths are included in the package.”

The 4,500-sqm ELSE-club is due to open in 2005 on the premises of the Alisa residential estate developed by the Krost concern in Pokrovskoye-Streshnevo. The club will comprise a 800-sqm bath zone. “This will be Moscow’s first club built in the image and likeness of western balneology resorts – a spa,” says director of the ELSE-club project Irina Strelnikova.

“But the bathhouse serves merely as a magnet for attracting customers, without producing most of our income. It is impossible to assess bathhouse profits separately in our projects.” ELSE-club will have seven baths, with temperatures rising gradually in three of them. Annual club membership cards, to be offered at $4,000 to $4,500 will enable their holders to visit them, along with swimming pools and gyms.

Earlier a bathhouse or a sauna was considered an inseparable part of the infrastructure of a top class residential estate. But today, says Marina Markarova, managing director at Blackwood, developers are revising their approaches towards equipping residential estates with bathhouse facilities.

Building bathhouses in apartment buildings of 20 to 30 flats, situated within the Garden Ring, is unprofitable as it is impossible to secure the necessary demand for the service without causing disturbances for the local residents. Experience of operating bathhouses, swimming pools and saunas within residential buildings has shown that building those facilities on the ground floors results in excessive humidity and dampness.

“But in houses with several hundreds of flats – some 800 – a sports and entertainment infrastructure can become an effective business,” says Markarova. In-house saunas are still popular among certain categories of consumers but they are no longer as fashionable as before.

A survey commissioned by the Moscow city department for the consumer market and services has revealed that saunas are popular mostly among male Muscovites between 18 and 40 years of age, businessmen and office workers. Russian baths attract both men and women – 60 and 40 per cent of respondents, respectively. People go to the baths once a week, or once a month. Saunas are attended once a month on average.