Business Overview and History

OneSpaWorld Holdings Limited (OSW) is a global provider of health and wellness services and products, operating primarily on cruise ships and at destination resorts around the world. The company has built a dominant market position through its deep expertise, innovative offerings, and long-standing partnerships with industry-leading cruise lines and resort operators.

OneSpaWorld's roots trace back to the early 1960s, when it opened the world's first salons at sea onboard transatlantic cruise ships, including the iconic Queen Mary and Queen Elizabeth II. Over the past five decades, the company has continuously evolved and expanded its health, fitness, beauty, and wellness services and products, solidifying its position as the pre-eminent global operator in this space.

Today, OneSpaWorld operates health and wellness centers on 199 cruise ships, serving substantially all of the major global cruise lines, including Carnival Cruise Line, Royal Caribbean Cruises, Norwegian Cruise Line, and many others. The company's destination resort footprint spans 50 locations, primarily in the United States, the Caribbean, and Asia. This extensive global reach allows OneSpaWorld to leverage its scale and expertise to deliver exceptional experiences for its cruise and resort guests.

OneSpaWorld has developed powerful staff recruiting, training, and logistics platforms to manage the complexity of its global operations and maintain its industry-leading quality standards. As of 2024, the company's comprehensive suite of premium health, fitness, beauty, and wellness services, products, solutions, and experiences reached more consumers than ever before, with its 199 centers onboard cruise ships addressing a captive audience of over 26 million passengers annually.

A significant milestone in OneSpaWorld's history was the business combination in March 2019, which merged Steiner Leisure Limited and Haymaker Acquisition Corp. This transaction allowed OneSpaWorld to become a publicly traded company, providing access to capital markets to fund its growth initiatives. Prior to this, OneSpaWorld operated as a private company for many years, building its reputation as the market leader in the outsourced maritime health and wellness center operations segment of the cruise industry.

One of the main challenges OneSpaWorld faced was the impact of the COVID-19 pandemic, which caused a complete cessation of cruise ship operations for an extended period. However, the company was able to weather this storm and return to normalized operations, demonstrating the resilience of its business model and the strength of its relationships with cruise line and destination resort partners.

Financials and Operational Metrics

OneSpaWorld's financial performance has been impressive, with the company reporting record results in fiscal year 2024. Total revenues increased 13% to $895 million, while income from operations grew 44% to $78.1 million. Adjusted EBITDA, a key profitability metric, surged 26% to a record $112.1 million. Net income for the year reached $72.9 million, with operating cash flow of $78.8 million and free cash flow of $72.1 million.

In the fourth quarter of 2024, OneSpaWorld reported revenue of $217.2 million, an 11% increase compared to the same period in 2023. This growth was driven by fleet expansion, higher guest spend, and increased onboard penetration. Net income for the quarter was $14.4 million.

The company's operational metrics also reflect its strong execution. At the end of fiscal 2024, OneSpaWorld operated health and wellness centers on 199 cruise ships, with an average ship count of 188 during the year. This compares to 193 ships and an average of 184 ships in the prior fiscal year. The company also expanded its Medi-Spa offerings, which are now available on 147 ships, up from 139 at the end of fiscal 2023.

OneSpaWorld's business is divided into two main segments: Maritime and Destination Resorts. The Maritime segment, which accounts for over 90% of total revenues, saw service revenues increase to $688.2 million in 2024, up from $610.7 million in 2023. Product revenues in this segment also grew to $167 million in 2024, compared to $140.7 million in 2023. The Destination Resorts segment, while smaller, generated service revenues of $35.1 million and product revenues of $2.5 million in 2024.

The company's financial position remains strong, with $58.6 million in cash and only $100 million in total debt at the end of fiscal 2024. OneSpaWorld's liquidity is further bolstered by a $50 million revolving credit facility that remained undrawn as of December 31, 2024. The company's debt-to-equity ratio stands at 0.20, with a current ratio of 2.03 and a quick ratio of 1.45, indicating a healthy balance sheet.

Strategic Initiatives and Growth Opportunities

OneSpaWorld has successfully executed on several strategic priorities in recent years, which have fueled its strong financial and operational performance.

First, the company has capitalized on highly visible new ship growth opportunities with its existing cruise line partners, adding seven new maritime health and wellness centers in fiscal 2024, including five new shipbuilds. This expansion, combined with the company's industry-leading 97% contract renewal rate over the last 15 years, has strengthened its dominant market position.

Second, OneSpaWorld has continued to innovate and expand its higher-value service offerings, such as Medi-Spa treatments, cryotherapy, and LED light facials. These premium services have driven increased revenues and margins, as evidenced by the 30% year-over-year growth in Medi-Spa revenue during the fourth quarter of fiscal 2024.

Third, the company has focused on enhancing the productivity of its health and wellness centers, through initiatives like increased pre-booking, dynamic pricing, and targeted marketing campaigns. These efforts have resulted in strong growth in key metrics such as revenue per passenger per day, weekly revenue, and revenue per staff per day.

Looking ahead, OneSpaWorld is well-positioned to capitalize on the continued recovery and growth of the cruise and hospitality industries. The company expects to open nine new maritime health and wellness centers in fiscal 2025, further expanding its global footprint. Additionally, the company's robust balance sheet provides ample financial flexibility to invest in future growth initiatives.

Industry Trends and Market Outlook

OneSpaWorld operates in the rapidly growing wellness tourism market, which was valued at $830.2 billion in 2023, representing a 19% growth from pre-pandemic levels in 2019. Industry reports project this market to grow at an average annual rate of 10.2%, reaching $1.35 trillion by 2028. This favorable market trend aligns well with OneSpaWorld's strategic positioning and growth initiatives.

For fiscal year 2025, OneSpaWorld has provided guidance indicating continued growth. The company expects total revenue in the range of $950 million to $970 million and adjusted EBITDA between $115 million and $125 million. For the first quarter of fiscal year 2025, OneSpaWorld anticipates total revenue between $215 million and $220 million, with adjusted EBITDA ranging from $25 million to $27 million.

Risks and Challenges

While OneSpaWorld's growth story is compelling, the company is not without risks and challenges. The cruise industry, which accounts for a significant portion of OneSpaWorld's revenue, can be vulnerable to macroeconomic conditions, geopolitical events, and public health crises, as witnessed during the recent COVID-19 pandemic. Any disruptions or slowdowns in the cruise industry could adversely impact OneSpaWorld's financial performance.

Additionally, the company operates in a competitive landscape, both in the maritime and destination resort health and wellness markets. While OneSpaWorld's market-leading position and strong partnerships provide a significant competitive advantage, it must continually innovate and enhance its service offerings to maintain its industry-leading status.

Conclusion

OneSpaWorld has established itself as the dominant global provider of health and wellness services and products in the cruise and hospitality industries. Through its extensive global footprint, innovative offerings, and long-standing partnerships, the company has built a differentiated business model that would be challenging and uneconomical to replicate.

As the cruise and hospitality industries continue to recover and grow, OneSpaWorld is well-positioned to capitalize on these trends and deliver strong financial and operational performance. With a robust balance sheet, a track record of strategic execution, and a talented management team, the company appears poised to maintain its leadership position and drive increasing value for its shareholders in the booming wellness tourism market.