Spa Company Therme Misrepresented Itself in Expansion: Report

Therme, a European wellness company, has grand expansion plans in the United States. But it’s been having some issues in another North American market.

Therme allegedly misrepresented itself and exaggerated claims about its business when bidding to secure a 95-year lease to operate a spa and water park in Toronto, a New York Times investigation revealed. As part of the plan, Therme is leasing an artificial island from the city and has signed contracts that have the Canadian government pay upfront costs. Therme, when seeking government contracts to build this new facility, presented itself as a company with half a dozen locations in Europe, when it only had one location outside of Bucharest, Romania.

The deal in Ontario already contained red flags. The development atop an artificial island on Lake Ontario was reportedly excluded from environmental checks. The deal was also classified as a real estate transaction, allowing the government to bypass a rigorous review.

Participants in the bidding process were required to sign nondisclosure agreements and the government allegedly retained the right to pick the winner, regardless of whether they met the bidding requirements. Infrastructure Ontario, which managed the bidding, defended the “flexible” process.

In 2019, Therme said in its bid that it had “proven the success of its concept with six globally placed facilities under operation.” Four years later, it declared it had four large facilities in Germany and Romania.

But the leader of Therme appears to have been conflating his business with another European spa company with the same name and similar logo; the founder of that company died in a private plane crash in 2017.

A representative of Therme said its wording could have been more precise, declaring that references to its success in Germany were intended to communicate that the concept of Therme had been successful.

The financial state of Therme is also unclear, but auditors allegedly found the company was losing money and only had approximately $1.1 million in equity.

Projects cost roughly $500 million each to develop. The end result is a facility where consumers can pay to relax, luxuriate and socialize in a water-filled environment.

“Therme Group categorically refutes the claim that it misrepresented itself during the Ontario Place bidding process,” a spokesperson for Therme told The Real Deal. According to the company, it had received backing from a shareholder to begin the early stages of international expansion.

The spokesperson defended its claims of having six global facilities as proof of “the success of the therme concept — not ownership.” As the spokesperson described it, the other older spa with the same name had a partnership with this new company, including “the exchange of architectural and operational expertise across both organizations… That important context was omitted from the final article.”

Therme needs to start building its Toronto project by next spring, but the next question is what happens to its proposals in the United States. It is exploring a 500,000-square-foot, $800 million project in Dallas and hoping to land public subsidies for it. A plan for a 500,000-square-foot, $500 million project in Washington, D.C. was also announced last month, according to the Washington Post.

A center for New York City was revealed four years ago by Insider, but nothing has come of it publicly.

The Georgetown Company recently acquired a 25 percent equity stake in Therme’s U.S. business to help develop 10 projects across the country.

— Holden Walter-Warner

The story has been updated to include a comment from Therme.