Will Revenue and Profit Growth Continue in 2009?
"Lodging industry owners and operators fully realize that a well-run spa operation can benefit a hotel in many ways," said
During challenging times like these, the spa industry has the potential to be buoyant. However, it is not invincible. "The dynamics of the spa industry enable it to persevere longer than other industries for several reasons," Baltin noted. "A large portion of its consumers are affluent, an increase in stress can further emphasize the importance of staying healthy, and in difficult times people tend to seek out experiences rather than material objects. All that being said, hotel spa usage will likely decrease due to expected declines in occupancy rates and guest counts for the lodging industry in general." In its
The 2008 Trends in the Hotel Spa Industry report analyzes the 2007 financial performance of 116 spas operated by hotels located throughout
Since the number of occupied rooms for the survey sample remained relatively flat (0.2 percent decline), the 5.0 percent rise in spa revenue was likely due to an increase in the price for spa services, increase in number of services utilized per hotel guest, or a stronger mix of local patronage. "Recent research has shown that although consumers are tightening their belts, they are still traveling albeit with a different mindset and expectation of services. People increasingly are requiring greater value and a heightened level of experience. Hotels with spas can meet those needs by providing promotional packages, special offers, and discounts," observed
For the hotel spas that participated in the survey, department sales represented 3.9 percent of total hotel revenue in 2007. Within the spa department, massage continued to be the greatest source of revenue (55.6 percent), followed by skin care and body work (18.8 percent) and salon services (10.7 percent).
Overall, spa department expenses increased 4.7 percent from 2006 to 2007, driven mainly by a 6.6 percent increase in labor costs. Like all departments within a hotel, labor-related costs are the biggest operating expense for spas, representing 57.2 percent of department revenue. "Labor costs in urban hotel spas tend to be somewhat higher than in resort spas. Urban hotel spas have lower revenues and inconsistent demand for services making scheduling more complicated," Lerner said.
The average departmental profit margin for the spas in the survey sample was 24.1 percent. For comparison purposes, the average profit margin for all other operated departments in PKF's Trends in the Hotel Industry survey was 29.4 percent.
From 2006 to 2007, hotel spa department profits grew 5.8 percent. Profit growth was greater for urban spas (12.3 percent) versus resort spas (4.6 percent). "While 5.8 percent is a healthy rise over the previous year, it was less than the 6.7 growth rate for total hotel operated department income, which demonstrates the evolving spa industry still has room to improve," Baltin noted.
Hotel Spas In 2009
"As U.S. hotels are forecast to struggle with declines in occupancy, ADR, and revenue, we believe there is an opportunity for spa operators to capitalize on operational and competitive advantages," Baltin said. "Hotel spas are an important amenity to all market segments and should be leveraged with regards to meetings, conventions, and other special events. Innovative marketing can also be created to promote the spa as a 'staycation,' thereby providing a refuge for local residents."
To purchase the 53-page 2008 edition of Trends in the Hotel Spa Industry, please visit the firm's online store at www.pkfc.com/store, or call (866) 842-8754. In addition to multiple data tables that display revenue, expense, and profitability benchmarks, the report includes editorial content from the following guest authors:
PKF Hospitality Research (PKF-HR), headquartered in
U.S. Hotel Spas Sources of Revenue (2007 Percent of Department Revenue) Revenue Percent of Total Revenue Massage 55.7% Skin Care and Body Work 18.8% Salon Services 10.7% Daily Facility Use 0.9% Fitness and Personal Training 1.9% Health and Wellness 0.3% Retail 10.3% Other 1.4% Total 100.0% Source: PKF Hospitality Research, 2008 Trends in the Hotel Spa Industry report. U.S. Hotel Spas Select Revenues and Expenses (Change From 2006 to 2007) Revenue/Expense Change from 2006 to 2007 Massage Revenue 5.6% Skin Care and Body Work Revenue 2.4% Salon Services Revenue 5.2% Retail Revenue 8.8% Total Department Revenue 5.0% Labor Costs 6.6% Non-Labor Related Expenses -0.5% Department Income* 5.8% Note: * Before deductions for undistributed expenses and fixed charges. Source: PKF Hospitality Research, 2008 Trends in the Hotel Spa Industry report. Contact: Bruce Baltin Senior Vice President PKF Consulting 865 South Figueroa Street, Suite 3500 Los Angeles, CA 90017 (213) 680-0900, ext 3309 Chris Daly or Jerry Daly (media) Daly Gray Public Relations 620 Herndon Parkway Suite 115 Herndon, VA 20170 (703) 435-6293
SOURCE PKF Consulting