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.
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.
The dynamics of the spa industry enable it to persevere longer than other industries for several reasons: 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. Yet during such economic times, the spa industry inevitably suffers as consumers re-prioritize and cut back on luxuries.
By examining the results presented in the 2008 edition of Trends in the Hotel Spa Industry produced by PKF Consulting and PKF Hospitality Research, operators and owners will hopefully be able to adjust their business model and identify areas of growth as we journey through this protracted recessionary period. The report analyzes 2007 financial performance data of 116 spas operated by hotels located throughout the United States.
Comparisons are also made to the 2006 performance of the same hotel spas. In aggregate, the 116 hotels that voluntarily submitted their data for the survey averaged 405 guest rooms in size and achieved an occupancy of 70.8 percent and average daily room rate of $257.14, which translated to a 7.4 percent increase in Revenue Per Available Room (RevPAR) as compared to 2006 RevPAR. Both urban and resort hotel spas were included in the research, while day spas, medical spas, destination spas, and hotel spas that independently lease space were excluded.
Revenues
For the hotels that participated in our Spa Trends survey, spa department sales represented 3.9 percent of total hotel revenue in 2007. Although this number may seem understated in comparison to rooms or food and beverage revenue, a spa’s indirect impact on hotel image, average daily rate, occupancy, and group bookings is noteworthy.
As expected, the spa sales to total hotel revenue ratio was higher for resort hotels (4.9 percent) versus urban hotels (2.4 percent). At a resort the spa treatment may be the main focus of a guest’s stay, while programs in urban spas are usually scheduled around the guest’s business or social schedule.
Total department revenue for the spas in the survey grew 5.0 percent from 2006 to 2007, slightly less than the 5.5 percent increase in total hotel revenue achieved by all hotels in PKF’s 2008 Trends in the Hotel Industry report. Since the number of occupied rooms for the representative sample remained relatively flat (0.2 percent decline), the rise in spa revenue was likely due to an increase in 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 require value and a heightened level of experience, spas can meet that need by providing promotional packages, special offers, and discounts.
Get the full story at htrends.com
