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The Hotel Spa Recovery Begins

PKF Reports an Increase of 8.3% in Department Revenue for 2011
with Trend Expected to Continue for the Foreseeable Future

January 22, 2013, Boston, Mass. – After lagging behind other hotel revenue sources, hotel spas began to see their sales recover in 2011, and this trend is expected to continue for the foreseeable future.  According to PKF Consulting USA, LLC’s (PKFC) recently released Trends® in the Hotel Spa Industry report, hotel spas enjoyed an 8.3 percent increase in department revenue in 2011, after suffering declines the three previous years.  For comparison purposes, rooms and food and beverage revenue began to climb out of the industry recession and post revenue growth starting in 2010.

“If we look to Maslow and his hierarchy of needs, we understand that basic needs include food and shelter, but do not include perceived ‘luxuries’ such as spa and wellness treatments,” said Andrea Foster, vice president and national director of spa and wellness consulting for PKFC.  “In a recession and in the initial recovery that follows, consumers are hesitant to spend on products and services that are beyond basic necessities.  We are pleased to begin seeing the loosening of purse strings for purchases that help support a healthier lifestyle.”
Revenues Rise For All
The beginning of the recovery in 2011 was enjoyed by all types of hotel spas regardless of location, volume of revenue, or size of the facilities.  Analyzing the data by hotel type, PKFC observed similar revenue increases for spas located in both resort (8.4%) and urban (8.2%) hotels.
While total spa department revenue increased 8.3 percent, when measured on a dollar per occupied room basis, the revenue increase was just 3.3 percent.  “This implies that spa managers benefited more from an increase in the capture of in-house guests, as opposed to a higher spend per guest.  The increased customer count also could have been influenced by a rise in the number of patrons from the local community,” Foster observed.

Massage services continue to generate the most revenue for hotels spas.  Sales from massages averaged 57.0 percent of total department revenue and grew by 9.2 percent from 2010 to 2011.  Other significant spa services enjoying strong growth in revenue during 2011 were Skin Care and Body Work (8.0%), Salon Services (8.1%) and Retail (13.4%).  “The higher percentage increase in Retail revenue might be the spa guest taking home products in an effort to extend the effects of the spa treatment before committing to more frequent spa visits,” noted Foster.
Expenses Under Control
Both urban and resort spa managers were able to limit the growth in total departmental expenses to just 5.5 percent during 2011.  Like most operating departments within a hotel, labor costs are the single largest expense item for spas.  In 2011, the combined costs of salaries, wages, bonuses and payroll-related expenses equaled 55.6 percent of spa department revenue, or 72.9 percent of total departmental expenses.  “Managing labor costs in a spa is challenging.  The inconsistent timing of appointments leads to erratic scheduling and elevated use of part-time and contract employees.  We were impressed that labor costs rose by just 4.9 percent from 2010 to 2011 despite the 8.3 percent rise in department revenue,” said Foster.
Profits Prevail
Like revenues, all types of hotel spas enjoyed profit growth in 2011.  On average, the hotel spas in the survey sample achieved an 18.5 percent increase in departmental profits from 2010 to 2011.
When segregating the sample by the total volume of spa revenue, PKFC did observe some distinctive differences in the percent change in profits.  Hotel spas with more than $3 million in revenue saw their profits rise by 8.0 percent.  On the other hand, smaller spas with under $1 million in revenue enjoyed a very strong 61.4 percent rise in profits.  Of course, it needs to be noted that the large volume spa operations average 13 times more dollars in profits than their smaller counterparts, which has a significant impact on the size of the percentage increases.
Growth By Price
Based on its December 2012 Hotel Horizons® forecast report, PKF Hospitality Research, LLC estimates that RevPAR for the U.S. hotels grew by 6.8 percent in 2012 and will continue to grow at an annual average rate of 6.4 percent through 2016.  Going forward, the majority of RevPAR growth will be achieved through increases in room rates, not gains in occupancy.  This trend is particularly true for luxury and upper-upscale properties, the two lodging categories in which most hotel spas operate.

“The implication for hotel spa managers is clear.  The pace of growth in hotel guest counts is going to diminish over the next few years.  Therefore, in order to perpetuate the recovery that started in 2011, hotel spa managers will have to generate revenue growth by increasing the capture rate of in-house guests, sourcing additional local customers and/or raising the amount the spa customers spend per visit,” said Foster.
The Impacts On Spas
Hotel spas are impacted by the economy at large and by the performance and trends of the lodging industry, in particular.  Additionally, demographics, psychographics and behavior trends also can play an important part in the performance of spas.  The deterioration of the United States’ health and excessive rates of obesity, resulting in record high cost of health care (or more appropriately, sick care), have been discussed widely.  Further, the nation has an aging population that includes 76 million baby boomers, the oldest of which will turn 67 years old in 2013.
“At the core of spa is taking care of one’s self.  As more attention is given – and action is taken – to improving poor health and proactively maintaining good health through better lifestyle choices, we can expect to see demand for spas increase as a result.  Synergistically, spa marketing and messaging should play to these trends and offer additional support in shifting popular thinking toward a more wellness-based lifestyle approach.  The potential result?  Hotel spas sustainably doing well, by doing good,” Foster concluded.
To purchase a copy of the 2012 Trends® in the Hotel Spa Industry report, please visit
Headquartered in San Francisco, PKF Consulting USA, LLC ( is an advisory and real estate firm specializing in the hospitality industry.  PKF Consulting USA is owned by FirstService Corporation (FSRV) and is a subsidiary of Colliers International.  The firm operates two companies: PKF Consulting USA, LLC. and PKF Hospitality Research, LLC.  The firm has offices in New York, Boston, Indianapolis, Chicago, Philadelphia, Washington DC, Atlanta, Jacksonville, Tampa, Orlando, Houston, Dallas, Los Angeles, Bozeman, and San Francisco.

Andrea Foster
Tel: 617 330 8189

Chris Daly
Daly Gray Public Relations
  Tel: 703 435 6293

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