RESEARCH
WE WILL SURVIVE
T e ISPA 2010 US Spa Industry Study shows that the long-term outlook for our sector is positive, yet many challenges lie ahead. We take a closer look
T
he International Spa Association’s (ISPA) 2010 study on the US spa industry confi rms pos- itive long-term trends in terms of total spa revenues and visitation levels, despite the downturn in 2009. According to ISPA’s pres- ident Lynne McNees: “We are ... encouraged to see that the industry remains viable, despite
the economic concerns of the past two years. While not every spa has been able to overcome the eff ects of the recession, the industry as a whole has weathered the storm quite well.”
POSITIVE LONG-TERM TRENDS T is latest ISPA 2010 study, which reports on 2009 fi gures, includes responses from over 1,000 survey returns and was conducted by PricewaterhouseCoopers (PwC). The margins of error on this survey are between ±3.9 per cent and ±4.7 depending on the slice of the sample in question. On the supply side, spa locations showed continuous growth from
just over 4,000 in 1999 to 20,610 (see Graph 1 below). Although this is a decline on the peak 2008 year, when there were 21,310 spa loca- tions in the US, the long-term trend is nevertheless one of growth. On the demand side, total spa industry revenue has not increased
every year, yet the long-term trend is also one of sustained growth, having risen from us$4.2bn (€3bn, £2.6bn) in 1999 to us$12.3bn (€8.9bn, £7.8bn) in 2009. Although most indicators in 2009 show a decline on the 2008 peak year, they still remain above the 2007 fi gures – the previous high. Similarly, the number of employees in the spa industry has been con-
sistently increasing from around 125,000 in 2000 to 332,000 by the spring of 2010. Other key statistics from 2009 can be seen in Table 1 (opposite). Overall, all indicators show considerable growth in the long-term.
GRAPH 1: US SPA INDUSTRY – SUPPLY AND DEMAND
15,000 20,000 25,000
10,000 5,000 0
1999 2001 2003 2005 2006 2007 2008 2009 NO OF SPAS REVENUE IN US$ BILLIONS 34 Read Spa Business online
spabusiness.com / digital
10 12 14
8 6 4 2 0
GRAPH 2: EMPLOYMENT IN THE US SPA INDUSTRY
100 120 140 160 180
80 60 40 20 0
2000 2001 2002 2003 2004 2006 2007 2008 2009 2010 FULL TIME CONTRACTOR PART TIME
REACTIONS TO THE RECESSION Not surprisingly, for an industry which is so closely tied with employ- ment prospects and personal income trends, between 2008 and 2009
there were declines in: ■ Total spa revenues: -4.3 per cent ■ Total spa visits: -10.2 per cent ■ Total spa locations: -3.2 per cent ■ Total square feet: -5.2 per cent (from March 2009 to May 2010) ■ Total employees: -2.5 per cent (from March 2009 to May 2010)
T e industry has reacted to the economic downturn with a mixture of predictable measures – attempts to increase revenues while con- trolling costs. According to the report: “Spas have re-engineered their menus and introduced discounts and rewards to incentivise customer loyalty and attract new spa-goers”. Promotions – eff ectively discounting – were introduced by 67 per cent of all spas. T is was much higher in hotels/resorts, where 76 per cent reported having introduced promotions in response to the recession. Further, 75 per cent of spas introduced “express treatments of 30 minutes or less”. Given that payroll is the largest cost in the spa industry, it’s not
surprising that this is where operators turned their attention; 61 per cent of respondents took “one or more steps to manage and reduce costs by reshaping their workforce and seeking greater control over labour costs”. Specifi cally, 38 per cent of businesses reduced employ- ees’ hours, 33 per cent “reduced the number of employees” and 21 per cent “shiſt ed full-time staff to a part-time status”. While employment in the industry overall dropped by 2.5 per cent,
with a decline in full-time employees (-13 per cent) and contractors (-19 per cent), in fact there was an increase in the number of part- time workers of 22 per cent – there were 112,000 part-time employees in March 2009 rising to 137,000 in May 2010 (see Graph 2, above).
SPA BUSINESS 4 2010 ©Cybertrek 2010
revenue in us$ billions
no of spas
total employees (000s)
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