RESEARCH
while revenues fell by 5 to 8 per cent. T is resulted in spa departmental profi t declines of between 11 and 25 per cent. T e story was similar between 2008 and 2009, although the cost cutting was more severe. While most spas reduced labour outgoings by between 13 per cent and 22.5 per cent (on a square foot basis), total spa revenues also fell by between 15.4 per cent and 21.5 per cent, resulting in spa depart- mental profi ts dropping by between 14.7 per cent and 27.4 per cent. Both the 2009 and 2010 surveys show that the largest declines in spa departmental profi t was experienced by those spas with revenues of under US$1m.
INDUSTRY ADVICE Given the higher per square foot revenue lev- els of the smaller hotels spas, Fenard believes that the economic crisis has “spelt an end to the large opulent spas. When development returns, it will be smaller spas which are devel- oped”. But this contradicts fi ndings showing that smaller spas fi nd it harder to convert rev- enues into profi t than the larger spa facilities; the study suggests that those spas with a turn- over of less than us$1m struggle the most. In these diffi cult times, spas will need to run effi - cient operations, particularly regarding labour and sharpen their marketing to increase rev- enues. Mary Tabacchi, associate professor at Cornell University, points out: “Spas have to develop and market their own uniqueness.
Due to the criticism of the luxury market
there is a strong drive back to wellness
However, Tabacchi is concerned at the over-
Spas have to develop and market their own uniqueness and fi nd new customers
New spa customers will have to be found. T is requires strategic marketing and fl exibility of hotel and resort spas.” With demand for hotels expected to
decline further during 2010, Greg Miller, area vice-president and managing director of management company Destination Hotels, believes that “it is important to educate our guests and buyers – spas should no longer be perceived as a discretionary indulgence, but as an important part of a healthier lifestyle.” T is is clearly an opportunity given that the 2009 PKF Consulting study reports that health and wellness services, such as nutritional cooking classes and life coaching, represented only 0.2 per cent of total spa revenues.
TABLE 2: PAYROLL ANALYSIS – 2010 SURVEY* SIZE OF SPA
Spa sq ft greater than 15,000
Total payroll costs per sq ft US$ 63.58 Payroll as % of spa revenue
* Based on 2009 fi gures 36 spa business handbook 2011
www.spahandbook.com 50.9%
Spa sq ft from 6,000 to 15,000
82.81 61.7%
Spa sq ft less than 6,000
147.03 64.4%
use of the term ‘wellness’: “Due to criticism of the luxury market there is a strong drive back to wellness. T ose who espouse wellness must ensure guests see results”. T ese could include spa treatments to relieve stress and promote wellbeing, she says, but warns that “treatments alone are not enough to promote fi t bodies and minds. T e move will have to be authentic”. Canyon Ranch’s vice-chair and CEO, Jerry
Cohen, concludes: “T e real test is whether the new wellness focus will simply be a marketing ploy or whether there will be real substance. If there’s going to be real substance, dollars directed away from opulent facilities will have to be dedicated to programming. I’m not sure if hospitality companies will do this as the return on dollars from health and wellness programming is not that great.” ● T e 2009 and 2010 Trends in the Hotel Spa
Industry can be purchased by calling +1 866 842 8754 or at
www.pkfc.com/store.
SPA TURNOVER
Spa revenue greater than US$3m
75.20 48.9%
Spa revenue US$1m – US$3m
82.80 57.5%
Spa revenue less than US$1m
61.28 66.5%
PHOTO:
ISTOCK.COM/©SEAN LOCKE
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