Despite rising labour costs, hotel spa revenue is showing strong growth, according to the latest research from CBRE. Mark VanStekelenburg outlines the key findings
For the first time in ten years, hotel spa department revenue grew at a faster pace compared to other sources of hotel revenue, according to the recently released 2016 edition of CBRE’s Trends® in the Hotel Spa Industry. The report shows that US hotel spa departments were able to increase their revenue by 5.6 per cent from 2014 to 2015. This compares favourably to a 3.3 per cent rise in rooms revenue for the properties in the survey sample, and a 5.5 per cent increase in total hotel revenue. This is the first time since the 2007 edition of the publication that spa revenue growth surpassed rooms revenue growth.
CBRE Hotels’ Americas Research is projecting modest gains in rooms revenue for the next few years, as the US lodging industry operates at the top of the business cycle. Therefore, hotel operators will need to look at other operated departments – like spa – to accelerate total hotel revenue growth.
Health and wellness is also becoming an increasingly important component of everyday life. Though historically considered as an exclusively high-end hotel amenity, the integration of health and travel is now expected.
For example, Westin has recently partnered with both Fitbit and New Balance to help its guests continue their fitness routines when they travel, while Fairmont has teamed up with Reebok. Intercontinental’s new wellness-oriented brand, Even Hotels, has seven properties in the development pipeline, and health club Equinox is branching out into the luxury lifestyle hotel market, launching its first hotel in New York City in 2019.
Integrating health and wellness into a hotel operation is a distinguishing mark to consumers as they strive to seek balance in all aspects of life, including travel.
Spa catches up During the Great Recession, spa department revenue was hit harder than other hotel revenues, extending the time needed for revenue to recover. It wasn’t until 2015 that spa revenue growth exceeded the pace of rooms revenue growth, signalling that the spa department is catching up in its recovery following the 2008 recession. Spa profits have seen double-digit growth in every year since 2010, with the exception of more modest growth in 2012.
Strong Profit Growth While hotel spa revenue is showing relatively strong growth, hotel spa department profits are increasing at an even greater pace. In 2015, hotel spa department managers were able to convert the 5.6 per cent increase in revenues into a strong 17.7 per cent boost in department profits. Spa managers were able to achieve such strong gains in profits because they controlled their expenses; from 2014 to 2015, the combination of cost of goods sold, labour costs, and other operating expenses increased by just 2.1 per cent. Labour costs comprise approximately three quarters of operating expenses for a hotel spa. Given the surge in hotel labour costs that we have seen in recent years, spa managers should be commended for achieving such strong flow-through within their departments. In fact, it was a reduction in other operating expenses that offset the 5.8 per cent increase in labour costs and allowed hotel spa departments to achieve the strong growth in profits.
A Bright Future Recent economic reports have indicated increases in retail sales, car sales, building materials and health and beauty products. This is an indication that people are spending on themselves and bodes well for travel.
Additional research shows that travellers are mindful of their wellbeing when it comes to choosing their lodging. Hotels have an opportunity to take advantage of this trend, not just by promoting their spas, but also by offering other health and wellness amenities and services throughout the hotel.
As more people travel, the demographics of travellers are also changing, causing hotel companies to refocus their offerings to ensure they meet the needs of their guests. Leisure and group travel are growing, and hotels continue to strive to make sure that the health and wellness needs of these different guests are addressed. Hotel companies are creating programmes and even entire brands – with a focus on providing the consumer with the basics of health and wellness. The future looks bright for the hotel spa industry.
Read more from this issue of Spa Business magazine
Interview: Jeremy McCarthy
Mandarin Oriental’s group director
of spa and wellness discusses mental
wellness, spas and technology
Promotional feature: Beautyworld Middle East
Set to take place May 14-16, 2017 in Dubai, Beautyworld Middle East is billed as “three days to rediscover wellness and shake up the industry.”
Promotional feature: ESPA
ESPA has been a leader in the field of therapeutic skincare and luxury spa design and management for 25 years. Founder Susan Harmsworth explains how the company’s recent brand evolution will make ESPA even more relevant to the future of wellness
Promotional feature: Riceforce
Rice Force is set to make further inroads into the spa market in 2017 with the
launch of its new aromatic oils and treatment protocol
Promotional feature: Oakworks
Oakworks’ new Masters’ Collection range, which will consist of over 15 models by the end of 2017, has been designed to offer spa operators the ultimate in modern styling, with solutions and functionality that address each spa’s practical needs
Historical Performance For 2015, spa department revenue averaged US$4,284 per available room (PAR), surpassing the 2005 average of US$4,200 PAR, but still below the peak in 2007 of US$4,838. Spa department expenses averaged US$3,217 PAR, close to the 2005 average of US$3,220 PAR. The trend is similar for spa department profits, which averaged US$1,067 PAR, above 2005’s average of US$980 PAR and close to 2006’s average of US$1,090 PAR
shutterstock
Given the surge in labour costs in recent years, spa managers should be commended for growth in profits
CBRE Hotels - Trends® in the Hotel Spa Industry
Mark VanStekelenburg
Mark VanStekelenburg is managing director at CBRE Hotels Spa Consulting Practice
Twitter: @cbre
l Hotel brands are racing to tie up with consumer fitness brands. Westin has partnered with FitBit and New Balance, while Fairmont has teamed up with Reebok
In the fast-paced world of fitness and wellness, where high-intensity workouts push us to
our limits and the sweat pours, the importance of efficient recovery cannot be overstated. [more...]
+ More featured suppliers
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Oakworks Inc
Oakworks is a US-based FSC-certified manufacturer of spa, massage, and medical equipment. [more...]
G.M. Collin
G.M. Collin develops superior skin care products, from preventive care to combating the first signs [more...]
Despite rising labour costs, hotel spa revenue is showing strong growth, according to the latest research from CBRE. Mark VanStekelenburg outlines the key findings
For the first time in ten years, hotel spa department revenue grew at a faster pace compared to other sources of hotel revenue, according to the recently released 2016 edition of CBRE’s Trends® in the Hotel Spa Industry. The report shows that US hotel spa departments were able to increase their revenue by 5.6 per cent from 2014 to 2015. This compares favourably to a 3.3 per cent rise in rooms revenue for the properties in the survey sample, and a 5.5 per cent increase in total hotel revenue. This is the first time since the 2007 edition of the publication that spa revenue growth surpassed rooms revenue growth.
CBRE Hotels’ Americas Research is projecting modest gains in rooms revenue for the next few years, as the US lodging industry operates at the top of the business cycle. Therefore, hotel operators will need to look at other operated departments – like spa – to accelerate total hotel revenue growth.
Health and wellness is also becoming an increasingly important component of everyday life. Though historically considered as an exclusively high-end hotel amenity, the integration of health and travel is now expected.
For example, Westin has recently partnered with both Fitbit and New Balance to help its guests continue their fitness routines when they travel, while Fairmont has teamed up with Reebok. Intercontinental’s new wellness-oriented brand, Even Hotels, has seven properties in the development pipeline, and health club Equinox is branching out into the luxury lifestyle hotel market, launching its first hotel in New York City in 2019.
Integrating health and wellness into a hotel operation is a distinguishing mark to consumers as they strive to seek balance in all aspects of life, including travel.
Spa catches up During the Great Recession, spa department revenue was hit harder than other hotel revenues, extending the time needed for revenue to recover. It wasn’t until 2015 that spa revenue growth exceeded the pace of rooms revenue growth, signalling that the spa department is catching up in its recovery following the 2008 recession. Spa profits have seen double-digit growth in every year since 2010, with the exception of more modest growth in 2012.
Strong Profit Growth While hotel spa revenue is showing relatively strong growth, hotel spa department profits are increasing at an even greater pace. In 2015, hotel spa department managers were able to convert the 5.6 per cent increase in revenues into a strong 17.7 per cent boost in department profits. Spa managers were able to achieve such strong gains in profits because they controlled their expenses; from 2014 to 2015, the combination of cost of goods sold, labour costs, and other operating expenses increased by just 2.1 per cent. Labour costs comprise approximately three quarters of operating expenses for a hotel spa. Given the surge in hotel labour costs that we have seen in recent years, spa managers should be commended for achieving such strong flow-through within their departments. In fact, it was a reduction in other operating expenses that offset the 5.8 per cent increase in labour costs and allowed hotel spa departments to achieve the strong growth in profits.
A Bright Future Recent economic reports have indicated increases in retail sales, car sales, building materials and health and beauty products. This is an indication that people are spending on themselves and bodes well for travel.
Additional research shows that travellers are mindful of their wellbeing when it comes to choosing their lodging. Hotels have an opportunity to take advantage of this trend, not just by promoting their spas, but also by offering other health and wellness amenities and services throughout the hotel.
As more people travel, the demographics of travellers are also changing, causing hotel companies to refocus their offerings to ensure they meet the needs of their guests. Leisure and group travel are growing, and hotels continue to strive to make sure that the health and wellness needs of these different guests are addressed. Hotel companies are creating programmes and even entire brands – with a focus on providing the consumer with the basics of health and wellness. The future looks bright for the hotel spa industry.
Read more from this issue of Spa Business magazine
Interview: Jeremy McCarthy
Mandarin Oriental’s group director
of spa and wellness discusses mental
wellness, spas and technology
Promotional feature: Beautyworld Middle East
Set to take place May 14-16, 2017 in Dubai, Beautyworld Middle East is billed as “three days to rediscover wellness and shake up the industry.”
Promotional feature: ESPA
ESPA has been a leader in the field of therapeutic skincare and luxury spa design and management for 25 years. Founder Susan Harmsworth explains how the company’s recent brand evolution will make ESPA even more relevant to the future of wellness
Promotional feature: Riceforce
Rice Force is set to make further inroads into the spa market in 2017 with the
launch of its new aromatic oils and treatment protocol
Promotional feature: Oakworks
Oakworks’ new Masters’ Collection range, which will consist of over 15 models by the end of 2017, has been designed to offer spa operators the ultimate in modern styling, with solutions and functionality that address each spa’s practical needs
Historical Performance For 2015, spa department revenue averaged US$4,284 per available room (PAR), surpassing the 2005 average of US$4,200 PAR, but still below the peak in 2007 of US$4,838. Spa department expenses averaged US$3,217 PAR, close to the 2005 average of US$3,220 PAR. The trend is similar for spa department profits, which averaged US$1,067 PAR, above 2005’s average of US$980 PAR and close to 2006’s average of US$1,090 PAR
shutterstock
Given the surge in labour costs in recent years, spa managers should be commended for growth in profits
CBRE Hotels - Trends® in the Hotel Spa Industry
Mark VanStekelenburg
Mark VanStekelenburg is managing director at CBRE Hotels Spa Consulting Practice
Twitter: @cbre
l Hotel brands are racing to tie up with consumer fitness brands. Westin has partnered with FitBit and New Balance, while Fairmont has teamed up with Reebok
People taking GLP-1 weight loss medications such as Ozempic, Wegovy, Mounjaro and Zepbound
may be losing weight, but they’re also becoming less physically active, according to new
research presented at the ENDO 2026 annual meeting of the Endocrine Society
Abu Dhabi-based investment firm Mubadala Capital has made a binding, fully financed
€1 billion
offer to acquire Pierre and Vacances SA, the European holiday resort operator behind the
continental European Center Parcs business.
Global retreat trade show, Synergy The Retreat Show, has launched a resource called The
Source, which hosts an open-access online Transformation Series programme.
The Standards Authority for Touch in Cancer Care (SATCC) charity has announced its first five-
day Living with Cancer and Beyond retreat, which will be held at Carden Park Hotel and Spa in
Cheshire, UK, between 1 and 5 September.
Patmos Aktis, a Luxury Collection Resort and Spa, has opened in Greece, with a renovated and
rebranded wellness offering called Ansana Wellness and Spa.
The Mauna Kea Beach Hotel, an Autograph Collection property in Hawaii, US, has opened its
22,000 sq ft indoor-outdoor Spa at Mauna Kea as the final step in the property’s overall
renovation, which has cost more than US$180 million (€166 million, £140 mill
The UK spa review and discovery platform for consumers, the Good Spa Guide, has announced
it will host the Good Spa Guide Awards 2026 during an event on 16 November at Sopwell House
Hotel in St Albans, UK.
Eighty-four per cent of consumers now say wellness is a top priority in their lives, with this
percentage increasing year on year, according to a preview presentation of McKinsey’s Future of
Wellness 2026 research report.
Mass protests have been taking place since Monday 1 June in Albania over the development of
a luxury resort by Donald Trump’s daughter Ivanka Trump and her husband Jared Kushner.
Global Wellness Day (GWD) marked its 15th anniversary on Saturday 13 June 2026, with the
theme: #JoyMagenta – a celebration of the healing qualities of simple gestures and activities
that spark joy.
In the fast-paced world of fitness and wellness, where high-intensity workouts push us to
our limits and the sweat pours, the importance of efficient recovery cannot be overstated. [more...]
+ More featured suppliers
COMPANY PROFILES
Oakworks Inc Oakworks is a US-based FSC-certified manufacturer of spa, massage, and medical equipment. [more...]
