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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.
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
The 16th edition of the esteemed international spa and hospitality industry event, Forum
HOTel&SPA, is rapidly approaching, promising an immersive experience for attendees. [more...]
Beltrami Linen’s approach to the world of spa is underpinned by a strong emphasis on bespoke
design, where close collaboration with customers and their designers is always of the utmost
importance. [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.
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
Kerzner International has signed deals to operate two new Siro recovery hotels in Mexico and
Saudi Arabia, following the launch of the inaugural Siro property in Dubai this February.
Nuffield Health’s fourth annual survey, the Healthier Nation Index, has found people moved
slightly more in 2023 than 2022, but almost 75 per cent are still not meeting WHO guidelines.
The US spa industry is continuing its upward trajectory, achieving an unprecedented milestone
with a record-breaking revenue of US$21.3 billion in 2023, surpassing the previous high of
US$20.1 billion in 2022.
Short-term incentives for exercise, such as using daily reminders, rewards or games, can lead
to sustained increases in activity according to new research.
The Sacred River Spa at Four Seasons Resort Bali at Sayan will reopen later this year with an
all-new design plus enhanced treatments and experiences inspired by its river valley home.
Operator Circadian Trust has launched a five-year growth drive designed to
support health and wellbeing across South Gloucestershire, UK. The initiative
will see a £2.4m investment in its five Active Lifestyle Centres.
Remedy Place, a US-based social wellness club brand, is poised for steady expansion in the
coming years, with plans to open two new clubs annually moving forward.
The 16th edition of the esteemed international spa and hospitality industry event, Forum
HOTel&SPA, is rapidly approaching, promising an immersive experience for attendees. [more...]
Beltrami Linen’s approach to the world of spa is underpinned by a strong emphasis on bespoke
design, where close collaboration with customers and their designers is always of the utmost
importance. [more...]