Hotel Spas in the Current Economic Downturn

 

The financial crisis that hit the world in 2008 has affected all industries across the globe. The spa industry has also suffered the negative effects due to this global downturn. This week, we are offering a general outlook of the way hotel spas have been affected by this crisis and the emerging signs of recovery the industry has recently experienced.

In order to do this, we are taking as a source of inspiration an article from 4Hoteliers.com published by Andrea Foster, Vice President for PKF Consulting USA, offering interesting insights about the current state of hotel spas. The article is based on the survey PKF Hospitality Research, Trends in the Hotel Industry.

 

Faster Recovery in The City

One of the interesting conclusions exposed by the PFK-HR report was the broad difference in terms of revenue loss between urban properties and those located at resort hotels. According to this analysis, in 2010 spas located in big cities suffered a revenue loss of 1.2%, which is quite small compared to the 13.6% loss that affected spas located in resorts.

The survey establishes two big reasons for this difference. First, big urban markets recovered faster. Second, metropolitan properties had the ability to “supplement hotels guests with patrons and members from the local community”. In other words, location has proved once again to be an important factor in the overall performance of a spa.

As stated by John R. Hendrie, an expert in communications and hospitality, “location and population core equal potential Spa user traffic”. However, while analysing this data it is also important to bring into consideration the fact that spa departmental revenue represents a bigger chunk of general revenue in spas located at hotel resorts than in those located in urban properties.

 

Managing Expenses

Something positive that emerged from the PFK-HR report was the general ability of spa managers to control expenses. Overall, “spa managers reduced their total direct departmental operating expenditures by 3.9 percent”. They were able to achieve this mainly by cutting costs on operational expenses such as decoration, beauty products, laundry and uniforms. Labour costs were also reduced by about 3.8% in 2010.

Unlike revenue, managers of spas located at hotel resorts did better than their counterparts in big cities. According to the PFK-HR survey, urban hotel spas cut their expenses by 2.6% while resort spas reduced their expenses by 4.3%.

In spite of this overall smart expense management, “hotel spa department profits declined by 27.4 percent in 2010”. A significant increase if compared to the 13.9% profit loss hotel spas suffered in 2009.

 

Hope for Recovery

Although 2010 was a bad year for hotel spas, the PFK-HR report also highlighted recent signs of recovery after 2010. In fact, the revenue levels for 2011 have already shown sign of improvement compared to the previous year.

In addition to this, big hotel chains (home to most hotel spas) are leading the way through recovery. An increasing expenditure on health and personal purchases by households is also an emerging trend for optimism within the industry.

Although hotel spas lag industry recovery, there are already signs that something is changing in this field. For spas to be part of the recovery, consumer spending on health may be the next business opportunity to embrace.

By Sonal

Sonal Uberoi creates and delivers smarter spas around the world. Spas and hotel groups hire Sonal to help them design, set up and manage their wellness businesses. Her finance background and worldwide operations experience in the spa, wellness and hospitality sectors make Sonal the go-to expert for business optimisation solutions. Connect with Sonal on LinkedIn www.linkedin.com/in/sonaluberoi.

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