The PricewaterhouseCoopers (PwC) Middle East Spa benchmarking survey is now in its third year since it launched in January 2010. The survey, which first focused on spas in the Dead Sea area in Jordan quickly expanded to include Doha, Qatar in 2010 and Beirut, Lebanon in 2011. These three markets, along with Dubai in the UAE, are key locations today in the Middle East where the spa industry is very popular.
The report, which releases results on a quarterly basis, is currently the only benchmark survey to cover the spa market in each region. Its goal is to provide spa operators, owners and investors with a benchmark of internal spa operations that can be used as a tool for driving operational decisions and profitability. This information concerning common indicators can also be used by investors and developers in the sector, as well as tourism ministries.
The analysis requires a minimum of three contributing spas of a similar category in each area in order to maintain confidentiality of information. Currently in each of our markets the contributing spas are all attached to five-star hotels and represent a large proportion of spa facilities in each region. The surveys track 11 key performance indicators related to revenue and in this feature we analyse figures for 2010-2012 for spas in the Dead Sea region and Doha and for 2011-2012 for spas in Beirut. It’s important to note that for 2012, the survey only covers January to August figures, as those later in the year have yet to be released, while those for 2010 and 2011 cover the whole year.
Average treatment revenue
The spa industry in Jordan is mostly dependent on the Dead Sea – the world’s most famous saltwater lake which is rich in minerals that can sooth the skin and give relief from conditions such as arthritis and allergies. The luxury hotels along the Dead Sea’s coastline feature some of the finest pampering treatments, although similar therapies are also available in Amman (Jordan’s capital) and Aqaba (along the Red Sea coast), which target business travellers who don’t have time to drive to the Dead Sea.
From January 2010 to August 2012, the average treatment revenue per treatment sold in Jordanian spas increased by 14 per cent to reach US$83 (€64, £54) per treatment. So how does this compare to the rest of the world? According to Intelligent Spas 2009 Global Spa Benchmark Program, it’s just below the worldwide average treatment revenue at US$90 (€69, £58), where Asian spas are at the lower end of the spectrum with an average of US$77 (€59, £50), and European spas are at the opposite end at US$111 (€85, £71).
Out of all three regions, Doha’s spas commanded the biggest increase in average treatment revenue of 19 per cent from January 2010 to August 2012. For the first eight months of 2012 the average revenue per treatment in Doha spas was US$143 (€109, £92) – an impressive 70 per cent higher than revenues in both Dead Sea and Beirut spas.
In contrast, spas in Beirut generated an average treatment revenue of US$84 (€64, £54) in 2012 amounting to a drop of 4 per cent from the previous year. This can be attributed to the volatility in the political framework and weakening economy in Lebanon for most of 2012.
It’s important that operators consistently work on increasing the average treatment revenue per treatment sold over time as this will help to increase the overall financial performance of the spa. However, similar to hotels, something might just ‘have to give’ for this to happen and this could result in lower utilisation rates of treatment rooms and therapists hours. As a case in point, spas in Doha had the lowest utilisation of therapist hours (23 per cent) in the region.
Hotel versus local customers
It’s interesting to note that there’s a sharp contrast in the number of treatments that are booked by in-house hotel guests versus local residents in spas in the Dead Sea area, Doha and Beirut. Significantly, a large proportion (91 per cent) of spa customers in the Dead Sea area are hotel guests. This is because the Dead Sea spa market is typically frequented by international tourist arrivals who come to Jordan for either leisure or medical purposes. Given the proximity to the Dead Sea, plus the fact that hotel guests/tourists might be more tempted to try out more in-depth treatment offerings than locals, it’s no surprise that the wellness in spas in Jordan offering is far more sophisticated and has a focus on natural healing. At the 6,000sq m (64,583sq ft) Zara Spa at the Mövenpick Resort & Spa Dead Sea, for example, there’s a 200sq m (2,153sq ft) medical clinic which has doctors, nurses and consultants who can offer hydrotherapy, electrotherapy, dermatology and rheumatology treatments. That’s on top of therapeutic sessions in the Dead Sea and a range of pampering services.
In contrast, local customers are the mainstay of hotel spas in Doha and Beirut. In Doha, 80 per cent of customers are locals from outside the hotel, while Beirut has 64 per cent of customers who aren’t hotel guests. Location is key here as hotel spas in both Doha and Beirut are usually conveniently situated in downtown areas in close proximity to the local population.
Time is money and the revenue per available treatment hour (RevPATH) model captures the money that a spa generates with time being the common denominator. This is conceptually similar to the revenue per available room (RevPAR) concept used widely today in the hotel business.
The RevPATH method allows for an accurate evaluation of performance across different spas irrespective of location as it compares performance to time. Each spa operator should use the RevPATH model to profile customers, preference of treatments and high volume period in a day, month and year. Promotions, staffing, opening hours and tie-ups with the hotel can be designed around this matrix if carefully planned.
In our evaluation of the three Middle Eastern markets, that Doha witnessed the largest growth in RevPATH over the three years, with a 50 per cent growth from January 2010 to August 2012 to US$33 (€26, £22).
When it comes to RevPATH both hotel spas in the Dead Sea area and Beirut experienced a slight decline. From January 2010 to August 2012, RevPATH in Dead Sea spas dropped from US$15-14 (¤11-10, £10-9) and from 2011-12, RevPATH in Beirut spas it fell from US$16-15 (€12-11, £10-9).
Fitness and retail revenue
Fitness revenues are high contributors to total spa income in the Middle East. In Doha and Beirut spas, fitness membership made up 57 per cent of total revenues, and this is growing, with spas seeing an increase in fitness revenue from 3 per cent (Doha) and 8 per cent (Beirut) from 2011-2012.
Because of their location away from affluent inhabitants of Amman, 40km away, spas in the Dead Sea market area don’t generate any money from fitness memberships.
Another area where spas should focus on increasing their monies is retail – a revenue stream that is under capitalised in spas in all of the regions: representing 8 per cent of total income in the Dead Sea area, 5 per cent in Doha and 3 per cent in Beirut.
There are many possibilities for retail in spas with the obvious choices including the sale of goods and merchandise and carefully packaged products. Nutrition-based F&B items might also be a key retail revenue driver to consider, following a 2010 study by Canada’s International Markets Bureau. The United Arab Emirates Consumer: Behaviour, Attitudes and Perceptions Toward Food Products study found people of all ages in the UAE are increasingly focusing on consuming healthier forms of food.
Increasing and declining
Out of all regions, Beirut has faced the most troubles of late which is reflected in its declining spa performance in 2012. Overall, hotel spas in both the Doha and Dead Sea markets have seen a significant improvement across most of the 11 matrix areas that PwC benchmarks.
This positive growth can be attributed to the rise in tourist arrivals, an improving economy, Qatar being voted as the destination for the 2022 World Cup and Jordan showcasing Ma’an Governorate, an historical site which has become even more popular since it was voted as one of the New 7 Wonders of the World in 2007. It’s anticipated these aspects will boost the leisure and hospitality segments in these markets, and positively impact the spa industry.
• For full copies of PwC’s spa benchmarking surveys in the Middle East region, email [email protected]
• For a review of PwC’s previous spa surveys in the Middle East, see Spa Business issue 2, 2012 p36; and issue 3, 2010 p30