Editor’s letter
Wellness surge breaks the Catch 22

New research shows there’s a tipping point where greater business volume transforms profitability, indicating the industry must focus single-mindedly on all aspects of occupancy, from yield management to turnaway analysis. Wellness is also key

By Liz Terry | Published in Spa Business 2014 issue 4


As more consumers turn to a wellness lifestyle, spas in urban hotels in the US are enjoying the benefits of increased volume, with profits up significantly, according to a new report from PKFC – Trends® in the Hotel Spa Industry.

The report shows spa and wellness as the standout performers: while spa revenues were increasing at 4.6 per cent in 2013, the combined revenues from other departments, such as food and beverage and retail, only grew by 4.4 per cent.

Couple this with the fact that spa managers controlled their cost increases to 2.5 per cent and urban hotel spa departments were able to translate this growth in revenue into a significant profit increase of 13.9 percent.

Andrea Foster, VP and national director of spa and wellness consulting for PKFC says the performance is in part explained by growth in volume: “Scheduling spa technicians has always been a challenge. However, as volumes increase, it’s easier for managers to bring on personnel for longer shifts and have the confidence there’ll be sufficient revenues to cover the labor cost.”

There are wider lessons for the spa industry here. Too many spas are bumping along the bottom, with low occupancy leading to nervous management limiting therapist availability which leads to higher levels of turnaways, a downward spiral and lack of engagement.

It’s exciting that consumer behaviour is driving urban hotel spas out of this Catch 22 situation and shows the profit potential spas have when they get critical mass.

We need to be brave enough to learn from this and risk ramping up wellness marketing and therapist availability.

PKFC found evidence of a wellness ripple effect too, saying that the revenue sources that increased the most were whole-health oriented. They also found customers no longer expect a spa and wellness experience solely in the spa. “We expect hotels to take advantage of the desire for whole-health options and drive revenue elsewhere in the hotel by offering spa menus, healthy bedrooms/meeting rooms and fitness programmes like bike shares.”

Wellness tourism is high on the industry’s agenda (see our feature on page 96) and identified by SRI, for the GSWS, as a fast-growing, US$494bn (€384bn, £301bn) market, with 587 million trips in 2013. It’s fascinating to see how this trend is impacting the various market sectors as we move towards a more holistic approach.

Liz Terry, editor twitter: @elizterry

 


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SELECTED ISSUE
Spa Business
2014 issue 4

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Leisure Management - Wellness surge breaks the Catch 22

Editor’s letter

Wellness surge breaks the Catch 22


New research shows there’s a tipping point where greater business volume transforms profitability, indicating the industry must focus single-mindedly on all aspects of occupancy, from yield management to turnaway analysis. Wellness is also key

Liz Terry, Leisure Media

As more consumers turn to a wellness lifestyle, spas in urban hotels in the US are enjoying the benefits of increased volume, with profits up significantly, according to a new report from PKFC – Trends® in the Hotel Spa Industry.

The report shows spa and wellness as the standout performers: while spa revenues were increasing at 4.6 per cent in 2013, the combined revenues from other departments, such as food and beverage and retail, only grew by 4.4 per cent.

Couple this with the fact that spa managers controlled their cost increases to 2.5 per cent and urban hotel spa departments were able to translate this growth in revenue into a significant profit increase of 13.9 percent.

Andrea Foster, VP and national director of spa and wellness consulting for PKFC says the performance is in part explained by growth in volume: “Scheduling spa technicians has always been a challenge. However, as volumes increase, it’s easier for managers to bring on personnel for longer shifts and have the confidence there’ll be sufficient revenues to cover the labor cost.”

There are wider lessons for the spa industry here. Too many spas are bumping along the bottom, with low occupancy leading to nervous management limiting therapist availability which leads to higher levels of turnaways, a downward spiral and lack of engagement.

It’s exciting that consumer behaviour is driving urban hotel spas out of this Catch 22 situation and shows the profit potential spas have when they get critical mass.

We need to be brave enough to learn from this and risk ramping up wellness marketing and therapist availability.

PKFC found evidence of a wellness ripple effect too, saying that the revenue sources that increased the most were whole-health oriented. They also found customers no longer expect a spa and wellness experience solely in the spa. “We expect hotels to take advantage of the desire for whole-health options and drive revenue elsewhere in the hotel by offering spa menus, healthy bedrooms/meeting rooms and fitness programmes like bike shares.”

Wellness tourism is high on the industry’s agenda (see our feature on page 96) and identified by SRI, for the GSWS, as a fast-growing, US$494bn (€384bn, £301bn) market, with 587 million trips in 2013. It’s fascinating to see how this trend is impacting the various market sectors as we move towards a more holistic approach.

Liz Terry, editor twitter: @elizterry


Originally published in Spa Business 2014 issue 4

Published by Leisure Media Tel: +44 (0)1462 431385 | Contact us | About us | © Cybertrek Ltd