Spas Shape Up Hotel Bottom Lines

Hotel spa revenues and profits are enjoying healthy growth, and many hotel owners are looking at new ways to drive further gains from their hotel spas, concluded a recent study on hotel spas from PKF Consulting. The study found that hotel spa revenues increased by 9.7 percent in 2006, while spa department profits increased by 11.3 percent. Spa revenue gains were sparked by popular spa services such as massages, body scrubs/wraps, and facials. But local membership fees, fitness lessons, personal training, and the sale of merchandise and clothing also were significant contributors to the revenue stream. “Spas have become a vital piece of the resort puzzle,” said Bruck Baltin, senior vice president of PKF Consulting. Indeed, he says spas have practically become “mandatory” at resort properties, and are increasingly focused on by meeting planners. “If you have a high-class resort, that doesn’t have a high-class spa, the meeting planner will likely tell you ‘If you don’t have a spa, we’re not there,’” Baltin said. Treatments such as massages, body wraps, and facials are the largest revenue source for hotel spas, together comprising 73 percent of the revenue generated by hotel spa departments in 2006. Clothing and merchandise sales exhibited the greatest gains of all revenue sources during the year, growing by 20.4 percent, while representing 6.6 percent of total departmental revenue. However, hotel spa departments typically are labor-intensive operations. Salaries, wages, and benefits together account for 73.6 percent of all spa department-operating expenses. In 2006, total spa department operating expenses grew 9.0 percent, with labor costs growing the most, at almost 10 percent. A hotel owner weighing whether or not to add a spa should consider two major factors, Baltin said. Is a spa necessary to the marketing of the hotel, and will its ROI be sufficient? Spas in urban hotels are typically smaller in size, and profits are not as high as their counterparts in resort properties, Baltin said. There is a strong chance that hotel spas will become even more profitable, Baltin said.Software programs that allow managers to schedule spa personnel at peak usage times will likely mean that more hotel spa operations will be in the pink.—