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24 Sep 2017 Spa Business Handbook
 

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Spa Business Handbook - Up And Away

North America Research

From Spa Business Handbook 2016 issue 1
Up And Away


ISPA’s 2015 US Spa Industry Study shows that spa visits, employment and industry confidence are at an all-time high. Research author Colin McIlheney outlines the findings

Colin McIlheney, PricewaterhouseCoopers
There are 37,780 unfilled therapist positions in the US spa industry and masseuses are in particular demand photo: shutterstock
Spas have recovered from the recession and are going from strength to strength
Farm to spa: social good is getting more popular

In its last study, the International Spa Association (ISPA) reported that the US spa industry was back on track after the recession. And now its 16th annual US Spa Industry Study shows that in 2014 the sector continued to perform strongly across key areas including overall revenue, spa visits, locations and employment. This is almost a mirror image of topline indicators in the US economy, with increases in GDP, employment and personal consumption expenditure.

Onwards & upwards
Four out of the ‘big five’ key US spa statistics show impressive increases on 2013 figures, with revenue now estimated at US$15.5bn (€13.8bn, £10bn), employees at 360,000, 20,660 locations and visits hitting a record high of 176 million (see Table 1).

Total revenue has gone up by approximately 5.3 per cent from US$14.7bn (€13bn, £9.5bn) in 2013. This was driven by strong growth in the number of spa visits, which rose to around 176 million in 2014, up from 164 million in 2013 (+6.7 per cent) and representing an all time industry high.

Almost 500 new spas opened in 2014, bringing the total number of facilities to 20,660, up 2.4 per cent from 20,180 in 2013. These new sites have assisted in boosting spa revenues and visits.

Once again the survey results show that day spas are the backbone of the sector, accounting for 79.5 per cent of all spa locations. Resort/hotel spas and medical spas both account for around 8 per cent and club spas for approximately 3 per cent. Destination spas and mineral springs only account for 0.4 per cent and 0.2 per cent of facilities respectively.

National employment in the US overall has grown by 2.3 per cent and this is also reflected in spa industry numbers with an estimated total of 360,000 employees – a record high for the sector. Both full-time and part-time positions have been created by spas, with full-time jobs increasing by 5,500 and a total of 7,500 part-time positions being added to the workforce. This is in line with ISPA’s previous study findings where part-time employment has seen greater growth than full-time. Positions which are filled by independent contractors in spas continues to decline, as has been the case since 2010.

On the menu
Despite the rise in income overall, the average revenue per visit declined slightly, by US$1, or 1.3 per cent, to US$88 (€78, £57) in 2014. It’s likely that there are several reasons behind this and the survey data alone cannot explain precisely why it’s the case. Clients visiting more often, but experiencing fewer or shorter treatments likely played a role. In addition, the increasing use of incentives and discounting are also likely to be contributing factors.

The study does show that spa operators have put a range of offerings in place to attract and engage customers (see Graph 1). Such offerings include express 30-minute treatments (66 per cent), loyalty programmes (62 per cent), online options to book treatments (54 per cent) and special discounts or promotions for the spa’s social media audience (52 per cent).

Almost all US spas (98 per cent) now have a website to promote their services and 54 per cent have online booking functionality. Among spas offering an online booking option, the average percentage of bookings made via the internet is 20 per cent.

Making a profit
Aside from the dip recorded in revenue per visit, the overall positive trend in US spa figures carries on when looking at profits. When considering all spas except for hotel/resort spas, almost three-quarters (73 per cent) report a
10 per cent profit or more, a sharp increase from 57 per cent in 2013. Two in three resort/hotel spas reported a profit in excess of 10 per cent, but this was slightly down on 2013 (71 per cent). Net losses in day, medical and club spas fell to 7 per cent from 13 per cent in 2013, and remained largely unchanged in resort/hotel spas at 6 per cent.

Recent experiences
While the ISPA research mainly looks at the key statistics from the previous 12 months (in this case, 2014), spa operators were also asked about their more recent experiences between September 2014 to March 2015. Around six in 10 spas said that in this time frame profitability had improved compared to the same period a year ago (see Graph 2) and this was consistent across different spa types, providing more evidence that the industry continues to grow.

Continuing the positive tone, seven out of 10 spas reported an increase in revenue, visits and client spend per visit in the six months. Each of the indicators are at their highest since ISPA first asked spas about them in 2010. It’s clear that spas have recovered from the recession and are going from strength to strength.

The big five statistics have shown that employment in the spa industry is at its highest level and facilities are persistently hiring new staff in response to demand. Almost one in two spas (46 per cent) said they had increased staffing levels in the last six months compared to the same period in the previous year. However, demand for more service providers in the industry is evident, with an estimated 37,780 unfilled positions of which 41 per cent are full-time and 59 per cent are part-time. Massage therapists are particularly sought after, representing half of all the unfilled positions. While this is a challenging position for many spas to find themselves in, it’s also another indicator of the rise in the demand for spa services.

Future plans
Spas are well aware of industry growth and are planning to take advantage of this in the future. Almost three in four businesses (74 per cent) said they’ll add or create new treatment offerings, 60 per cent said they’ll introduce new product lines and 55 per cent have plans to create a new spa menu in 2015.

On the theme of employment, almost two-thirds (65 per cent) of spas said they intend to add or create new employee training opportunities along with 57 per cent saying they plan to create new job opportunities. Competition to fill vacancies in the workforce may have led to this heightened focus on employees and their key role in the spa experience.

More than one-third of spas are concentrating on community engagement, such as seeking out local suppliers for ingredients for skincare and meals. Thirty-five per cent of spas say that they plan to add or create new community partnerships in the near future.

Yet the overwhelming next big trend was, perhaps unsurprisingly, related to wellness, health and fitness and projecting spa visits as part of a healthy lifestyle. Many spas in the US are proposing to offer a wider range of health-focused services including stress management, integration of medical treatments, therapeutic treatments and healthy ageing.

Confident operators
The positive outlook continues with an overwhelming majority of spas stating that they were confident that revenues would continue to increase in 2015. Close to nine in 10 spas (89 per cent) said they were ‘very confident’ (53 per cent) or ‘confident’ (36 per cent) of an increase in revenues in the next six months. Confidence levels are therefore at their highest since tracking on this point began in ISPA’s 2012 industry study.

Table 1:

2015 US Spa Industry Study – The Big Five Statistics

 



Source: ISPA 2015 US Spa Industry Study
Graph 1:

Spa Treatment Offerings*

 



*Source: ISPA 2015 US Spa Industry Study
Graph 2:

Change in Demand Over Past Six Months

 



* Source: ISPA 2015 US Spa Industry Study

About the research & ISPA
The 2015 ISPA Spa Industry Study, which takes in a detailed performance of spas in 2014, was based on 1,592 spa surveys and a database of more than 17,000 spas. Facilities also gave an account of their business performance in the six months from September 2014 to March 2015 to provide a more recent perspective.

This year’s full report, free to ISPA members, is available to download at www.experienceispa.com.

Based in the US, ISPA represents operators and suppliers in over 70 countries. Its first national spa study launched in 2000.


About the author

 

Colin McIlheney
 

Colin McIlheney is the global research director at PricewaterhouseCoopers and in his 32-year-career, he’s designed more than 200 international surveys. He’s also the research advisor for ISPA and was the lead manager on the 2015 US Spa Industry Study.

Email: ispa@ispastaff.com

Tel: +1 888 651 4772



Originally published in Spa Business Handbook magazine 2016 issue 1

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