Key Drivers for Hotel and Resort Spa Profitability

November 24, 2017

Relaxation and a sense of wellbeing are at the heart of the spa and wellness market. Hence, it's no wonder that hotels, resorts, and spas have begun to reorganize their operations around wellness. The benefits, in the form of a stronger bottom line and appeal to demand segments, extend not only to guests but to hoteliers and hospitality companies, as well.

Traditional resort spas cater to relaxation through a variety of services including aesthetics, facials, and massage. Some also offer salon services for hair and nails. Wellness-focused resort spas cater to diet and nutrition, spiritual counseling, and naturopathic health- and prevention-oriented services that extend beyond the scope of a traditional spa.

 

This article looks at the scope of growth for traditional and wellness-focused spas worldwide, as well as the physical and operational keys to building stronger bottom-line performance.

 

Asset Attributes

Both traditional and wellness-focused spas are considered effective operating models that can add value to a guest's hotel or resort destination experience. Moreover, they add value to the hospitality operation itself. These models have begun to emerge, presenting a new subdivision of resort and hotel wellness-driven spa environments.

 

One thing hotel and resort wellness spas have in common is that they are at the epicenter of one of the fastest-growing spa and wellness market segments. They are also charged for tremendous rolling growth for their marketability and the increasing demand for experiential and leisure travel.

 

The Millennial generation and its relatively younger, health savvy members are a prime demographic for the wellness-oriented hotel and travel space.

 

Revenue

Traditional spas generate cash-based revenue for selected services. These services are priced based on treatment type, quality, duration of service, and packages. Additional revenue sources for spa services can include a daily fee for spa facility use and auxiliary services, such as poolside massage or treatment provisions provided in other areas of the hotel and guest spaces.

 

While spas are a cash revenue producer, wellness centers comprise a mix of cash, insurance, memberships, and payment plans. Diversifying spa modalities and treatment options can abundantly increase the scope of treatment revenue. 

 

The Luxury resort spa pricing can come at a premium, spa and wellness center costs are equally competitive, making the move to diversify services more intriguing and ultimately more lucrative.

 

The following table charts the nearly $5 billion in the overall growth of the global spa market between 2013 and 2015. As stated above, this growth has come in the form of new and innovative spa services, as well as product lines that appeal to a wide variety of wellness travelers, including corporate and leisure demand.

Global Market Growth

According to the Global Wellness Institute's (GWI) 2017 Global Wellness Economy Monitor, the global spa market grew 2.3% between 2013 and 2015, resulting in a $98.6-billion market. Once considered an amenity (the pejorative term for what spas provide was "pampering"), spa facility revenues in 2015 were worth $77.6 billion globally, while revenue from supporting market sectors that enable spa businesses was reportedly worth $21 billion. These are big numbers, and they're moving upwards.

 

Between 2013 and 2015 alone, the number of new spa locations increased worldwide from 105,591 to 121,595, adding more than 16,000 new spa facilities and over 230,000 individuals to its workforce. Spa segment growth is anticipated to flourish by an additional 6%, to be worth $103.9 billion by 2020.

Key Drivers for Hotel and Resort Spa Profitability.

The GWI study also reports that global wellness tourism revenues grew to $563 billion, a striking 14% rise from 2013 to 2015. The U.S., the #1 wellness market in the world, represented $202 billion of these revenues, nearly triple that of the #2 market. The GWI estimates that wellness tourism will grow another 37.5%, to $808 billion, by 2020.

 

Investment Value

The force of the spa and wellness industry's success in recent years has changed the way hoteliers approach the expanse of demand for spa and wellness offerings at their hotels and resorts. 

 

Profitability

A hotel spa that caters to wellness can provide a strong competitive advantage for the leisure and wellness-minded customer, as well as corporate groups. However, achieving an operational flow alongside profitability often presents a challenge, making it crucial to understand industry benchmarks that support this evolving market.

 

Conclusion

Spas and wellness-oriented operations have had a meteoric rise over the past several years and continue to make waves in the lodging industry, particularly at resorts.

 

 

The Swiss Hotel Management School provides programs in the field of resort management. The links below provide more information.

Master of International Business in Hotel, Resort and Food & Beverage Management

Master of International Business in Hotel, Resort and Spa Management

 

Does a job near the beach or in a thriving ski resort appeal to you? Do you enjoy meeting new people and working in a fast-paced environment? Study.com has the information you need to discover if a career in resort management is a good fit for you.

 

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