Many hotel spa operators are facing their first significant economic downturn. The first because many hotel spas are new, and hotel spas were among the pioneers of the new spa industry that has developed in the past decade around the world.

How is the spa industry faring? The newness of this industry means there is no directly comparable historical data. Further in a fragmented spa market data is scarce. This article looks at the performance of a mixed bag of broadly comparable businesses, that is beauty and personal care, to give a flavour of the disparate industry.

An often expressed view in the beauty industry in late 2008 to the first indications of a serious downturn was to roll out the “lipstick theory.” That is that any future downturn would see the core consumers of beauty, women, sustain the market by spending on minor indulgences, such as lipstick.

The lipstick theory derives its name from an explanation propounded by Estee Lauder to explain the rise in luxury lipstick sales during a downturn at turn of the century. Though luxury lipsticks might not be the product, the fundamentals of the theory are a guide to consumer behaviour. That is, that beauty is necessary treat ...