Spa and the Three Star Hotel Market

By Elaine Fenard Partner & Chief Operating Officer, Europe and U.S., Spatality | October 28, 2008

In the last decade spa has become synonymous with luxury and upper- upscale hotel markets, building a five star resort without a spa is now unthinkable and has become a standard of entry into this market segment. While growth of spas within the five star hotel markets is expected to continue, the four star hotel markets has also steadily begun to incorporate spa into the facility footprint; especially in resort markets. Furthermore, spa is beginning to emerge in the three star hotel market.

The reason for this is that spas today are viewed as an integral part of people's lives; at home and when on the road.

In 1994, Faith Popcorn, founder and CEO of the trends research firm Brain Trust, predicted that "entertainment and travel will be health and longevity obsessed." She was right! Spa has become part of a lifestyle phenomenon. Consequently in the past decade the spa industry has experienced unprecedented growth. The driving force behind the growth is consumer demand from a broadening demographic with disposable income. This has opened the door to a whole new generation of spa-goers who have limited time and money to embark on destination spa experiences, yet who do look for short term, quality spa experiences. As a result, it also has become quite evident that each of the spa markets feeds the others. Day spa guests aspire to the destination experience and enjoy the resort experience while destination spa goers use day spas for maintenance therapies. These guests frequently visit hotel spas as a treat or while on business.

So what does spa in the three star hotel market look like? And the big question, how can spa impact the three and four star market and to what degree? Is spa something that will impact a guest's choice of hotel company and will it dictate the rack rate?

In order to help answer these questions we asked ourselves if spa continues to be a part of the lifestyle trends of today. The findings continue to astound us as the numbers speak for themselves:

According to the International Spa Association North American spas, including those located within hotels and resorts have seen an average annual growth rate of 16 % between April 2004 and August 2006. In 2005 U.S. spas drew $ 9.7 billion in revenue, proving spa is a thriving industry and can greatly impact other markets to a large degree.

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