Hotel Development Trends: The Emergence of Hotel Spas

By Donald R. Boyken Chief Executive Officer , DRB Consulting, LLC | October 28, 2008

The Baby Boomer's new "theme park" are now the casino and the spa. In the 1990's, the baby boomer generation - those born between the years 1946 and 1962 -- spent a great deal of their time and money visiting theme parks with their families. Now that their kids have grown, these same thrill-seekers have shifted their focus toward entertaining themselves. One venue that has been a major beneficiary of this trend is the spa.

According to the International Spa Association, based in Lexington, Kentucky, some 57 million American adults have been to a spa. There are an estimated 12,000 spas in the United States, and that's up from 5,700 just a few years earlier. Today, spas occupy an estimated 86.7 million square feet of indoor space in the U.S. Spas are this country's fourth largest leisure industry. Collectively, they generate more than $11 billion in revenue each year.

Day spas continue to be the largest segment of the industry in terms of the number of establishments. However, resort and hotel spas are swiftly becoming the industry's dominant force. The resort and hotel segment of the spa industry represents just 14 percent of spa locations-that is about one out every seven spots. But, it accounts for a disproportionately high share of total industry revenue - more than 40 percent - and more than 25 percent of all spa visits and number of employees.

It's no surprise that every new major resort hotel project that we're involved in includes a spa.

The typical spa size is measured by treatment rooms and square footage. On average, most spas are designed with six to ten treatment rooms that cost more than $700 per square foot for development. Our experience tells us that the development cost breaks down to $500 per square foot for construction and equipment and the balance is for soft costs. For our clients, this is proving to be a healthy investment, not an insignificant add-on. Since the average spa ranges in size from 10,000 to 30,000 square feet, a typical spa can cost between $7 million and $21 million to build.

Our clients tell us that there is a significant untapped market in the spa business. As one would expect, most of a spa's revenue is generated from massages -- for both male and female clients - with facials, manicures and pedicures right behind. What we have also learned is that of all the potential clients, only 30 percent actually will use the spa. That provides hotels and resorts with a significant opportunity for revenue growth.

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Sales & Marketing: Selling Experiences

There are innumerable strategies that Hotel Sales and Marketing Directors employ to find, engage and entice guests to their property, and those strategies are constantly evolving. A breakthrough technology, pioneering platform, or even a simple algorithm update can cause new trends to emerge and upend the best laid plans. Sales and marketing departments must remain agile so they can adapt to the ever changing digital landscape. As an example, the popularity of virtual reality is on the rise, as 360 interactive technologies become more mainstream. Chatbots and artificial intelligence are also poised to become the next big things, as they take guest personalization to a whole new level. But one sales and marketing trend that is currently resulting in major benefits for hotels is experiential marketing - the effort to deliver an experience to potential guests. Mainly this is accomplished through the creative use of video and images, and by utilizing what has become known as User Generated Content. By sharing actual personal content (videos and pictures) from satisfied guests who have experienced the delights of a property, prospective guests can more easily imagine themselves having the same experience. Similarly, Hotel Generated Content is equally important. Hotels are more than beds and effective video presentations can tell a compelling story - a story about what makes the hotel appealing and unique. A video walk-through of rooms is essential, as are video tours in different areas of a hotel. The goal is to highlight what makes the property exceptional, but also to show real people having real fun - an experience that prospective guests can have too. The June Hotel Business Review will report on some of these issues and strategies, and examine how some sales and marketing professionals are integrating them into their operations.