Structural Shift in the Personal Care Industry - Spas and the Beauty Business in a Downturn

By Jacqueline Clarke Wellness Research Director, Diagonal Reports | November 14, 2009

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 for many consumers.

Some companies in very different markets from North America to Europe have bucked the trend and report no change in sales to date in 2009, compared to 2008. These companies attribute their performance to their offer of, what are, relatively inexpensive treats (what in the USA they call "little goodies," and in France "petits bonheurs".)

The USA company represents the, so-called, beauty kiosks. That is small unit offering various beauty and body care treatments that are located inside of high volume commercial centres across North America. The performance of the kiosk beauty formula, which was first rolled out in the USA in 2007, contrasts with the performance of the wider professional beauty market. According to one leading company ––L'Oreal–– US beauty salons, day spas, and medspas registered a reduction in footfall to date (first half) in 2009.

Choose a Social Network!

The social network you are looking for is not available.

Close

Hotel Newswire Headlines Feed  

Coming up in May 2019...

Eco-Friendly Practices: Corporate Social Responsibility

The hotel industry has undertaken a long-term effort to build more responsible and socially conscious businesses. What began with small efforts to reduce waste - such as paperless checkouts and refillable soap dispensers - has evolved into an international movement toward implementing sustainable development practices. In addition to establishing themselves as good corporate citizens, adopting eco-friendly practices is sound business for hotels. According to a recent report from Deloitte, 95% of business travelers believe the hotel industry should be undertaking “green” initiatives, and Millennials are twice as likely to support brands with strong management of environmental and social issues. Given these conclusions, hotels are continuing to innovate in the areas of environmental sustainability. For example, one leading hotel chain has designed special elevators that collect kinetic energy from the moving lift and in the process, they have reduced their energy consumption by 50%  over conventional elevators. Also, they installed an advanced air conditioning system which employs a magnetic mechanical system that makes them more energy efficient. Other hotels are installing Intelligent Building Systems which monitor and control temperatures in rooms, common areas and swimming pools, as well as ventilation and cold water systems. Some hotels are installing Electric Vehicle charging stations, planting rooftop gardens, implementing stringent recycling programs, and insisting on the use of biodegradable materials. Another trend is the creation of Green Teams within a hotel's operation that are tasked to implement earth-friendly practices and manage budgets for green projects. Some hotels have even gone so far as to curtail or eliminate room service, believing that keeping the kitchen open 24/7 isn't terribly sustainable. The May issue of the Hotel Business Review will document what some hotels are doing to integrate sustainable practices into their operations and how they are benefiting from them.