Strategies for Today's 8 Key Challenges in Hotel Spas
By Kate Mearns Spa Director, The Spa of Colonial Williamsburg | July 15, 2012
Spas have certainly come a long way in the last 15 years. In that period, growth of the hotel spa segment has been rapid and for the most part sustained at a strong pace. That strong growth was fueled by two attitudes that hotel operators seemed to share: first, a "build it and they will come" mentality, and second, the "keep up with the competition" approach. And at first, the business results suggested it was working – guests were indeed visiting these new spas and strong spa revenues proved it. However, since the early growth days in our industry, we have had to survive numerous challenges to our businesses; and those challenges continue today. Individual spa growth and market share have both been threatened by the growing number of spas; and for the industry as a whole, the marketing message has been challenged, staffing requirements have been a concern, and the economy has experienced numerous downturns.
The good news and bad news for spas are flip sides of the same coin – while the industry has grown and has established itself as a necessary and also potentially profitable segment of the hotel business, that strong, consistent growth has simultaneously led to declines in market share at the individual property level, confusion in marketing and messaging as consumers become more sophisticated, and cost increases due to the staffing levels needed to provide excellent customer service. Fortunately, spa operators have been working to overcome these challenges with various strategies.
Industry Growth and its Effect on Market Share
The building of spas exploded and the increase in number of spas has directly and adversely affected the market share at the individual property level as more and more spas compete for spa visits and customers. According to US Spa Industry data compiled by the International Spa Association (ISPA), in the decade from 1999 to 2010 the number of spa locations grew from 4,140 to 19,900 in 2010, a staggering 500% increase. At the same time, spa visits were also increasing over the same decade from 90.7 million to 150 million, an amazing 165% increase. Of course, with the increase in the number locations, the individual properties' market shares began to diminish: using these numbers, in 1999 each spa averaged about 22,000 visits compared to about 7,500 per spa location in 2010, which is an almost 66% decline. What this means is that spas needed to maximize the value of each visit to each guest in terms of quality experience and benefits, and at the same time look at ways to increase average spend by each guest in order to meet revenue and budget projections.
Strategy 1 - Going Local to Meet the Market Share Challenge
Spa operators are responding to this challenge in several ways. One of the most successful strategies used by hotel and resort spas to expand the market share under these conditions was to begin opening their spas to the mainstream (local) audience while providing more affordable service options. Spa operators have learned that casting the marketing net to a wider demographic and at the same time offering expanded menu options to include less expensive services (while closely monitoring profitability) has proven to be a win-win for both guests and spas. In fact, ISPA reported that in 2011 a majority of spas have promoted some sort of discount and have primarily focused that offer on their local markets or new customers: survey data suggest that in 2011, 83% of spas marketed to local consumers and 51% of those properties' spa promotions targeted first-time customers.