STR’s HOST report and CBRE’s report on hotel spa industry trends show that spa revenue growth surpassed room revenue growth in 2015. Hoteliers told HNN what’s driving more spa revenue growth in their particular markets.
REPORT FROM THE U.S.—Hotel spas are bringing new, refreshing products and treatments, and creating packages to bring in business from guests and the local community. For many hotels, these efforts have led to increased spa revenue growth.
Both STR, HNN’s parent company, and CBRE have released reports looking at data from 2015, which shows that spa revenue growth surpassed room revenue growth at hotels in each of the surveys.
Joseph Rael, director of financial performance, consulting and analytics at STR, said STR’s HOST report includes revenue for 322 hotels. The report shows that total spa revenue increased 4% in 2015 and room revenue increased 3.2%. He added that the majority of hotels in the survey are luxury properties, and that the greatest revenue increases came from salon revenue.
The 2016 edition of CBRE’s “Trends in the Hotel Spa Industry” report shows that spa revenue at hotels in the U.S. increased their revenue by 5.6% while room revenue rose 3.3%.
Mark VanStekelenburg, managing director of CBRE Hotels’ Northeast practice, said both urban and resort hotels saw increases in spa revenue growth, and that many of these spas brought in local products, which helped hotel spas on “the marketing side and on the revenue per treatment side.”
“We saw back in 2008, 2009, the effects of what we’ve dubbed as the AIG affect, where even on the corporate side, add-on spending for spas, for golf, things outside of the traditional food and beverage and rooms at hotels, there was a significant drop off in those,” VanStekelenburg said. “We’ve seen a lot of that come back.”
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Refreshing spa offerings
To bring in both local customers and hotel guests, sources said they try to stock new products and offer treatments and strategically priced spa menu items.
Kristen Pryor, GM at the Westin Riverfront Resort & Spa in Avon, Colorado, said the hotel’s spa revenue grew 16% in 2016 compared with 2015 while room revenue grew 10%. Pryor added that when looking at spas, pricing strategies have helped determine adjustments.
“Similar to when you’re pricing rooms, we do strategy meeting(s) to look for need periods and demand, and we do dynamic pricing,” she said. “We have a menu and it has a set price, but we’re always looking at the demand and the need periods, and we’re reacting to what’s going on in the hotel or in the community to adjust and put out different offers and communicate different pricing to attract people based on the demographic.”
Jonathan Crook, GM at the Peninsula New York, said 70% of the hotel’s spa business comes from locals. In 2015, he said the Peninsula had flat room revenue growth and spa revenue grew by 1%.
“We’re here for New York City and the local market, so we have quite a large repeat clientele through that and really focus our (electronic direct mail) advertising and campaigns on sort of attracting a local market to visit and use the spa and different services that we offer,” Crook said.
Sheen Mahmud, director of Spa Evangeline at the Epicurean Hotel in Tampa, Florida, said the spa brought in new product lines, which helped boost revenue.
“The spa brought in more retail items for its boutique, which allowed guests to spend more time shopping,” she added.*
Pryor and Crook said the spas at their hotels also brought in new products, such as new types of facials, and created new treatments to continue to attract customers.
”We also try to always be on the cutting edge of what’s new and different and creating new treatments and staying relevant, so our spa also has a full athletic club tied to it,” Pryor said, “so launching a (yoga) program and tying that in with the healing benefits of massage; finding new partnerships. It’s looking at spa and massage in many different ways from healing to therapeutic to just relaxing.”
Spa packages for guests
Pryor said the Westin Riverfront attracts guests to the spa by offering packages.
“The goal is always to create all-inclusive packaging,” she said. “We’ll have room rates tied to it, create some weekend experiences that drive room occupancy in addition to spa occupancy and food and beverage. That’s the ultimate goal is to use the spa and the wellness factor as a launching point to drive additional revenue to rooms and F&B as well.”
While business for the Peninsula New York’s spa is mostly from locals, Crook said the hotel still offers spa incentives to guests.
“Even though room occupancy in the city of New York has sort of been flatter in the last few years, it’s important to continue to work for the hotel guest and provide certain packages and incentives for them to use at the spa,” Crook said.
*Correction, 31 January 2017: A previous version of this story used the wrong pronoun to refer to Sheen Mahmud.