Spas Pampering US Hotel Revenues

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Hotel spa revenues and profits are outpacing other non-room revenue sources, according to a new report.

Spa department revenues for U.S. hotels increased 5 percent in 2012, PKF Consulting USA reports. This compares to a 2.3 percent increase in food and beverage revenue, the second largest source of revenue for most hotels, during the same time period.

"Due to its historical stigma as a luxurious amenity, spa revenue initially lagged behind the growth of other revenue sources during the early stages of the recovery," Andrea Foster, vice president and national director of spa and wellness consulting for PKFC, said in the report. "There has been a notable focus shift to wellness, specifically taking better care of ourselves for improved health and quality of life, of which spas are an important part."

The spa department performance increase for the 125 hotels surveyed is reassuring for hotel managers, but the extent of its effect on overall hotel performance is difficult to measure, PKF said in the report. 

"Though difficult to quantify the full economic effect of spas, we expect their impact to expand in the coming years," said Foster. "With a shifting focus to healthier lifestyles...we expect to see more demand for spa- and wellness-related services and experiences, both within the spa itself and beyond the spa walls in other areas of the hotel."

The overall hotel industry is already demonstrating signs of a recovery. A recent report from STR showed strong performance numbers for U.S. hotels in August, led by the luxury segment. The firm also reported a positive outlook for the industry for the rest of 2013 and 2014. 

The PKF report also highlights caveats to the positive performance for hotel spas. 

"Growth in revenue is certainly welcome news, but the increase in business volume also carries with it an increase in expenses," Ms. Foster said. "While revenues were growing at 5.0 percent in 2012, total spa department expenses grew by 5.2 percent."

Spa department profit margins dropped from 21.6 percent in 2011 to 21.4 percent in 2012, with labor costs accounting for the greatest expense. 

The report also highlights the increased role local patrons are having on the performance of hotel spas. 

"The combined revenue from facility use and membership fees, fitness and personal training, and health and wellness services increased by 4.6 percent in 2012," Ms. Foster said. "These are revenue sources most frequently associated with local patrons."