U.S. Luxury Hotel Market Facing Tough Enviroment, Says STR

---

(News Source: Smith Travel Research)

(HENDERSONVILLE, TN) -- Continuing economic headwinds have not spared the luxury hotel spa industry. According to the latest figures of Spa STAR, the spa benchmarking program published by STR, performance metrics were either on par or declined for the first six months of 2009.

"The luxury hotel industry is facing a very tough operating environment," commented Jan D. Freitag, vice president at STR. "The luxury spas in those hotels have not been immune to the effects. It stands to reason that operators are now giving renewed attention to locals business, which seems to have the desired effect on utilization rates."

Year-to-date, the revenue per available treatment room hour (RevPATH) declined from US$136.79 in June 2008 to US$120.88 in June 2009, a 13-percent decrease. However, at the same time the utilization of the treatment rooms (calculated as treatment rooms hours used divided by the treatment room hours available) year-to-date remained almost unchanged. Through June 2008, the treatment room utilization was 30.3 percent, compared to 30.8 percent through June 2009. It remains to be seen if discounting of treatments was the catalyst that kept the utilization rate from deteriorating.

For luxury hotel spa salons, the decline in revenues per available station hour (RevPASH) was equally as steep. Year-to-date, an 18-percent decrease was reported, from US$61.87 through June 2008 to US$52.43 through June 2009. Interestingly, utilization rates of salon stations were almost identical to the figures reported a year ago, the same trend observed for treatment rooms. Through June 2008, the utilization rate was reported to STR as 21.1 percent; through June 2009, it was 21.5 percent.

---