While this shift from opening spas and creating more radical marketing programs has certainly startled a few, the real magic lies in the spa-goers shift towards lifestyle programming. Just as jogging became a mainstay after a rather trendy disco introduction in the 70s, spas are finding their own ground and those niche markets that once seemed so far out are following suit as well. Like a 20-something newly out of college, the industry is settling down with more steady markers of growth and retention numbers that show a preference for consistency, authenticity, and predictability. Can we expect the engagement to lead to a long and happy marriage? All signs point to yes.
Defining the Market
After all of these years we are still squabbling about, among other things, the definition of a spa. Does it include nails? How many medical services does it take to make a spa a medi-spa? Where does water enter into the mix? In fact, we are still embroiled in bitter lawsuits over vague state rules governing sanitation laws, medical rules, fee splitting, scope of practice and appropriate conduct, and training procedures. While the industry is settling into compliancy, growth, and standards of practice, certain trends are emerging as telling signs of the future of the spa industry in the U.S.
Day spas, micro-spas, and massage studios are still the most highly represented type of spa in the U.S., roughly measuring 63 percent of all spas. More than any other group, day spas are attracting the social client who only years ago may have been found on the tennis court, at a wine tasting, or at an urban enclave of some sort. Favorite services include weekly or monthly regimens like classic facial services and various forms of massage heavily accompanied by necessary indulgences like spa pedicures, microdermabrasion, and rejuvenating hand treatments. The spa is very much so a regular activity for most spa-goers now as compared to the sprawling and rather random gift certificate giving of long ago. One of my employees once quipped, “Some of these women would rather have a pair of running shoes than a mud wrap!” Fortunately, now men enjoy visiting spas as well (some spas are reporting up to a 50/50 split among their spa-goer mix); making the day spa experience a must do for one’s self rather than an occasional luxury. Accordingly, home care, series sales, and “blended” services are on the rise. For example, a typical 50-something client might want a microdermabrasion, anti-aging facial, and a take home regimen only to return for alternating lasering or chemical peel resurfacing, or perhaps lactic acid skin whitening. Very typically these clients might also opt for more invasive procedures down the road to lift, shift, and renew. No matter how the chips fall, however, the trend has shifted dramatically towards results driven, series sales mixed neatly with lifestyle adjustments and home care regimens that are “prescribed” and given equal importance when reviewing long term aesthetics and wellness goals.
Fragmentation vs. Franchising
The industry is still highly fragmented: the typical spa is still a single destination with well under one million dollars in annual gross revenues. While the franchise trend is on the rise, many franchisees report low earnings with the single most crucial factor being finding staff that is licensed and highly skilled. The spa market is becoming saturated at a rate that is overly competitive for the bulk of the market that is operated by locally owned spas measuring below 5,000 square feet. While resorts and destination spots have deeper pockets, more lavish facilities, and greater staffing options, day spas still command over 70 percent of overall industry revenues. Furthermore, day spas generate four to one retail sales in comparison to resort and hotel spas. Franchises make up less than one percent of the entire spa market in the U.S. with regional spas making up over six percent of the total market. More importantly, however, regionally owned spas numbering between two and 23 locations account for some of the most lucrative privately owned facilities in the industry.
Spa packages have increased in popularity ranging from teen, senior, and party packages to packages of a more treatment focused nature. Among package options there are a few that have been stellar performers over the last three years. These include: couples packages, pregnancy packages, and lifestyle programming packages.
Couples packages have been so popular that over 63 percent of all spas now have double sized rooms for side by side treatments and 21 percent of spas reported more than one double sized treatment room. Most respondents to The Spa Association’s latest polling listed adding a couple’s room or additional room to their top five items scheduled for updating in their next remodeling schedule. Couples treatments typically include a mini facial, full body massage, snack, and beverage. Roughly six percent of spas additionally offer dinner reservations, car service, or flower delivery to this type of package.
Lifestyle programming includes contouring, diet and exercise consultation, facial rejuvenation, various massage sessions for soft tissue manipulation and pain management, and similar “fusion” therapies that involve diagnosis of individual goals and needs blended with the expertise of a licensed professional. More and more the initial consultation in creating long standing routines for clients takes precedence in the initial visit and sets the tone for future visits and prescribed home care. While a prescription approach to administering professional spa care is more time consuming and ultimately
From advanced skin care to yoga to car washes to pet grooming... the spa is finding its way into various groupings of new business models. This breaks down into not only new themes, but also new ways of distributing services, new methods of expanding bookings, and additional approaches to using and selling products. Online web-spa grabs feature interactive experiences from determining your skin type to creating the perfect spa experience in an attempt to quiz you on combination skin maladies while demonstrating a monsoon room. Spa party video clips, side by side infomercials, and live demonstrations of spa treatments entice while mall kiosks, memberships, treatment with gift, and similar promotional devices abound. From hipster to soccer mom there seems no end to the themes, styles, packages, and fusions of ideas leading to the ultimate spa experience. The latest trend flagged by the SPAA study was discounted spas. If the salon model is any indication this will be a tough category to compete both with and within. With overhead pared down to a minimum by many spa enterprises, the undeniable problem is staffing. The spa industry is still starving for licensed, qualified staff options. Licensure is becoming more stringent lending to additional hiring hurdles and pay is an entirely separate problem. From a consumer standpoint the issues of safety, scope of practice, sanitary concerns, and potential contraindications loom large on the horizon of unresolved topics simply ignored by the growth of discount spas.
Travel is becoming more spa dependent as many tours, excursions, and simple weekend getaways are offering “spa packages” as a part of the deal. In a 2006 consumer study, The Spa Association published that 68 percent of all travelers considered the spa facilities before booking a trip either online or with a travel agency. Of these potential spa-goers, over half preferred side-by-side treatments or anticipated enjoying the spa with a friend, significant other, or group of fellow travelers. While many hotels are building opulent accompaniments in the spa realm to in some way complement their master product which is the hotel itself—many are struggling to define what the spa should translate both within their product mix and within their bottom line. With travelers becoming more savvy given the day spa education that they are routinely offered in their home domicile, resorts, and hotel spas alike are working harder to create indigenous treatments, specialty therapies, uniquely themed environments, and memories of their client’s spa experience that they hope will immediately please and not soon be forgotten.
Spas have certainly changed since the beginning of time (or so it seems). Hanging a shingle with “and Spa” has evolved to a variety of hybrid business models, treatment offerings, healthful jaunts, and one stop shop facilities. From nail spas to medical kiosks to full service urban retreats, the spa as we once knew it will never be the same step-child, back room excursion, or confusing blend of Americanized services. Franchising, consolidation, regional chain growth, and expansion will become the norm as ‘mom and pop’ shops become the favorite corner secret—or not. No matter what, there is still a lot of excitement, opportunity, niche-space, market share, and room for settling to keep the pace brisk as this industry evolves, improves, and expands.