For the first time, the 2013 US Spa Industry Study contained a detailed section on spa employee salaries and payments. An important addition given that the sector is highly labour intensive due to the nature of the services provided.

The research by the International Spa Association (ISPA) showed that 343,600 people are employed in 19,960 spas in the US, representing a 1.2 per cent increase from May 2012 to May 2013. Overall, the industry generated US$14bn (€10.2bn, £8.4bn) in revenue in 2012, which equates to approximately US$7bn (€5.1bn, £4.2bn) paid in wages, salaries and benefits. This is a key indication of the size of the nation’s spa sector and underlines its economic impact to local people and communities.

Indeed, the large-scale survey, which was based on approximately 14,000 spa operators, shows that the US spa industry has had its strongest year since 2007. It clearly demonstrated that five key statistics – spa visits, spending per visit, revenues, the number of spa locations and staffing levels – have all grown over the course of the year.

The survey was based on detailed data from 2012 and examined criteria such as financial performance, employment and growth as well as the regional distribution of spas, ownership structures, number of visits, product and service offerings and other areas of interest. In addition, spas were also asked to give an account of the six months from September 2012 to March 2013, across four key business indicators.

The findings are a continuation of the positive news from ISPA’s 2012 report (see the 2013 Spa Business Handbook, p106), in parallel with the upturn of the national economy in the US. There is positive sentiment regarding future trends.

Workforce and wages
The fact that the spa industry is very labour intensive is reflected in the portion of total revenues attributed to staffing costs, which averages 49 per cent across the spas surveyed. Although the overall number of people working in the sector increased, a main talking point was the marked shift from full-time employment (-7.2 per cent) to part-time employment (+13.2 per cent). This could be an indication of wider changes in US working practices or may reflect the industry’s flexible workforce.

Resort/hotel spas have a far greater emphasis on full-time staff, with 99 per cent employing at least one full-time person. In comparison, only 81 per cent of day spas employ at least one full-time staff member.

Resort/hotels are also more likely to employ a spa director and two-thirds of those pay a salary in excess of US$70,000 (€51,000, £41,800) a year. In contrast, most day spas (57 per cent) pay their directors less than US$60,000 (€43,800, £35,850).

This divergence in compensation between spa types is also evident in the salaries of managers, aestheticians and massage therapists. It also affects the policy around gratuities, with over half (51 per cent) of resort/hotels choosing to add an automatic gratuity, compared with only 3 per cent of day spas.

All rise
In the 2013 study, the five key performance measures in spas were increased from the year before which underscores the industry’s recovery. Aside from the rise in employee numbers, the study found that total spa revenue is up 4.7 per cent, at US$14bn (€10.2bn, £8.4bn). Compared to the pre-recession peak of US$12.8bn (€9.3bn, £7.6bn), this is a 9.4 per cent increase and highlights the extent of the recovery, in revenue terms.

Revenue-per-visit figures show that customers are spending on average US$87.20 (€64, £52) per spa visit, an increase of 1.8 per cent on the year before and the first significant increase in four years.

As an aside, it’s also interesting to note that increased economic demand continues to drive profitability, which accounts for the sustained growth observed across all areas of the spa industry. Excluding spas in resorts/hotels, 61 per cent of those surveyed reported a profit percentage in excess of 10 per cent in 2012 – a rise from a total of 54 per cent in 2011 and 49 per cent in 2010. The proportion of spa operators reporting a net loss also declined, from almost one in five (18 per cent) to one in seven (14 per cent). In the resort/hotel sector, 43 per cent of spas reported a profit percentage in excess of 20 per cent for 2012 which is an improvement of the 2011 results (36 per cent).

The number of total spa locations continues to grow slowly; there are now 19,960 locations across the US, 0.5 per cent more than the 19,850 recorded in 2011. This is positive news when set against the context of 2009 and 2010 during which time the industry witnessed two years of spa closures outpacing new locations. As of May 2013, total indoor floorspace was estimated at 78 million sq ft, an increase of 1.1 per cent compared to May 2012.

A breakdown of spa types show that day spas remain the industry’s mainstay, with 78.9 per cent of the total, followed by medical spas (8.8 per cent), resort/hotels (8.7 per cent) and club spas (2.9 per cent).

A promising trend in recent years has been the pace at which the total number of annual spa visits has increased each year. This trend continued in 2012, as total visits rose by 2.8 per cent, to 160 million.

Diversifying tactics
The ability of spas to raise prices and report increased profitability represents an increase in market demand, which is indicative of the bullish consumer sentiment witnessed across the US economy. Strategically, spas continue to diversify their services to attract greater market share and cater to customers who’ve become more price-aware over the past five years.

Retail products offer an example of this diversification, as spas now offer an average of 11 different retail lines. There was variability in this data, with resort/hotels leading the way overall (18 retail lines) and ‘other’ spas (including medical) specialising in areas such as skincare products, where they offer more than double the range presented by day spas or resort/hotels.

When asked to identify the most popular new product introduced in 2012, the variety of items available was testament to the diversity spas have embraced in the wake of the recession. Traditional beauty products such as moisturising lotions, scrubs and masks remain popular but have been bolstered with home goods, clothing and accessories and more specialised products such as homeopathy and medical/therapeutic treatments.

Treatment offerings in spas have also continued to diversify; where 28 per cent of those surveyed in 2011 offered shorter treatment times (30 minutes or less), this number has now risen to 61 per cent. Around half of spas now also offer special discounts or promotions to their social media audience (51 per cent), as well as having loyalty programmes (47 per cent), spa party packages (47 per cent) and giving customers the option to book treatments online (45 per cent).

Positive outlook
On top of the positive news throughout the study, 78 per cent of operators said they anticipate an increase in revenues over the next six months. This was across the range of spa types and is the same figure that was reported in the 2012 study, indicating an industry showing reinforced confidence.