Aggregate hotel spa revenues1 in Q1 2010 up 45.5% over Q1 2009, Share of hotel guest spa visits compared to day spa visitors increases in Q1 2010, RevPATH (Revenue Per Available Treatment Hour) up 5.5% at AED 77 in Q1 2010 compared to AED 73 in Q1 2009
Revenues for hotel spas in Dubai are rapidly increasing and have risen by 45.5 % in Q1 2010. This was revealed in Ernst & Young's Spa Benchmark Survey Report that tracks and compiles performance of Dubai's 5-star hotel spas on a monthly and year-to-date basis.
Dubai spas improve operational efficiency
Confirming that operational and business process improvement are an increased focus for spas this year, Revenue per Available Treatment Room Hour (RevPATH) in Q1 2010 came in at AED 77, a 5.5% increase over the AED 73 RevPATH in Q1 2009. Year-to-Date utilization of treatment room hours also increased to 25% in Q1 2010 from 24% in Q1 2009. Year-to-Date utilization of therapists' hours stood at 54% in Q1 2010, an increase of 6.5pp from 47.5% in Q1 2009. This would indicate better scheduling and higher staffing efficiencies achieved in the current year.
Paul Arnold, Principal, Real Estate, Hospitality & Leisure, Services Ernst & Young MENA noted: "Dubai hotel spa operators are beginning to incorporate formal reporting techniques and use standardized metrics towards evaluating their spa performance. Increased attention to operational diagnostics and business improvement strategies are important factors underlying the positive trends in spa performance."
Changing customer behavior
In Q1 2010, 61% of spa treatments were booked by hotel guests while non-hotel guests or day spa visitors booked only 39%. On a monthly basis, the percentage of hotel guests visiting spas ranged between 60% and 62%, which is higher than the 48% to 58% range witnessed during all the months in 2009.
Nikita Sarkar, Spa Industry Specialist at Ernst & Young MENA adds: "The increasing share of hotel guest visitors to spas, combined with the increase in aggregate spa revenues, is a positive trend as it points towards the fact that hotel guests' propensity to spend on spa services appears to be returning. Dubai hotel spa operators may now have the opportunity to create more effective marketing and promotion programs and move away from price-based discounting of last year."
Insights for increasing spa revenues from 2009
In 2009, total revenues at hotel spas comprised revenues generated by treatments, retail sales, fitness and related memberships, and other charges. Treatment revenue contributed the largest share of spa revenues, approximately 70% in 2009 while retail revenue represented only approximately 9%. Fitness & membership accounted for approximately 19% and other charges contributed approximately 2% of overall annual spa revenues.
Arnold adds: "In 2010, the focus will need to be on maximizing revenue generation potential from each of the revenue streams. For example, retail sales remain an under-exploited component of spa operations, seen as contributing only 10.6% to overall Dubai hotel spa revenues in Q1 2010, whereas certain high-performing spas have achieved up to 25% revenue contribution from retail. This indicates that there remains an opportunity for spa operators to apply increased attention to sales efforts."
"Survey results highlight the importance of effectively integrating spa and fitness offerings at the hotel. In addition, other charges including day usage fees and rental fees can be expanded via membership and loyalty programs that induce repeat visitation. Through these, spas have the potential to maximize revenue generation from typically non-revenue producing areas of the spa (i.e. steam, sauna, lounges, etc.) without necessitating customer spend on high price point spa treatments," concluded Sarkar.
Revenues generated by treatments, retail sales, fitness and related memberships, and other charges
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About the Ernst & Young Spa Benchmark Survey Report
Ernst & Young's Spa Benchmark Survey is the foremost monthly spa benchmarking initiative, which was launched in 2009 and tracks ten key metrics. Ernst & Young's Spa Benchmark Survey was conceived as a service to the various stakeholders of a spa business, specifically within a hotel setting. In working as strategic advisors for developers, investors, owners, hotel and spa operators, Ernst & Young experienced a dearth of standardized metrics for profitability and performance measurement within the spa industry; as well as a great variation and lack of transparency with regards to sharing of the existing metrics. In response to this identified need, EY's spa benchmarking initiative was envisioned and created to promote a better appreciation of spa business operations vis-a-vis general market performance indicators.
Ernst & Young's spa benchmark survey sample includes 10 international and regional hotel spa brands, several of which are part of multi-property chains with strong presence regionally and/or globally. The 10 metrics that are tracked cover high-level top-line operating performance and were developed and short-listed after detailed brainstorming discussions with various industry partners.
Ernst & Young's Spa Benchmark Survey is currently in its first phase and focuses on the luxury and 5-star hotel spas in Dubai. The hospitality industry in Dubai comprises a plethora of international hotel and spa brands from around the world (Asia, North America, Middle East) making the local spa market truly global in nature. As such, the implementation of Ernst & Young's Spa Benchmark Survey in Dubai allows the benchmark template to be tested across a range of spa business models and provides insights and highlights trends that are relevant for the global spa industry.
Paul Arnold and Nikita Sarkar, recently presented key highlights and findings from the year-end 2009 and first quarter 2010 Ernst & Young's Spa Benchmark Survey reports at the Global Spa Summit, which was held May 16-19 in Istanbul, Turkey. Ernst & Young's spa benchmarking initiative garnered a lot of interest and the feedback received has been extremely positive.
Ernst & Young's Spa Benchmark Survey's unique value proposition is that in addition to tracking and providing the metrics on a monthly basis, the survey reports also include detailed analysis and interpretation around the metrics - so that the information is usable, implementable and actionable and aids in strategic decision-making.
Phase two for Ernst & Young's Spa Benchmark initiative includes expanding the geographical scope of the survey across the Middle East and North Africa region, and subsequently into European and North American markets. Additionally, based on feedback and increased demand, Ernst & Young has also begun providing advisory services that comprise operational diagnostics, brand strategy, revenue optimization, and concept review, with a special emphasis on spa businesses.
About Ernst & Young MENA
The MENA practice of Ernst & Young has been operating in the region since 1923. For over 85 years, we have evolved to meet the legal and commercial developments of the region. Across MENA, we have over 4,200 people united across 20 offices and 15 Arab countries, sharing the same values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential.
About Ernst & Young Global
Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 144,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential.
Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit www.ey.com.
For more information please contact:
Lamice Murshid
Ernst & Young
Tel: +971 4 332 4000
E-mail: lamice.murshid@ae.ey.com
Sandeep Sharma
Weber Shandwick MENA
Tel: +971 4 321 0077
E-mail: sandeep.sharma@ws-mena.com
© Press Release 2010
