Do you believe these numbers?
August 24th, 2007 • Posted by Stephany Toman • Permalink
We're not sure what's up, but when we read Anitra Brown's recent article Spa Industry Statistics, 2007 we started scratching our heads.
According to the article, which is based upon ISPA's preliminary spa statistics report (the final of which comes out in November), some interesting things happened. Day spas grew in number from 10,988 in August, 2006 to 11,736 in August, 2007.
But in spite of 748 new day spas this year, revenues DROPPED BY 22%!!
2006 annual revenues in the 11,736 day spas in the U.S. came in at $5.294 billion, where 2005's total was $6.794 billion.
How can that be?
We decided to see how you guys have been doing saleswise with Instant Gift Certificates, and our numbers reflect same store INCREASES of 61% (Valentine's Day), 36% (Mother's Day), and 37% (Just July) over 2006.
Now if we take the idea even further, a 22% decrease in overall revenues for the day spa market would equate to about a 27% decrease per spa. Do you believe these numbers?
Please share what you think! We're all ears!
Posted in Spa Business Management • Share • Trackback
August 25th, 2007 at 10:02 am
How can they reflect what's happening on the ground? If in the aggregate day spa business was down by more than 20% we'd be witnessing existing day spas boarding their doors at such a fast rate that the net number of day spa's couldn't possibly increase.
Who knows? Maybe last year's numbers and the growth they showed were just "bad" numbers–after all, they were brought to us by the same folks to compiled this year's.
I work with clients from all over the country and though you wouldn't count the absolute number of them as statistically significant. I'd like to say that none of them experienced a poor 2006–in fact everyone had an increase in overall sales 2006 vs. 2005–a result of a number of factors (an up-tick in retail, price increases, multiple services, etc. (although I say many were hard pressed to meet 2005's gift certificate numbers).
Frankly I've always wondered about the industry statistics–as there's just so little public information available in the sector that a statistician can count on. These ISPA numbers are just icing on the cake of unreliability.
August 25th, 2007 at 10:33 am
Well… here is a theory: How many SpaBoomers aren't day spas? I had a big increase in gift certificate sales at Valentine's Day. A huge increase over last year, but I am not a day spa, I am just a solo massage practitioner.
I am interested to know how many solo practitioners are represented by SpaBoom. I don't think ISPA represents solo practitioners like me, but I do know a lot of solo practitioners who do use SpaBoom.
Perhaps consumers are shying away from day spas and trying out solo practitioners like myself.
August 27th, 2007 at 7:17 am
Christine,
Good question. Unfortunately, we can't give specific numbers of our customer types, but solo practitioners are not the bulk of our business. Take a look at the following pie chart, which is good as of August 1st, 2007:
August 27th, 2007 at 10:10 am
Another Theory (or two):
I believe ISPA's numbers are based on what the average spa is doing. I think the numbers have dropped for two reasons…
Another thought: How would you calculate the income of spas within a hotel setting. Many hotels actually lose money on there spas but make it up in other areas.
September 12th, 2007 at 3:46 pm
The current statistics coming from ISpa are indeed cause for alarm. There are several factors contributing to the downturn of the aggregate Day Spa Numbers.
First, there are more Day Spas sharing the same market so even a small decrease in industry revenue can affect a particular Spa significantly.
Second, there are those customers, whom we love dearly, that price is not a concern. The Medical Spa has cut into this customer segment significantly. We need to work hard on bringing them back to our Day Spas.
Third, while the economy has hurt our industry many Spas are raising prices in an effort to gain back the lost revenue. This is the exact opposite of what we should be doing. We need to find ways to deliver these services for less money, not more.
Consumer studies show that there is a whopping 40% of the population that would like to have services at Spas or have more services at Spas but feel that the pricing is beyond their reach. If we are still looking for the same growth that we have enjoyed in the luxury segment for years, then I am afraid we will be disappointed at least until the economy turns around.
If on the other hand we want to enjoy the growth that Massage Envy is experiencing, then we need to go after that “value oriented” consumer that has already told us that they want to come to our Spa if we can make it affordable to them.
How do we accomplish this when our profit margins are so thin already? As I have preached for years now, we must as individual Spas and as an industry change our antiquated compensation system away from the commission structure and toward a more traditional business model.
Or so it seems to me…
Best Wishes & Healthy Profits
Skip Williams
Resources & Development