Spa Services
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Industry Overview
The spa services industry in the US includes about 18,000 facilities with combined annual revenue of more than $10 billion. Major spa services companies include destination spa chains Canyon Ranch and Golden Door and massage clinic franchise Massage Envy. The industry is highly fragmented: most spa services companies operate a single facility with less than $1 million in annual revenue.
Competitive Landscape
Demand for spa services is driven by personal income and demographic trends. The profitability of individual companies depends on efficient resource use and effective marketing. Larger companies have some economies of scale in marketing and purchasing. Small companies compete by offering unique services, catering to a local market, and delivering a superior customer experience. The spa industry is labor-intensive: average annual revenue per employee is less than $50,000.
Products, Operations & Technology
Major providers of spa services are day spas (60 percent of industry revenue); resort and hotel spas (27 percent); and medical spas (10 percent). Other providers include club spas, mineral springs spas, and destination spas. About 80 percent of the spa facilities in the US are day spas; however, many of these may be hair and nail salons with "spa" in the name that may offer a few traditional spa services. Medical spas are similar to day spas, but focus on services provided by healthcare professionals, such as Botox injections and laser hair removal. Destination spas offer lodging and a specific health regime, such as weight loss or detoxification programs.
The most popular spa services are full body massages, manicures and pedicures, and facials. Other services include movement classes, body scrubs or wraps, and hydrotherapy. In addition to services, most spas also sell skin treatment and other health and beauty products. Some day spas also provide hair care services. Destination spas often are known for more exotic and expensive services and tend to focus on mind-body health, fitness and nutrition, cuisine, and ancillary services.
Day spas typically range from 2,000 up to 20,000 square feet and consist of a reception area, changing rooms, and multiple treatment rooms. Some spas may offer a separate lounge area for customers between treatments. Profitable spas typically have at least half their square footage as treatment rooms, since treatments generate revenue. The reception area is also used to display treatment products for sale. Resort spas have similar setups, but are larger, ranging anywhere from 10,000 to 50,000 square feet.
There are about 140 million spa visits each year; some 32 million people visit spas regularly. Basic day spa equipment (manicure/pedicure chairs, reception furniture, tools, massage tables) costs around $10,000. Hydrotherapy equipment ranges from $2,000 for a steam cabinet up to $15,000 for a hydrotherapy tub. Specialized equipment for medical treatments, such as laser hair removal or microdermabrasion, creates additional capital requirements. Standard spa treatments, such as massages, facials, and manicures, are provided by massage therapists and cosmetologists, who may be full-time, part-time, or contract employees. Licensed healthcare professionals such as plastic surgeons or other medical doctors, are required to provide some medical treatments.
Spas use information systems to schedule customer appointments, treatment rooms, and employees. Point-of-sale (POS) systems are used to capture data on treatment sales and retail product sales. Many spas use databases to track customer preferences to enhance the customer experience and drive targeted marketing programs.
