The ISPA 2002 Spa Industry Study - Executive Summary

Lexington, Ky. September 5, 2002 - In 2000, the International SPA Association (ISPA) engaged PricewaterhouseCoopers to conduct the inaugural Spa Industry Study. It was the first study to provide a research-based profile of the industry, including industry size and growth. Recognizing the need for current information, ISPA once again engaged PricewaterhouseCoopers to conduct a comprehensive study to update the findings from the 2000 study.

The 2002 study develops a current profile of the industry in the U.S. and Canada. This executive summary highlights the key findings from the 2002 study. The full report contains more detailed analyses including product / service offerings, employment and compensation and a profile by spa type and geography.

How Big is the Spa Industry?

This study looks at several key measures of the size of the spa industry.

Spa Locations. There are an estimated 9,600 spas throughout the U.S. and 1,300 in Canada. In the U.S., the largest spa category, accounting for over three-quarters of locations, is day spas. Resort/hotel spas are the second largest group, followed by club spas, mineral springs spas, medical spas and destination spas.

Geographically, the distribution of spas in the U.S. generally reflects the distribution of the population. In Canada, the distribution of spas is concentrated in Ontario and, to a lesser extent, British Columbia.

Spa Visits. There were approximately 155.8 million spa visits made in the U.S. in 2001. Sixty-eight percent (68 percent) of these were to day spas. Resort/hotel spas and club spas received the next largest numbers of spa visits. 

Square Footage. The U.S. spa industry occupies an estimated 97.7 million square feet of indoor space. Treatment rooms account for 46 percent of space in the U.S. and Canadian spas, while beauty salons occupy 20 percent of the space.

Revenues. In 2001, the U.S. spa industry achieved approximately $10.7 billion in revenues. Half (51 percent) of the spa industry's revenues are derived from treatment rooms. Beauty salons and retail also account for significant portions of industry revenue. 

Employment. An estimated 282,000 people are employed by the U.S. spa industry. Sixty-three percent (63 percent) of employees are full time. Employee wages and salaries totaled approximately $4.9 billion in 2001.

How Fast is the Spa Industry Growing?

The robust growth reported in 2000 continues across the spa industry.

Locations. The number of spa locations has doubled in number every four years. The number of locations has increased by an average of 20 percent annually over the last eight years. The resort/hotel spa segment has been expanding faster than any other and showed a cumulative two-year increase of 143 percent in number of locations. Mineral springs spas are also growing faster than the industry average. 

Square Footage. Total industry square footage has increased by 151 percent in the past two years. Unlike the 2000 study, this study shows the growth in square footage arising from both the increase in the number of spas as well as an increase in the average spa size. Treatment rooms, retail and beauty salons continue to be the most common area of expansion among existing spas. 

Revenues. Industry revenues have grown by 114 percent between 2000 and 2002. However, the annual growth in revenues for individual spas has moderated from 28 percent in 1999 to only 14 percent in 2000 and 8 percent in 2001. 

Employment. The spa industry saw an 87 percent increase in the total number of employees in the past two years. 

Spa visits. Demand continues to be the driving force behind the tremendous growth of the industry. Despite poor economic conditions, the number of spa visits continues to grow rapidly, increasing by 71 percent between 1999 and 2001.

What are the Key Trends in the Industry? 

The report details a number of industry trends. A few of the key trends are summarized below.

Product Trends. The Eastern/Asian influence continues to be very strong in the industry, influencing products, services and spa design. There is a strong trend towards "medical type" products and services. Food- and plant-based treatments have also gained widespread popularity. 

Consumer Trends. Manx people no longer see the spa as "pampering", but as a requisite to stay healthy and look good. These consumers want simplicity in their spa experiences and are returning to more traditional spa products. Consumers' limited free time means they have less time available to spend at the spa, and the industry is designing its offerings around this trend. 

Investor Trends. As evidenced by the decrease in single location operations, consolidation seems to be occurring across most spa categories (particularly in the resort/hotel and day spa categories). There is also a strong trend toward branding and retailing within the spa industry.

Technology Trends. The industry's use of technology has advanced in the past two years. Spas have moved beyond the use of the Internet as a simple research or e-mail tool, and now report major investments in database management, integrated channel
customer contact systems and marketing products/services online.

Conclusions 

The spa industry has solidified itself as a major player in the hospitality and leisure sector. In the past two years, the spa industry has kept pace with, and even surpassed, other major leisure activities.

Despite the economic downturn, the industry has continued to grow at a robust pace. With revenues recording an average annual growth rate over the past two years of 46 percent, the spa industry has shown the ability to weather the challenges of a weak economy. 

Day spas continue to dominate the industry in terms of number of establishments; but resort/hotel spas are gaining ground. The resort/hotel spa group was the fastest growing sector, firmly establishing it as the second largest segment, well ahead of club spas. 

Note: The full ISPA 2002 Spa Industry Study was available from ISPA after the ISPA conference in October, 2002.