Transcript Southern California Lodging Forecast

Resort Spas on the D.O.T.
Design, Operations,
Trends in Performance
Resort Management Conference
March 20, 2006
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Presented By
• Andrea Foster
– Vice President, PKF Consulting
• Patty Monteson
– Owner, Health Fitness Dynamics
• Kim Huber
– Director, The Spa at Pinehurst at
The Pinehurst Resort
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PKF CONSULTING
• Hospitality Real Estate Consultants
• Tracking the Hotel Industry for over 75 years
• Publications include:
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Benchmarkers & Spa Benchcluster
Annual Trends
Monthly Trends
Southern California Lodging Forecast
Hotel Outlook
• Available at: www.pkfc.com
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Trends in the Hotel Industry
• The economy is up; people are traveling and spending money!
– Hotel occupancies are up and average daily rates are growing
• Individuals have a higher expectation of lifestyle today
– Design and comfort are becoming higher priorities
• Our guests have more stimuli and less free time in their lives
– Demand for services that offer greater relaxation in a shorter period
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What does this mean?
• The demand base exists to support spa facilities and services
• The lifestyle focus of spas is in higher demand
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Relaxation
Pampering
Surrounded by a serene, possibly luxurious, environment
Focus on healthier living
• Spa services fit our schedules better than other forms of
recreation
• More revenues and income to resorts from the spa department
– One spa treatment can generate more revenue than a round of golf
– Less capital-intensive than a golf course
– Spa services are more accepted from a gender and corporate
perspective
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CHANGE IN HOTEL/RESORT
GOLF vs SPA REVENUE
2003 to 2004
10%
8.1%
8%
6%
4%
3.4%
2.4%
2%
0%
-2%
-2.1%
-4%
Golf Revenue
PAR*
Spa Revenue
PAR*
Golf Revenue
POR**
Spa Revenue
POR**
Source: PKF Hospitality Research, Select group of same-store properties that offer both golf and spa.
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Full-Service Hotels
Top 52 U.S. Markets
2004
2005
2006F
2007F
Occupancy
67.1%
69.4%
69.6%
69.3%
% Change
+3.5%
+2.3%
+0.2%
-0.3%
$120.00
$129.95
$136.38
$140.63
% Change
+4.4%
+8.3%
+5.0%
+3.1%
RevPAR
$80.54
$90.21
$94.98
$97.43
% Change
+10.1%
+12.0%
+5.3%
+2.6%
ADR
Source: STR, PKF-HR/TW Outlook XL
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What is a Spa?
• “Spas are entities devoted to
enhancing overall well-being through
a variety of professional services that
encourage the renewal of mind, body,
and spirit.”
-ISPA
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What is a Resort Spa?
• Facilities:
– Steam
– Sauna
– Men’s and women’s
locker rooms
– Treatment rooms
– Retail area
– May incorporate a
fitness center
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• Services:
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Massage
Facials
Body treatments
Nail/salon services,
optional
• Experience!!
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What is a Resort Spa?
• For resort owners and managers, spas are
opportunities
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To generate more room night demand
To increase revenues
To increase profits
To increase property value
To enhance the guest experience
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Hotel/Resort
Spa Performance Metrics
• REVENUES
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Spa Revenue as a percentage of Total Revenue
Revenue per occupied hotel room (Spa RevPOR)
Revenue per available hotel room (Spa RevPAR)
Revenue per available treatment room (RevPAT)
Revenue per available treatment room hour (RevPATH)
Revenue per square foot (Rev/SF)
• EXPENSES
– % of Revenues
– Per treatment room
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Hotel/Resort Spas
Mix of Revenues
Clothing / Merchandise
6.9%
Salon Treatment
10.1%
Spa Treatment
22.1%
Other Revenue
4.2%
Club / Membership
Dues
11.0%
Fitness / Training
0.9%
Health / Wellness
Services
1.3%
Massage
43.5%
Source: PKF Hospitality Research
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Hotel/Resort Spa
Direct Operating Expenses
Expense Item
Percent of Department Revenue
Administration
0.7%
Contract Services
5.0%
Cost of Goods Sold
3.2%
Health and Beauty Products
3.7%
Salaries, Wages, and Employee Benefits
54.8%
Laundry and Dry Cleaning
2.4%
Linen
0.5%
Management Fees / Royalties
0.8%
Marketing
0.3%
Miscellaneous
3.3%
Operating Supplies
4.7%
Uniforms
0.3%
Total Expenses
79.5%
Source: PKF Hospitality Research
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2004
Resorts with Large Spas
are at an Advantage…
2004 Data
Revenue vs Net Income Per Treatment Room
$500
$450
$400
$350
$300
$250
$200
$150
$100
$50
$0
$443
$423
RevPAT
$422
$305
$241
$164
$58
1-5
$86
6-10
$98
$59
11-15
16-20
Net Income
Per Available
Treatment
Room
21+
Source: PKF Hospitality Research
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…as they are more
profitable
2004 Data
Net Operating Income as a % of Revenues
Net Operating Income
50%
18.8%
20.4%
24.4%
22.1%
1-5
6-10
11-15
16-20
38.9%
40%
30%
20%
10%
0%
21+
Number of Treatment Rooms
Source: PKF Hospitality Research
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