Hotel Tourism and Leisure lounge

Recent data released by STR Global, , shows improving conditions in the Italian hotel market.

LONDON—Recent data released by STR Global, the leading provider of market data to

the world’s hotel industry, shows improving conditions in the Italian hotel market.

Occupancy in Rome showed an increase of 17.9 percent during August 2009 compared

with the same period from the previous year. Florence and Naples both posted increases

in occupancy rates for July and August, indicating that at least the leisure sector is

gaining back some of the ground recently lost.

“Growth is back”, said Marco Malacrida, director Italy for STR Global. “Italy entered the

current recession in the second half of 2008, somewhat later than many others, and

these figures could point the way to an earlier recovery certainly in the leisure sector.

Corporate business is still suffering even if the Milan Fashion Week in September drew

more visitors than in 2008”.

These recent improvements need to be considered in a national and regional context. The

performance for Italy year-to-date August 2009 shows a year-on-year percentage change

in revenue per available room of -18.1 percent. This is not quite as bad as Europe’s 19.4-

percent decrease. Further indication of the scale of the problems facing Italy’s hoteliers

can be seen in the table below.

 

Year-on-Year Percentage Change for the year to August 2009

	Occupancy	ADR	RevPAR
Italy	-9.2	-9.8	-18.1
Bologna	-7.7	-11.4	-18.2
Florence	-6.5	-9.4	-15.3
Genoa	-11.4	-4.1	-15.0
Mestre	-7.9	-12.8	-19.7
Milan	-13.9	-10.9	-23.3
Naples	0.2	-6.3	-6.1
Padova	-7.7	-9.8	-16.8
Perugia	-8.8	-3.8	-12.3
Rome	-4.8	-8.9	-13.2
Turin	-18.5	-5.7	-23.1
Udine	-6.8	-5.8	-12.2
Venice	-2.1	-12.5	-14.3

Source: STR Global

 

STR Global has recently introduced its STAR programme to Udine and Perugia in

addition to its ongoing expansion of all Italian markets, in particular Naples, Genoa and

Turin. “With the cooperation of the Federalberghi, Confindustria Alberghi and numerous

hotel associations across the country, we have implemented revenue management

training courses that have helped to spread the understanding of the importance of

reliable and timely performance information in making the correct pricing decisions”,

Malacrida said. Other markets that are in progress include more leisure-based samples

covering the Adriatic Riviera, Sicily, Capri and the Amalfi coast, all to be launched

shortly.

“We have been compiling data in Italy since 2001 and are delighted with the confidence

the market places in us”, said Elizabeth Randall, managing director of STR Global. “In the

current downturn the value of competitive market data is becoming clear as it allows

hotels to maximise their return on a bedroom dependant on the market conditions”.

Aperto il Boscolo Exedra Milano

Boscolo Hotels inaugura il nuovo 5 stelle lusso della collezione. Lunedì 14 settembre, Boscolo Exedra Milano ha aperto le sue porte nel cuore del quartiere dello shopping milanese lungo Corso Matteotti, vicino via Monte Napoleone e Piazza San Babila. Dalla creatività dell'architetto Italo Rota ha preso vita un nuovo concetto di hotel con 9 piani e 154 camere e suite con diversi temi e dettagli.

Happy Easter for London Hotels while regional cities feel the cold

28 May 2009: While London hoteliers were successful in filling their beds in April – albeit at lower room rates - regional hotels suffered a significant fall in room rates and occupancy, according to monthly figures released today by PKF Hotel Consultancy Services.

Average room occupancy in London was 82.5%, up 0.9% on April 2008 but room rate fell 10.6% to £123.85 dragging rooms yield down by 9.7% to £102.11. Although room occupancy held out well, given the recession, it is likely that this was only achieved by extensive use of leisure discounting deals to attract visitors into the capital over Easter.

The significant fall in yield in April accelerates the year to date downward trend to £93.89, a 7.9% fall from £101.89 in April 2008.

The April figures for regional figures reveal a gloomy landscape in which the three main performance indicators of room rate, occupancy and yield are now in double digit decline. The room rate fell by 11.2% from £78.17 in April 2008 to £69.43; occupancy was down 13.6% to 63.9%; and rooms yield plunged 23.2% to £44.40. The year to date fall in yield has now fallen 15.6% from £51.93 in 2008 to £43.85.

The UK’s second and third largest cities – Birmingham and Leeds – had a grim April as did Liverpool and Manchester, the seventh and ninth largest. Birmingham hoteliers suffered a 20% drop in occupancy and 15% reduction in room rate which resulted in rooms yield falling by almost a third (32.1%) to £42.72. Leeds fared almost as badly with the combination of a 24% drop in occupancy and a 9% fall in room rate causing a 30.8% plunge in yield to £40.45 from £58.46 the previous April.
Liverpool rooms yield also fell sharply by 28.6% to £59.55 while Manchester rooms yield dropped 21.7% to £55.77.
In contrast, the underlying year round strength of Edinburgh as a business and leisure visitor destination was demonstrated by a 6% increase in occupancy to 77.2% which was achieved at the expense of only a 6.1% drop in room rate from £85.64 to £80.46.

Robert Barnard, partner for Hotel Consultancy Services at PKF, commented, “While the buoyant occupancy figures for London are indicative of the capital’s resilience to virtually every kind of economic, political, biological and climatic turbulence, hoteliers are clearly sacrificing margin in order to fill their beds. The longer the recession continues, the more it will eat into these margins and the harder it will be for hotels to survive.

“But London has enduring appeal as a major world destination and the long range weather forecast for a hot summer and the vast programme of concerts, sporting and cultural events can only be good news for battling hoteliers.

“The worsening scenario in the UK’s major cities, however, must be of serious concern to the hotel industry as a 30% drop in yield clearly cannot be sustained over a long period of time. It is too soon to say how much the April Easter is responsible for the dire results but we can only hope that the glimmerings of more positive economic news among the gloomy headlines will result in a better second half of the year.”

Preliminary data for April 2009

Rooms department	2009	2008	% change
UK Regional hotels (477)
Average daily room rate per occupied room	£69.43	£78.17	-11.2
Average daily room occupancy	63.9%	73.9%	-13.6
Average daily rooms yield per available room	£44.40	£57.82	-23.2
Approximate number of rooms per day	68,850	68,550
London hotels (167)
Average daily room rate per occupied room	£123.85	£138.47	-10.6
Average daily room occupancy	82.5%	81.7%	0.9
Average daily rooms yield per available room	£102.11	£113.17	-9.8
Approximate number of rooms per day	36,600	36,500

– ends –

For further information or to speak to Robert, please contact:

Jane Murray, PR Executive, 020 7065 0135, jane.murray@uk.pkf.com

Notes to Editors:

1. PKF (UK) LLP is a leading firm of accountants and business advisers with more than 1,500 partners and staff operating in 23 offices in the UK mainland firm, incorporating a wholly-owned financial planning company and associated offshore practices. The firm specialises in advising growing and entrepreneurial/owner-managed businesses, AIM and fully listed companies, and also has extensive experience public and not-for-profit sectors. Principal services include assurance and advisory; taxation; consultancy; corporate recovery and insolvency; corporate finance and forensic. The firm has particular expertise in advising sectors such as hotels and leisure; mining and resource; public sector; real estate and construction; professional practices; not-for-profit; and medical. The firm’s web site is www.pkf.co.uk.
   
2. PKF (UK) LLP is a member firm of the PKF International Limited network of legally independent firms. The PKF International Limited network has around 15,000 people operating in 120 countries around the world.
   
3. PKF (UK) LLP has been providing hotel consultancy services since the early 1970s and, in that time, has undertaken thousands of assignments throughout Europe, the Middle East and Africa and further a field. Services include: market evaluation and financial feasibility studies; operational and profit improvement reviews; asset management; business valuations; international property services; corporate strategy and planning; litigation support. PKF’s web site features regular articles from the firm’s hotel consultancy services experts on industry topics – the address is www.pkf.co.uk/hotelcons.
   
4. PKF (UK) LLP’s hotel trends surveys feature a broad range of hotels across the country although mainly in the 3 – 4 star categories and featuring rather more chain operated hotels than those operated independently. While there are a fair number of hotels in country and rural areas, there is a predominance of hotels in towns and cities. In London, supply featured is mainly in the 3 –5 star categories.

Final data for March 2009

Rooms department	2009	2008	% change
UK Regional hotels	482	482
Average daily room rate per occupied room	£72.14	£75.75	-4.8
Average daily room occupancy	64.8%	67.7%	-4.4
Average daily rooms yield per available room	£46.76	£51.34	-8.9
Approximate number of rooms per day	72,600	72,350
London hotels	172	172
Average daily room rate per occupied room	£125.22	£140.39	-10.8
Average daily room occupancy	82.4%	81.6%	0.9
Average daily rooms yield per available room	£103.17	£114.59	-10.0
Approximate number of rooms per day	37,700	37,600

Definition of the key terms used in the surveys table are given below:

Room occupancy: the ratio of total occupied rooms to total available rooms
Average achieved room rate (AARR): rooms revenue divided by the total number of guest rooms occupied during the year.
Rooms yield: room occupancy multiplied by the average achieved room rate (also known as RevPar).

Pricing for profit

Pricing for profit

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Disponibile on line la ricerca Il mercato degli eventi in Italia. Outlook 2009

Sul sito di Convegni è possibile scaricare la presentazione della ricerca e la versione integrale delle tabelle

Nella crisi economica globale, rivela la seconda edizione della ricercaIl mercato degli eventi in Italia. Outlook 2009 promossa da Convegni, anche gli investimenti in eventi subiscono una frenata, ma restano una leva di marketing sempre più strategica e pensata in modo integrato nei piani aziendali.
Le aziende tengono le redini delle strategie e valorizzano le competenze interne acquisite dopo anni di sperimentazioni, mentre alle agenzie chiedono uno sforzo di creatività e la capacità di essere “vicine” all’azienda, ripagandole con un alto tasso di fidelizzazione.
Gli eventi si accorpano e diventano multitarget e multiformat, facendo saltare ulteriormente gli steccati tra le varie professionalità di un mondo in continua evoluzione, dove l’importante non sono le etichette ma i risultati
 
L’indagine, che è stata realizzata con il supporto della società di ricerca DataContact per l’elaborazione dei dati raccolti e dei risultati, si è basata su 200 interviste a responsabili di aziende che investono nel mercato degli eventi, e, a completamento del quadro, quest’anno, a 160 agenzie che lavorano per l’organizzazione degli eventi aziendali, per studiare le previsioni di investimento negli eventi per il 2009.

Dopo anni che avevano visto crescere il mercato degli eventi, in controtendenza con altri strumenti tradizionali come la pubblicità, e diventare una leva di marketing e di comunicazione sempre più importante, per la prima volta, come effetto della recessione globale, si registra un inevitabile rallentamento. 

Da un’analisi attenta dei risultati emerge però che gli eventi sono comunque importanti ed efficaci per le aziende, ma che in questi primi mesi dell’anno si è scelto di adottare una generale prudenza, di posticipare la pianificazione degli eventi nel corso dell’anno o di organizzare eventi con maggiore sobrietà, anche per motivi di immagine, non volendo realizzare eventi sfarzosi e costosi.
 
Scarica la presentazione della ricerca e la versione integrale delle tabelle

New Surveys Reveal Relative Strength of Spa Industry -- And Top Marketing Strategies Being Embraced for 2009

New Surveys Reveal Relative Strength of Spa Industry -- And Top Marketing Strategies Being Embraced for 2009

Day Spas Outperforming Resort/Hotel Category; Urban Hotel Spas Poised to Lead 'Stay' Spa Industry * Spas Favor Deals/Specials and Increased Internet Marketing Over Traditional Advertising in 2009

And with marketing budgets under more intense scrutiny, the significantly increased focus on targeted, measurable Internet marketing, rather than traditional media, comes as no surprise.

New York, NY (PRWEB) April 17, 2009 -- SpaFinder, the leading spa and salon marketing and research company, has released the findings of new surveys designed to illuminate how day and resort/hotel spas are performing in the tough economy--as well as which marketing tactics each sector is focusing on to weather the downturn in 2009. 

The findings provide hard evidence that despite the ongoing recession, the industry has proven relatively resilient: a majority of day spas (51%) actually reported revenue gains in 2008 over 2007--and while the resort/hotel category was more impacted (with 54% of resort spas reporting revenue declines in 2008), 46% still reported gains.

The research also provides the first window into which precise marketing strategies spas are focusing on in 2009, and the findings are clear: the industry will put a significantly increased emphasis on deals/specials and Internet marketing in the year ahead, with traditional advertising (print, TV, and direct marketing) facing significant cuts.

"The spa industry's ongoing, aggressive focus on deals has been an extremely savvy move, meeting the demand of stressed consumers who need spas more than ever--but only if the price is right," said Susie Ellis, SpaFinder's president. "And with marketing budgets under more intense scrutiny, the significantly increased focus on targeted, measurable Internet marketing, rather than traditional media, comes as no surprise."

Additionally, preliminary '09 data currently being amassed at SpaFinder Research indicates that day spas should continue to outperform resort/hotel spas across 2009--and within the 'stay' spa category, urban hotel spas will perform best. Ellis noted, "As more consumers forego travel and seek breaks closer to home, the 'daycation' has moved from a trendy buzzword to reality. Urban hotel spas will lead the resort spa category, as they're uniquely poised to attract the 'day spa' consumer. Given recent research* that the wider U.S. hotel industry's revenue-per-room is down 17%, we're finding welcome evidence that a spa component is providing much-needed revenue for hotels--particularly in larger markets."

SpaFinder's Spa Performance and Strategies in the Economy surveys were conducted with over 500 spas in February 2009.

Key Findings:

Financial Performance and Staffing Plans:

• 51% of day spas clocked revenue gains in '08 over '07, reporting relatively strong performance across each sales channel (with treatments strongest, followed by gift certificates, and retail). Comparing January 2009 to January 2008, 57% of day spas maintained or increased treatment sales.
• While 54% of resort/hotel spas reported revenue declines in '08, their spa facilities are generating a rippling profit-effect. The significantly largest bloc of respondents reported that guests using the spa spend more in other areas of the resort than non-spa guests--with over half reporting that spa-users now spend more than 15% more than non-spa guests.
• Day spas' strength is reflected in their staffing plans: 60% report they'll maintain staff levels in '09, with roughly 20% reporting they will increase--and 20% cut--personnel. Not surprisingly, resort/hotel spas plan somewhat larger cuts: 55% will stand firm on staff in 2009 and 5% plan increases, but 38% plan cuts.

The Deal Weapon in the Recession:

Day and 'stay' spas strongly concur that deals and value-added discounts represent one of their top two marketing strategies for 2009…

• 66% of day spas plan to increase deals/unique promotions in '09 over '08, with 30% maintaining at the current level, and only 3% planning any decrease. Dedicated 'deals' trump wholesale treatment price decreases: only 14% of day spas plan to decrease treatment prices in 2009.
• Similarly, 76% of resort/hotel spas plan to increase deals/promotions in 2009, with 22% maintaining at the current level, and virtually 0% planning any declines. Resort/hotel operators report that discounts are far and away the #1 way to attract new customers.

Internet Marketing Crucial for Spas in '09:

Day and 'stay' spas further concurred that Internet marketing is poised to make serious gains against traditional advertising this year…

• More than four out of five spas are upping, or standing firm, on their Web marketing spend in '09--while roughly half plan to slash traditional advertising.
• 82% of day spas plan to increase or maintain their online marketing spend (i.e., display ads, listings with industry websites, etc.) in '09, with 42% planning significant increases. But only 12% plan to increase their traditional advertising (print magazines, newspaper or TV), while 47% plan to make cuts.
• Similarly, 83% of resort/hotel spas plan to increase/maintain their online marketing budgets, with 43% planning significant increases--while only 20% plan any increases for traditional advertising, and 44% are planning cuts.

Learn more:
SpaFinder's Spa Performance and Strategies in the Economy surveys provide further data on particular strategies being undertaken by the industry in 2009. To learn more, or speak with SpaFinder President Susie Ellis, please contact Betsy Isroelit at 213-300-0108 or betsy [at rbicom.com.

About SpaFinder, Inc.:
The world's largest spa media, marketing and gifting company, SpaFinder, Inc. connects millions of wellness-focused consumers with thousands of spas worldwide. SpaFinder's media properties include the award-winning Spafinder.com, the Spa Enthusiast newsletter and the annual worldwide spa directory, Global SpaFinder. Spa Finder Gift Certificates and its new gift division, Spa & Salon Wish, offer spa gift certificates and cards that are redeemable at a combined network of over 8,000 spas and salons worldwide and available at thousands of retail outlets. The company's software division innovates new solutions that help spas build and streamline their businesses, including the popular SpaBooker online booking system. SpaFinder Europe and SpaFinder Japan offer regional spa marketing and gifting programs, including localized, native-language websites. Founded in 1986, the privately held company is headquartered in Manhattan.

• Smith Travel Research, March 2009

PKF UK: Another slow month for UK hotels

26 January 2009: The festive season did not bring much cheer for UK hoteliers in December as room rate, occupancy and rooms yield all fell for most during the month, according to preliminary monthly figures released today by PKF Hotel Consultancy Services. 

In the capital, room rate dropped from £139.33 in 2007 to £138.03 this year – a fall of 0.9% – while occupancy decreased by 1.2% on the same period last year. Overall, this meant a 2.1% decline in rooms yield from £102.07 in 2007 to £99.89 in 2008.

Year to date figures were a little more positive, with London achieving a 2.7% increase in rooms yield for the year from £114.08 in 2007 to £117.19 in 2008: this was mostly driven by a 4.6% hike in room rate.

In the regions, hoteliers felt the effects of the downturn more severely with rooms yield dropping by 11.6% in comparison to December 2007. This was a combination of a 9.4% decrease in occupancy, from 62.2% to 56.3%, and a drop in room rate from £73.20 last year to £71.42 this year. 

Even Liverpool, which has benefitted greatly over 2008 due to its status as European Capital of Culture, had a disappointing December recording a loss in rooms yield of 14.5%. Liverpool still held the title in December, but obviously the attraction to the city was not as great in comparison to last year when the city was gearing up for its 2008 status. 

Year to date figures were also equally as gloomy for the regions as a whole, with an overall 2.2% decline in rooms yield for the year. Room rate did manage a 0.7% increase however, from £75.61 in 2007 to £76.14 in 2008.

Robert Barnard, partner for Hotel Consultancy Services at PKF, commented, “The decreases experienced by hoteliers this month are not surprising considering the current climate. While in recent years UK families may have chosen to take a break over the Christmas period by staying in a hotel, or families from overseas many have chosen to travel to the UK for a holiday, this year most will have opted to stay at home and save money ahead of what is expected to be a difficult 2009.

“Business travel always drops off in December, but this year it would have been further diminished as companies try to cut costs.

“Looking forward into 2009, the weak pound may help bring some tourists back to the UK and therefore into hotels, but on the whole, it will be a more testing year for hoteliers than the last few and they should be continuing to prepare themselves for a downturn in business.”

Preliminary data for December 2008

Rooms department	2008	2007	% change
UK Regional hotels (478)
Average daily room rate per occupied room	£71.42	£73.20	-2.4
Average daily room occupancy	56.3%	62.2%	-9.4
Average daily rooms yield per available room	£40.23	£45.53	-11.6
Approximate number of rooms per day	69,850	69,300
London hotels (150)
Average daily room rate per occupied room	£138.03	£139.33	-0.9
Average daily room occupancy	72.4%	73.2%	-1.2
Average daily rooms yield per available room	£99.89	£102.07	-2.1
Approximate number of rooms per day	34,050	34,200

– ends –

For further information or to speak to Robert, please contact: 

Jane Murray, PR Executive, 020 7065 0135, jane.murray@uk.pkf.com

Notes to Editors:

1. PKF (UK) LLP is a leading firm of accountants and business advisers with more than 1,800 partners and staff operating in 23 offices in the UK mainland firm, incorporating a wholly-owned financial planning company and associated offshore practices. The firm specialises in advising growing and entrepreneurial/owner-managed businesses, AIM and fully listed companies, and also has extensive experience public and not-for-profit sectors. Principal services includeassurance and advisory; taxation; consultancy; corporate recovery and insolvency; corporate finance and forensic. The firm has particular expertise in advising sectors such as hotels and leisure; mining and resource; public sector; real estate and construction; professional practices; not-for-profit; and medical. The firm’s web site is www.pkf.co.uk.
   
2. PKF (UK) LLP is a member of PKF International Limited, an association of legally independent member firms with more than 14,650 people operating in 119 countries around the world.
   
3. PKF (UK) LLP has been providing hotel consultancy services since the early 1970s and, in that time, has undertaken thousands of assignments throughout Europe, the Middle East and Africa and further a field. Services include: market evaluation and financial feasibility studies; operational and profit improvement reviews; asset management; business valuations; international property services; corporate strategy and planning; litigation support. PKF’s web site features regular articles from the firm’s hotel consultancy services experts on industry topics – the address is www.pkf.co.uk/hotelcons.
   
4. PKF (UK) LLP’s hotel trends surveys feature a broad range of hotels across the country although mainly in the 3 – 4 star categories and featuring rather more chain operated hotels than those operated independently. While there are a fair number of hotels in country and rural areas, there is a predominance of hotels in towns and cities. In London, supply featured is mainly in the 3 –5 star categories.

Final data for November 2008

Rooms department	2008	2007	% change
UK Regional hotels	539	539
Average daily room rate per occupied room	£75.43	£77.23	-2.3
Average daily room occupancy	69.4%	73.7%	-6.0
Average daily rooms yield per available room	£52.32	£56.96	-8.2
Approximate number of rooms per day	74,000	73,450
London hotels	175	175
Average daily room rate per occupied room	£143.28	£149.87	-4.4
Average daily room occupancy	79.7%	85.1%	-6.3
Average daily rooms yield per available room	£114.24	£127.58	-10.5
Approximate number of rooms per day	37,450	37,850

Definition of the key terms used in the surveys table are given below:

Room occupancy: the ratio of total occupied rooms to total available rooms
Average achieved room rate (AARR): rooms revenue divided by the total number of guest rooms occupied during the year. 
Rooms yield: room occupancy multiplied by the average achieved room rate (also known as RevPar). 

PKF Country Trends 2008

This year PKF survey includes over 1,094 hotels extending over many countries throughout Europe, the Middle East and Africa. There are a number of new countries in the survey this year, including Portugal and Denmark.

In 2007, the hotels in PKF survey delivered an overall growth in rooms yield of 8.0% to €90.52 as occupancy rose 1.5% to 71.5%. The strength in demand assisted an increase in average achieved room rate (AARR) increasing to €126.65, a 6.4% growth on the previous year. The hotels in the Middle East continue to shine with impressive improvement in rooms yield compared to Europe and Africa.

The report is available to purchase by clicking the link below. To download a sample of what the report looks like please click here

2008 edition of Trends in the Hotel Spa Industry by PKF Consulting

Jan. 6, 2009 -- Spas continued to contribute to the top and bottom lines of U.S. hotels in 2007. Total spa department revenue increased 5.0 percent from 2006 to 2007, while spa department profits grew 5.8 percent. These are among the findings reported in PKF Consulting's (PKF-C) recently released 2008 edition of Trends in the Hotel Spa Industry, a report that examines the revenue, expenses, and profits of hotel-operated spas in the United States.

"Lodging industry owners and operators fully realize that a well-run spa operation can benefit a hotel in many ways," said Bruce Baltin, senior vice president in the Los Angeles office of PKF Consulting. "In addition to the monetary contribution, a spa can help define the market position of a hotel, provide a competitive asset that is attractive to multiple demand segments, and diversify a hotel's revenue stream. It is this type of product differentiation that managers hope will provide a competitive advantage in 2009."

During challenging times like these, the spa industry has the potential to be buoyant. However, it is not invincible. "The dynamics of the spa industry enable it to persevere longer than other industries for several reasons," Baltin noted. "A large portion of its consumers are affluent, an increase in stress can further emphasize the importance of staying healthy, and in difficult times people tend to seek out experiences rather than material objects. All that being said, hotel spa usage will likely decrease due to expected declines in occupancy rates and guest counts for the lodging industry in general." In its December 2008 Hotel HorizonsSM report, PKF Hospitality Research (PKF-HR) is forecasting that the typical U.S. hotel will experience a 5.3 percent drop in occupancy in 2009.

The 2008 Trends in the Hotel Spa Industry report analyzes the 2007 financial performance of 116 spas operated by hotels located throughout the United States. In aggregate, the 116 hotels that voluntarily submitted their data for the survey averaged 405 guest rooms in size and achieved an occupancy of 70.8 percent and average daily room rate of $257.14 in 2007. Both urban and resort hotel spas were included in the research, while day spas, medical spas, destination spas, and hotel spas that independently lease space were excluded. For the purposes of this research, departmental profits are calculated before deductions for undistributed expenses and fixed charges.

Spa Revenues

Since the number of occupied rooms for the survey sample remained relatively flat (0.2 percent decline), the 5.0 percent rise in spa revenue was likely due to an increase in the price for spa services, increase in number of services utilized per hotel guest, or a stronger mix of local patronage. "Recent research has shown that although consumers are tightening their belts, they are still traveling albeit with a different mindset and expectation of services. People increasingly are requiring greater value and a heightened level of experience. Hotels with spas can meet those needs by providing promotional packages, special offers, and discounts," observed Gabrielle Lerner, associate in the Los Angeles office of PKF-C.

For the hotel spas that participated in the survey, department sales represented 3.9 percent of total hotel revenue in 2007. Within the spa department, massage continued to be the greatest source of revenue (55.6 percent), followed by skin care and body work (18.8 percent) and salon services (10.7 percent).

Spa Expenses

Overall, spa department expenses increased 4.7 percent from 2006 to 2007, driven mainly by a 6.6 percent increase in labor costs. Like all departments within a hotel, labor-related costs are the biggest operating expense for spas, representing 57.2 percent of department revenue. "Labor costs in urban hotel spas tend to be somewhat higher than in resort spas. Urban hotel spas have lower revenues and inconsistent demand for services making scheduling more complicated," Lerner said.

Spa Profits

The average departmental profit margin for the spas in the survey sample was 24.1 percent. For comparison purposes, the average profit margin for all other operated departments in PKF's Trends in the Hotel Industry survey was 29.4 percent.

From 2006 to 2007, hotel spa department profits grew 5.8 percent. Profit growth was greater for urban spas (12.3 percent) versus resort spas (4.6 percent). "While 5.8 percent is a healthy rise over the previous year, it was less than the 6.7 growth rate for total hotel operated department income, which demonstrates the evolving spa industry still has room to improve," Baltin noted.

Hotel Spas In 2009

"As U.S. hotels are forecast to struggle with declines in occupancy, ADR, and revenue, we believe there is an opportunity for spa operators to capitalize on operational and competitive advantages," Baltin said. "Hotel spas are an important amenity to all market segments and should be leveraged with regards to meetings, conventions, and other special events. Innovative marketing can also be created to promote the spa as a 'staycation,' thereby providing a refuge for local residents."

To purchase the 53-page 2008 edition of Trends in the Hotel Spa Industry, please visit the firm's online store at www.pkfc.com/store, or call (866) 842-8754. In addition to multiple data tables that display revenue, expense, and profitability benchmarks, the report includes editorial content from the following guest authors: Lynne McNees - ISPA, John Korpi - ISPA Foundation, Mary Tabacchi - Cornell University, Jennifer DiFrancesco - Miramonte Resort and Spa, and Judith Singer - Health Fitness Dynamics, Inc. In addition Brett Blumenthal - Gensler, Jeanie Klueter - WATC, Julia Monk - BBG-BBGM, and Chris White - WTS International participated in a roundtable discussion on spa design trends.

PKF Hospitality Research (PKF-HR), headquartered in Atlanta, is the research affiliate of PKF Consulting, a consulting and real estate firm specializing in the hospitality industry. PKF Consulting has offices in Boston, New York, Philadelphia, Washington DC, Atlanta, Indianapolis, Houston, Dallas, Bozeman, Sacramento, Seattle, Los Angeles, and San Francisco.

U.S. Hotel Spas

Sources of Revenue

(2007 Percent of Department Revenue)

Revenue Percent of Total Revenue

Massage 55.7%

Skin Care and Body Work 18.8%

Salon Services 10.7%

Daily Facility Use 0.9%

Fitness and Personal Training 1.9%

Health and Wellness 0.3%

Retail 10.3%

Other 1.4%

Total 100.0%

Source: PKF Hospitality Research, 2008 Trends in the Hotel Spa Industry report.

U.S. Hotel Spas

Select Revenues and Expenses

(Change From 2006 to 2007)

Revenue/Expense Change from 2006 to 2007

Massage Revenue 5.6%

Skin Care and Body Work Revenue 2.4%

Salon Services Revenue 5.2%

Retail Revenue 8.8%

Total Department Revenue 5.0%

Labor Costs 6.6%

Non-Labor Related Expenses -0.5%

Department Income* 5.8%

Note: * Before deductions for undistributed expenses and fixed charges.

Source: PKF Hospitality Research, 2008 Trends in the Hotel Spa Industry report.

Latest insights from JMBM's Hotel Attorneys and PKF Consulting on what lies ahead for the hotel industry . . .

By Jim Butler, Hotel Lawyer | Author of www.HotelLawBlog.com

Hotel Lawyers with the pulse of the hotel industry from ALIS. Mark Woodworth of PKF Consulting shared his latest analysis of the hotel industry with us, as well as his slides from the ALIS conference. The picture is not pretty. Mark says, that if you're waiting for the recovery, the key word is "PROTRACTED." Here are the details.

A deteriorating situation getting worse

Mark Woodworth views employment as one of the best measures of the economy's health. Conversely, unemployment shows the economy's weakness. The situation is pretty bad and has been getting worse. The following slide shows actual and projected unemployment and how the forecasts have worsened from August to October and now January 2009.

The experts from PKF consulting are projecting that it will take 15 quarters for employment to return to its prior levels. If true, this would be one of the worst unemployment periods since 1979, as shown in the following slide.

When will the hotel industry recover and what are the turning points?

Here is a graphic illustration of how PKF sees the economic recovery in terms of GDP, income and employment:

Loan delinquencies growing

The picture on the loan delinquencies looks pretty grim, with home equity loan delinquencies peaking near the end of 2010

We can only guess where hotel CMBS delinquencies will go from here, but here is Mark's chart on results to date:

Protracted hotel supply-demand disconnect, declines in occupancy and ADR, and record declines in NOI

PKF is projecting a protracted disconnect in supply and demand for at least 31 months -- a new record -- as shown in the chart below

This leads to protracted declines in occupancy and ADR, with ADR recovering only in the second quarter of 2010.

And these factors in turn cause, what Mark calls "a modern record" in NOI declines, which NOI going positive only in mid-to-late 2010

"Explosion" in hotel cap rates

PKF Consulting is forecasting an "explosion" in cap rates for hotels, up by 210 basis points from today through 2010 to 9.7%.

Falling hotel values

Falling NOI and exploding cap rates lead to a projected decline in hotel values of more than 20% in 2009, with no significant improvement in values until 2012.

Low occupancy hotels (less than 70%) will experience extraordinary value declines

Although PKF Consulting is projecting a national average decline in RevPAR of 9.8% for 2009, the impact of RevPAR declines on NOI will depend upon the occupancy level of the hotel as it enters 2009. The following chart shows PKF's projections that high occupancy hotels (with occupancy greater than 70%) will have NOI declines of 8.6%, while hotels with less than 70% occupancy will suffer a 44.8% NOI decline!

Less than 30% of all CMBS Hotel loans since 2005 have LTVs over 70%

So where does this leave lenders and borrowers in terms of "loan to value" or "LTV" ratios? This final slide suggests that at the end of 2008, less than 20% of the CMBS loans originated since 2005 still had an LTV greater than 70%.

Let me turn that around to say it differently: At the end of 2008, more than 80% of the hotel CMBS loans have less than a 70% LTV, and in 2009, the experts are predicting record RevPAR and NOI declines with an "explosion" in cap rates of 210 basis points . . . and no improvement in value for some time. This does not bode well.

Hotel bankruptcies around the corner?

Hotel bankruptcies have already begun, but we see the flow speeding up as lenders and owners "see the writing on the wall." There will be tremendous opportunities here for someone.


This is Jim Butler, author of www.HotelLawBlog.com and hotel lawyer, signing off. We've done more than $50 billion of hotel transactions and more than 100 hotel mixed-used deals in the last 5 years alone. Who's your hotel lawyer?

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Our Perspective. We represent developers, owners and lenders. We have helped our clients as business and legal advisors on more than $50 billion of hotel transactions, involving more than 1,000 properties all over the world. For more information, please contact Jim Butler at jbutler@jmbm.com or 310.201.3526.

Jim Butler is one of the top hospitality attorneys in the world. GOOGLE "hotel lawyer" or "hotel mixed-use" or "condo hotel lawyer" and you will see why.

Jim devotes 100% of his practice to hospitality, representing hotel owners, developers and lenders. Jim leads JMBM's Global Hospitality Group® -- a team of 50 seasoned professionals with more than $50 billion of hotel transactional experience, involving more than 1,000 properties located around the globe. In the last 5 years alone, Jim and his team have assisted clients with more than 100 hotel mixed-use projects -- frequently integrated with energizing lifestyle elements.

Jim and his team are more than "just" great hotel lawyers. They are also hospitality consultants and business advisors. They are deal makers. They can help find the right operator or capital provider. They know who to call and how to reach them.

Contact him at jbutler@jmbm.com or 310.201.3526. For his views on current industry issues, visit www.HotelLawBlog.com.