Sep 15 2019
The Health and Wellness Spas industry has recorded robust growth over the past five years. The industry’s expansion is quite remarkable, given that household discretionary income has declined over the same period.
The Australian Retail division, which also relies on discretionary expenditure from households, has struggled under the same, sluggish economic conditions over the past five years. According to industry research firm IBISWorld, declining discretionary income has weighed on many Australian industries over the period, particularly those in the arts, recreation and personal services sector. For example, revenue for the Hairdressing and Beauty Services industry is expected to decline at an annualised 0.2% over the five years through 2019-20. In contrast, revenue for the Health and Wellness Spas industry is anticipated to expand at an annualised 3.6% over the same period.
‘The Health and Wellness Spas industry’s resilience can be attributed to growing links with Australia’s burgeoning tourism sector and domestic consumers seeking affordable luxuries amid tough economic conditions for households,’ said IBISWorld Senior Industry Analyst, Tom Youl.
Although real household discretionary income has declined over the past five years, consumers have generally become more willing to spend on wellness services, particularly while on holidays, which has strengthened demand for the Health and Wellness Spas industry.
‘Australians are living increasingly busy and high-pressure lifestyles, and have sought out services offered by health and wellness spas as a break from day-to-day stresses. For many, trips these spas are an affordable luxury. Consumers have increasingly cut other discretionary purchases to fund these visits,’ said Mr Youl.
Australia’s growing tourism sector has also benefited the Health and Wellness Spas industry over the past five years. Strong growth in inbound international visitors over the period has boosted industry demand, particularly among industry participants that provide accommodation alongside wellness services. In addition, domestic tourism has been growing strongly over the past five years, as a depreciating Australian dollar has made overseas travel more expensive.
‘Travellers are increasingly seeking wellness-related tourism experiences, with global wellness tourism expenditure growing at an annualised 6.5% over the two years through 2016-17, according to the Global Wellness Institute. The organisation also states that tourists are an exceptionally lucrative market for spas, as the average wellness tourist spends 53% more than the typical international tourist,’ said Mr Youl.
According to Tourism Australia, regional wellness centres reported annualised visitor growth of 14.3% over the five years through 2017-18. More recent trends in the Tourism and Domestic Airlines industries have provided a further demand boost to spas located in regional areas, with these operators driving the Health and Wellness Spas industry’s expansion over the past five years.
According to IBISWorld, the weak Australian dollar, combined with the decline in discretionary income, has encouraged many Australians to forgo overseas holidays for domestic trips. However, domestic airfares have been rising in response to Qantas and Virgin winding back seat availability, causing demand for flights to soften significantly.
According to the Bureau of Infrastructure, Transport and Regional Economics (BITRE), restricted economy airfares have reached their highest prices, in real terms, since October 2007. As a result, domestic tourists are getting in their cars and visiting more of regional Australia instead of taking domestic flights, a trend demonstrated in recent tourism statistics:
- Domestic airline passengers: 0.7% growth over the year ended March 2019
- Total domestic overnight trips: 9.8% growth over the year ended March 2019
- Total domestic day trips: 7.8% growth over the year ended Mach 2019
“Health and wellness spas are a common drawcard of regional areas, such as Hepburn Springs in Victoria and Margaret River in Western Australia. Investment in developing and expanding spa facilities, both standalone and in hotels, has been significant in recent years. For example, the Peninsula Hot Springs in Victoria completed a $13.0 million expansion project in September 2018, adding new geothermal pools and accommodation. However, most investment in terms of expenditure has been conducted by hotel establishments, with several new luxury venues offering spa and wellness services entering the market. The robust investment in this space indicates that demand will likely continue flourishing over the next five years,” said Mr Youl.
IBISWorld reports mentioned in this release:
- Health and Wellness Spas
- Hairdressing and Beauty Services
- Tourism in Australia
- Qantas Airways Limited
- Virgin Australia Holdings Limited
For more information, to obtain industry reports, or arrange an interview with an analyst, please contact:
Strategic Media Advisor – IBISWorld Pty Ltd
Tel: 03 9906 3641