Day Spas and Tanning Salons

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 30,900 day spas and tanning salons in the US provide personal care services to clients, including massages, indoor and sunless tanning, skincare treatments, and nail care treatments. Day spas and tanning salons also sell skincare and body care products, cosmetics, candles, vitamins and nutritional supplements, and other retail products. Some day spas also offer hair care services.

Competition for Services

Day spas face competition from other providers of massages and skin treatments, including hotel and resort spas, medical spas, fitness centers, independent masseuses, nail salons, and dermatology practices.

Indoor Tanning Health Concerns

Concerns over the health risks of using tanning beds threaten to reduce demand for tanning salons.

Industry size & Structure

The average day spa has 16 employees and generates over $842,000 in annual revenue, while the average tanning salon has 6 employees and generates about $275,000 in annual revenue.

    • The spa industry in the US has about 21,500 locations, employs 345,000 people, and generates about $18 billion in annual revenue. About 80% of locations are day spas, with the remainder consisting of hotel and resort spas, destination spas, and medical spas.
    • Tanning salons in the US have about 9,400 locations, 60,500 employees and generate about $2.6 billion in annual revenue.
    • US consumers made 182 million visits to spas in 2023, according to the International SPA Association.
    • Most day spas and tanning salons are independently owned and operated. Franchise locations of large chains account for less than 5% of industry revenue.
    • Day spa chains include Massage Envy, Woodhouse Day Spa, and Bliss.
    • Tanning salon chains include Palm Beach Tan, Planet Beach Tan, Hollywood Tans, and LA Tan.
                              Industry Forecast
                              Day Spas and Tanning Salons Industry Growth
                              Source: Vertical IQ and Inforum

                              Recent Developments

                              May 17, 2024 - Consumer Spending, Wages Up
                              • Day spas and tanning salons may see an uptick in demand due to higher consumer spending levels in March 2024, up 3.1% compared to a year ago and 0.5% from the previous month, according to the Bureau of Economic Analysis. Data from the Bureau of Labor Statistics (BLS) showed 1.5% employment growth by other personal care services, including day spas and tanning salons, in March 2024 compared to a year ago. Wages at other personal care services, including day spas and tanning salons, were up 6.9% to $25.39 per hour in March 2024 compared to a year ago, per the BLS.
                              • A new report from the International SPA Association (ISPA) shows growth in all spa industry benchmark data in 2023 as the industry continues to improve post pandemic, according to Salon Today. Overall revenue reached a record $21.3 billion in 2023, up 5.7%, and average revenue per visit reached $117.2, up 5.1%. Other key data points included a 2.6% gain in spa industry employment, a 0.2% increase in spa locations, and a 0.6% rise in sessions. According to ISPA President Lynne McNeese, “Revenue drives growth for spas. Increasing overall revenue and dollars spent per visit allows spas to hire more employees and open new locations. This year’s good news will make it possible for the spa community to reinvest in growth.” The ISPA commissioned PricewaterhouseCoopers (PwC) to conduct the annual ISPA US Spa Industry Study.
                              • More spas and salons are incorporating “Buy Now Pay Later” (BNPL) payment options to give customers additional flexibility to pay for high-priced services such as advanced skin care, spa packages, and med spa treatments, according to Modern Salon. The BNPL option allows customers to pay for purchases in installment-based payments over a fixed period interest free. The option lets spas consider expanding their current prices or adding higher-priced premium services, knowing that clients have payment flexibility. Younger shoppers are also comfortable using the BNPL plans. According to a new report from PYMNTS Intelligence and Splitit titled “Redefining Retail: Consumer Finance Trends Driving the Evolution of Pay Later Plans,” 65% of Gen Z and millennials used pay later plans in the past year.
                              • The US day spas and tanning salons industry is projected to grow at a CAGR of 6.2% between 2024 and 2028, according to a forecast from Inforum and the Interindustry Economic Research Fund, Inc. The expected growth rate is faster than the overall economy's anticipated growth. The report noted that consumer confidence levels have improved, which bodes well for the other services industries, which include day spas and tanning salons. Additionally, consumer sentiment has seen a degree of improvement following sustained lower levels. A broad recovery is underway for many in-person services that were affected when consumers were largely limited to their homes in 2020 and 2021. Factors that continue to limit spending are higher price levels and interest rates, though both are expected to improve in 2024. Post-pandemic, consumer spending has shown slower gains of 2.5% in 2022 and 2.2% in 2023, supported in part by savings amassed by households from federal pandemic relief programs.
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