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Second Quarter Forecast 2012
<em>It’s a “buyer’s market” out there, and time to use that to your advantage.</em>
The effects of The Great Recession and its tepid recovery have led most spa owners to suffer a drop in revenues these past few years. Many have even gone out of business. And according to a February Kiplinger report, economic rehabilitation isn’t exactly switching into high gear this quarter, with overseas growth slowing in Asia, and Europe sliding into political paralysis and recession.
The housing demand remained weak during the first quarter of 2012, and revenue-strapped local governments continued to lay off workers. Financial experts expect Gross Domestic Product to grow by about 2.3% in 2012—far short of the 4% or more that would characterize true recovery. Job creation is expected to average about 175,000 jobs per month in the coming year, only slightly ahead of workplace growth—which brings us to the potential silver lining of this economic storm cloud for savvy spa owners: the continued, relatively high level of unemployment.
According to the U.S. Department of Labor, there were an astounding 8.4 million jobs lost between 2006 and 2009, representing the most dramatic contraction since The Great Depression of the 1930s. And while the unemployment rate dropped to 8.3% in January, there still were 13.7 million unemployed Americans.
And that tells only part of the story. The underemployment rate (as tracked by the Gallup Organization), which includes the unemployed and those who are working part-time but wish to work full-time, remained at 18.6% last December. That’s a whopping 27 million American workers!
What does this mean for spa owners? Simply put, as the economy continues its slow recovery, it is a buyer’s market for employers.
“Every time we place an ad, people respond immediately. I remember when you could not get applications and hire a person, no matter how much you were paying,” recalls Tamara Friedman, owner of Tamara Spa & Wellness in Farmington, Michigan. “But a lot of companies closed up or downsized during the recession; people truly need jobs now, especially in Michigan.”
“This is an excellent time to hire,” agrees Ann Emich-Patton, owner of Savvy Spas Consulting in Scottsdale, Arizona, who talks about her recently completed recruiting assignment for a Florida spa that resulted in 15 new hires. “There were many good candidates, mostly for the hourly positions of front desk/reception, massage therapists and spa attendants,” Emich-Patton reports. “It took a bit longer to find strong supervisory candidates, but I returned to the property just last week and am happy to say that those hired are getting excellent reviews from managers, operators and, most importantly, the guests!”
The buyer’s market that now persists due to high unemployment will likely remain prevalent for the next couple of years, until we reach a sustainable economic growth. DAYSPA’s advice this quarter? Take advantage of this abundance of potential candidates, to ensure that you have the best employees available to differentiate your spa’s service level.
J. Tol Broome, Jr. is a freelance financial writer.
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