One day, when smog-free cars run on sea water and every loophole in the tax code has been closed, the entirety of humanity will be in such a glorious state of physical fitness and spiritual bliss that falling asleep will be as simple as laying one’s head on a pillow. Until that day, however, the business of helping people get a good night’s rest is likely to remain what it is: A fast-growing sector in an otherwise slow-moving economy, with a little fuel additive in the mix that’s only going to make things more interesting. That would be the increasing awareness within the insurance industry that insomnia in all its guises is a real problem for much of the nation.Sleep-assistance is already a big business. Industry revenues are expected to surpass $32 billion in 2012, an average annual increase of 8.8% a year since 2008. That’s according to a recent report in The Fiscal Times, which offers a description of the sleep economy that ”includes everything from pills, products and medical devices to ‘sleep consultants’ who farm themselves out to hospitals, labs, and sleep centers, to luxe mattresses made with tension-relieving foams.”
In other words, almost any product or service that people use to help themselves nod off at night (or during the day), which represents a shockingly large number of folks. According to the Center for Disease Control, roughly a third of working Americans, or more than 40 million people, aren’t getting enough sleep—an amount of shuteye the National Sleep Foundation puts at 7 to 9 hours for adults. And, by some estimates, another 10 million to 30 million have trouble getting the rest they need on a regular basis. In fact, sleep-deprivation is such a widespread concern these days that “Increase the proportion of adults who get sufficient sleep” is one of the stated goals of Healthy People 2020, a U.S. Department of Health and Human Services program launched in 2010.
Such “official” recognition of the problem, of course, is likely one of the reasons that sleep-industry revenues are growing. Because as government goes, more often than not, so goes the insurance industry. For example, the market research firm IBISWorld estimates that revenue growth in one segment of the sleep economy—clinics that treat sleep disorders—will increase in the low double digits in 2012, continuing a five-year trend. That’s due in part to “rising private and public health insurance coverage,” says IBISWorld analyst Kevin Culbert, who authored a recent report about the industry. As we’ve learned the hard way in healthcare, the willingness of third-party payers to pony up for services tends to increase demands for those services.
But don’t let concerns about the effect of Obamacare (or any other type of reform) keep you up at night fretting about sleep-industry growth. In addition to many of the usual suspects that have long been cited as causes of insomnia—stress, shift work, depression—there’s a more modern one that’s unlikely to abate any time soon: Too much computer screen time, too close too bed. “While sleep problem awareness grows,” Culbert says, “habits like using light-emitting electronics before bed are unlikely to subside, creating more sleep issues and demand for sleep clinic services.”
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All of which bodes well for clever entrepreneurs and savvy investors who can capitalize on insomnia as a growth business. Exhibit A: Sleep Train, an operator of free-standing mattress stores, based near Sacramento, which is launching a chain of mall-based stores as well. In addition to high-end mattresses, the retailer is selling snooze-friendly accessories and aids like white noise machines, scented candles, and lotions.
Exhibit B: The Benjamin Hotel in Manhattan, whose “sleep concierge” is just one aspect of a smartly differentiated approach to business travel; specifically, a focus on the part of business travel that involves sleeping. Which is, of course, the crucial part of any hotel stay, no matter how nice the gym or how well-stocked the mini-bar. As Daniel Goodman, Business Insider producer and author of the nifty tumblr blog The Sleepers Companion likes to say about his favorite subject: “Everyone does it and most want to do it more than they can.”
It’s hard to imagine there isn’t money to be made in a business like that.