Hotel Spa Business Focuses on Basics

Like other segments of the lodging industry, the hotel spa business has had to adjust during the current economic downturn. According to Judith Singer, president and co-owner (with Patricia Monteson) of Health Fitness Dynamics, the emphasis is back to basics at many hotel spa facilities. “A lot of our focus today is helping spa operators figure out what they could be doing differently and better to improve their revenues and profits,” says Singer. HFD is a Pompano Beach, FL-based spa consulting company specializing in planning, marketing and management support services for both hotel and day spas. “A big problem is that there aren’t many reliable benchmarks in many areas of spa operations.”

As example, one of her clients was netting around $200,000 a year from its spa facility but wondered if it could be doing better. “We did an operational review and determined the spa should be able to net more like $750,000 a year,” says Singer. “That’s a big difference.”

The operational reviews focus on several key areas—marketing, staffing, pricing, facilities and more—and in most cases, improvements can be achieved immediately. In today’s economic environment, says Singer, pricing should be the most critical area of scrutiny.

“In the past, pricing at lodging-related spas was often too high, and even four-star hotels were pricing their treatments like they were five-star facilities,” she says. “And typically there’s a day spa nearby that is more realistic in its pricing. Think about it: the average price for a 50-minute treatment at a hotel spa is $150. How terrific can that treatment be, when you compare it to the same treatment for $75 at a day spa?”

Singer says a number of high-end spas have become more creative in their pricing and instituting value-added offers: bring a friend for free, two treatments for the price of one, product gifts with purchases of treatments, etc. It’s also critical that hotel marketers integrate their spas into advertising and marketing programs. “It’s a learning curve for many hotel marketing people,” she says. “Hotels in urban areas are trying to use their spas to attract more weekend business, but it’s tough to compete when there is a day spa on every corner. Marketers need to be more creative.”

She also believes it can be a mistake for spa operators to reduce hours or days of operation during this slump. “It only takes five appointments a day to keep a spa operating, but cutting hours and payroll means some staff members won’t be able to make ends meet,” she says. “That’s not showing any loyalty to your staff.”

Noting the difficulty in finding and keeping good spa employees, Singer advises operators not to hire too many employees and to create compensation plans that create loyalty. She recommends either base hourly rates or salary plus productivity incentives based on the number of treatments performed and sales of products. “Once your employees starting reaching 70-percent productivity, you can hire another person,” she says. “It makes no sense to hire five people and have each one only be 20-percent productive. No one can make a living and staff will leave.”

Another tip: Include tips in the price of the spa treatments—“many guests will appreciate that because they don’t know how much to tip”—and then give the gratuities back to the staff in full to be shared by the treatment providers and the support people.

Saying it’s time to get back to “meat and potatoes,” Singer believes simple is better in today’s spa operations.

“Give the people what they want. The fancier you get with treatment menus, the more products you need and more training is required,” she says. “It’s difficult to develop a staff that is diversified enough to be able to deliver a wide range of treatments, many of which customers never even order. Keep it simple.”

Singer recently wrote an in-depth article on how spas can avoid a financial decline in these difficult times. In addition to her own observations, it includes advice from three spa industry leaders on ways to prosper in a slumping environment.

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