Shifting
the Spa Paradigm
"How to Re-energize
the Guest Experience and Increase Profits"
By Judy Singer,
ISHC and Patty Monteson, ISHC
Lodging, April 2002
In the mid-1980s,
including or adding a spa to a resort started to become popular.
Most of the spas developed during this time were located in
upscale, independent resorts and the spa was considered to be
a great marketing vehicle to attract new business to the property.
During the 1990s, the growth of the resort-based spa began to
proliferate and today the mantra is that a resort is "not
a resort" unless it has a spa.
While it is true
that the development of resort-based spas has increased in the
past 15 years, the growth has created some challenges.
The supply of spas
has out-paced the demand in terms of the number of current spa-goers,
and there is a lack of originality that could broaden the market
appeal and profitability. If spas are to be financially feasible
ventures that are not only marketing tools for the resort, but
viable businesses in and of themselves, the copy cat syndrome
needs to stop and a new spa paradigm must emerge.
THE MARKET
• Most spas
are at upscale resorts, and they cater to the affluent guest.
We believe there is an untapped market of people who go on vacation
and would use a spa if it were more affordable, flexible, approachable
and guest-friendly.
• Spas continue to market to women (perhaps that's why
women continue to make up 70 - 75% of the spa-goer market).
However, most men have stress, and they also care how they look
and feel. Men spend over $4 billion per year on personal grooming
items. Spas need to be more male-friendly in terms of facility
features, decor, treatments and marketing strategies.
DEVELOPMENT
• It is not
uncommon for a turnkey, four star spa to start at $350 per square
foot (excluding land). Most luxury spas are upwards of $500
per square foot. We believe, in order for owners to see a reasonable
ROI, the resort-based spa may need some conceptual, physical
and experiential changes.
• Because of
the popularity of spas, it seems that just about everyone claims
to be a spa architect, designer or consultant. It is important
to work with experienced professionals who understand form and
function. If the spa is not designed to be operationally efficient
for the staff and comfortable for the guests, it is difficult
for it to be profitable for the owner or operator.
• The spa is
more than the bricks and mortar. The facility needs to have
a "heart and soul." There needs to be a seamless and
harmonious blend of the physical features, program, products,
people and passion if the spa is to touch all the senses and
leave an indelible memory on the guests.
STAFFING
• Labor continues
to be a challenge for many spas and, in many areas of the country,
it is difficult to find qualified staff. When you are planning
the spa, make sure you have thought about the number of staff
you will need and where/how you are going to find, train and
keep them.
• Creating the
right compensation, incentive and benefits package will make
a significant difference in attracting and retaining staff while
making sure the spa is an economically viable business. Finding
and retaining a good, affordable and loyal spa director can
be a challenge. For some of our clients, we have recommended
that they hire from within and then we develop a training program
for this person.
THE EXPERIENCE
• It is not
uncommon in a luxury resort to offer a 50 minute massage for
$100 plus tip. This may have an impact on the fact that spa
treatment rooms are only utilized 30% - 60% of the time. Spas
need to be pro-active and focus on spa yield management if they
want higher occupancy.
• Spa treatment menus are becoming more exotic and extensive.
A spa does not have to offer the international encyclopedia
of spa treatments It is confusing to guests and adds considerable
time and cost to the training program.
• Sometimes
people are afraid to go into a spa because they have never been
to one. You can give potential spa-users a sense of confidence
with something as simple as having a section in your spa brochure
for "helpful hints" or "everything you want to
know but are afraid to ask."
• Facility fees
or daily membership fees for hotel guests can sometimes present
a barrier to entry. The fee is sometimes waived in full or in
part; however, this revenue is important because it covers a
lot of fixed operational overhead.
FINANCIALS
• Most resort-based
spas are not independent business units. They receive some subsidy
from the hotel and very few, if any, pay rent. As a semi-IBU,
a well-managed and marketed spa could have an NOI between 15
and 25 percent. If the spa is more of a department (primarily
responsible for payroll and product-related costs), the NOI
can be in the 30 to 40 percent range.
• Labor is the
most expensive operating cost. Planning less labor-intensive
facilities and creating the right compensation program is something
the spa industry should address. While it's reasonable that
payroll, including benefits, at stabilized spas is between 55
and 65 percent of gross revenues, some spas operate at 80 percent
or higher.
• It is nearly
impossible to quantity the spa's contribution to additional
room nights, occupancy, etc. HFD research has shown (via surveys
of resorts) that spas help resorts with regards to their marketing
advantage, revenue/occupied room, occupancy and perceived value
for room rate.
• Retail is
an untapped potential. It can and should be an on-going extension
of your brand identity and equity. It is the only annuity a
spa has because it is consumable. It also has the highest profit
potential and is not labor intensive.
• We have always
believed that spas should be run as a business. They are part
of the hotel operation and should be an accountable department.
It is important to understand the risks, opportunities and economic
realities of the spa business.
More than ever, spas
are expected to be marketable and profitable. To accomplish
this, it is imperative that operators re-evaluate how they do
their business.
______________________________________________________________________________________________
Judy Singer, ISHC, and Patty Monteson, ISHC, are owners of Pompano
Beach, Florida-based Health Fitness Dynamics, Inc. (hfdspa.com),
an internationally recognized firm that specializes in the planning,
marketing and management of spas for fine hotels & resorts,
day spas and mixed-use properties. HFD has been the consulting
firm to over $600 million of completed spa projects since 1983.
A partial list of clients includes: The Homestead; Four Seasons
Hualalai; The Salish Lodge; Miraval; Pinehurst; Delano; Bacara;
The Greenbrier; Topnotch Resort & Spa; Silverado Resort
& Country Club; La Posada de Santa Fe; Hotel Crescent Court;
Pinehurst.
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Health
Fitness Dynamics, Inc.
1305 N.E. 23rd Avenue, Suite 2, Pompano Beach, Florida,
U.S.A. 33062
Phone:
954-942-0049 - Fax: 954-941-0854
E-MAIL: hfd@hfdspa.com
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