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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.


• 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.


• 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.


• 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.


• 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.


• 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