Editor's Note:
This article is excerpted from Patty Monteson's seminar, "So
You Want to Have a Spa" presented May 20, 2002 at the Spa
& Resort Expo in New York City, NY.
SO
YOU WANT TO HAVE A SPA
By Patty Monteson,
ISHC
Spa & Resort Expo
in New York City, NY
May 20, 2002
My name is Patty
Monteson and I, along with my business partner, Judy Singer,
am the owner of Health Fitness Dynamics, Inc. (www.hfdspa.com).
HFD is a nineteen year old company specializing in planning,
marketing and managing health spas for fine hotels, resorts,
mixed-use developments and day spas. Since 1983 HFD has completed
more than $600 million of spa development.
This session will
provide a general overview for planning, budgeting and marketing
your spa. I will share some of our firm's recommendations on
how to have a profitable and marketable spa.
The format of my
presentation will follow a step-by-step process that we've developed
and refined over the years. Since this is a Spa and Resort Expo,
my comments will primarily focus on resort-based spas.
SPA SEGMENTATION
Our firm classifies
spas in 2 major categories: Lodging Spas and Day Spas
The first example
of a Lodging Spa is the Destination Spa where everyone is there
for the spa program; people usually have a goal they want to
accomplish. The components are: exercise, nutrition, wellness
and spa services. The accommodations range from spartan to luxury.
The second example
is the Resort Spa where guests combine the spa with all the
other offerings of the resort. In the 1990's, I believe spas
re-defined the resort experience as people began asking for
and were using them in record numbers.
As for Day Spas,
these often are an extension of a salon, but they can be stand
alone developments. Usually they are in an urban or suburban
location. In the past few years some resort spas that are located
near a dense local population have become day spas to this population.
Our firm has coined
a new term, the Hybrid Spa. This is a resort spa that is a very
important component of the resort - it makes a statement. This
type of spa combines the best of resort and day spas.
THE PROCESS
Now, let's go over
this eight step process which can become the foundation for
your spa venture.
- Define the Market
- Identify the Objectives
- Develop the Concept/Guest
Experience
- Plan the Facility
- Determine the
Start-Up Costs
- Prepare the Pro
forma
- Develop the Marketing
Plan
- Begin Operations
Step 1 - Define
the Market
- Existing Market:
You can increase your market share by targeting young, female
baby boomers, women over 50 and men
- You can deepen
your market by going after business travelers and young, professional
achievers. You should also look into the "feeder"
program that Spa Finder has developed.
Step 2 - Identify
the Objectives
The first step when
we start a new project is to make a site visit and gather information
on our HFD Site Visit Questionnaire. This helps us explore all
the issues related to planning, marketing, financing and operating
the spa. This enables us to determine the size of the spa, cost,
projected revenues, etc.
As for objectives,
most of our clients want to have a spa that will be a profit
center, improve the marketability and profitability of their
core business and, in some cases, to help sell real estate.
Remember, if you have a mixed-use property and are selling homes;
condominiums or even timeshare, you are selling a lifestyle.
Often the spa is an important component of this lifestyle.
As for the benefits
of a spa, it should be a tangible asset for you. The spa should
be profitable. It should also be an intangible asset. Economic
research of resort-based spas conducted by our company has shown
that spas contribute to the marketing advantage; revenue / occupied
room; occupancy and perceived value for the room rate. The spa
should also help increase the asset value of your property.
Step 3 - Develop
the Concept
Early on you need
to determine the type of spa you want to have and what the guest
experience will be. This program should drive the facility planning.
Some spas will offer a sense of place and the spa reflects the
geographical or historical aspects of the area. Others may take
a theme, e.g., Asian, and then plan the spa services and facility
around this.
A few resorts have
chosen to franchise or license another spa's name. When this
happens it may affect the concept of the spa. Almost all of
our clients have chosen to create their own identity starting
with concept, treatments, facility, products, service standards,
etc.
When developing your
concept, you need to create the experience, touch the senses,
evoke the feelings, create the memories and establish "signature
touch points." Some spas will create a signature theme
such as age management, medical aesthetics, mindfulness, fitness,
wellness, luxury, etc.
The key points to
remember are to know your market and your competition and then
to create something that your market wants, your competition
is not offering and will help you increase and deepen your market.
Step 4 - Plan
the Facility
When you develop
the design theme you need to create the story, set the stage,
touch the senses, create the memories. I believe you should
provide a sense of place. It is critical that the spa is comfortable
for your guests so it really can be an experience for them.
Among some of the other things to remember are the spa should
be easy to maintain, it should be operationally efficient for
staff and must have the ability to be profitable for owner/operator.
As for location,
it should not be left-over space that will inhibit the size
and flow; there should be easy access for the community without
infringing on security and privacy of hotel guests; you should,
whenever possible, combine indoor and outdoor space.
The size is based
on the market demographics, market mix, hours of operation,
concept, objectives, budget, etc. Remember, bigger does not
mean more profitable, however some spas may need the size to
create the theme. It is imperative to have enough profit centers
and comfort zones. If you think there is a chance for an expansion
of the spa in the future, plan for it during this stage.
When planning your
spa, you need to examine its impact on the resort's existing
business. The spa should enhance and complement your core business.
You also need to pay particular attention to its impact on existing
departments such as reservations, sales & marketing, laundry,
housekeeping and maintenance.
Step 5 - Determine
the Start-up Costs
Next you need to
put a price to all this planning by determining your costs for
construction, general FF&E, spa-specific FF&E and pre-opening
costs such as training, marketing, etc. It is not uncommon for
a four-star quality spa, to cost in the range of $350 - $450.
A five-star quality spa can cost $450 - $550 and, in some cases,
higher. At some point, you need to evaluate the developmental
cost and determine if you will be able to get the return on
investment you are looking for.
Step 6 - Prepare
the Proforma
Results from HFD's
economic studies show that most revenues (55 percent) come from
ala carte services. We believe retail is a missed opportunity
for many spas - this should be your annuity. Most spas report
about 10 percent of their gross revenues coming from retail.
As for gift certificates, we believe spas should make sure the
recipients use them. Hopefully, they will not only use the certificate,
but will purchase retail items and even become regular users
of the spa.
Since most of what
happens in a spa is one-on-one, payroll is your highest expense.
In a stabilized year, payroll can be 35 - 45 percent of gross
revenues; with benefits, it can be 55 - 65 percent. Operating
expenses can be 13 - 20 percent of gross revenues.
When the spa is being
charged in full or on a pro-rated basis for most expenses, with
the exception of rent which is typically waived, the profit,
as a percentage of gross, is in the range of 15 - 25 percent.
If the spa is just responsible for payroll and products, the
range is usually 30 - 40 percent.
Step 7 - Develop
the Marketing Plan
Your collateral Information
should include not only your brochure, but also information
for your newsletter, video and web site. Avoid complexity in
your message - more is not better and can be over-whelming and
stressful. Don't forget to communicate as much as possible via
your web site and e-mail address.
As for advertising,
most of our clients piggy back the spa with resort ads which
have become more regional than national. You may want to have
special ads in the local paper for your day spa business.
Editors are always
looking for a unique spa story and this is what you should pitch
in your PR messages. Focus on what makes you different.
Your hotel guests
are a captive market and should be your primary source of spa
business. Market the spa to them prior to their arrival, upon
their arrival, perhaps with spa dollars to be used within 24
hours, and at their departure, maybe with something to use on
their next visit. Educate key resort departments, e.g., reservations,
sales and marketing, front desk, bellman, etc. to be ambassadors
for the spa.
As for your local
guests, gift certificates are a great marketing tool. Offer
specials of the week to them, form strategic alliances with
flower shops, candy stores, wedding planners, etc.
Step 8 - Begin
Operations
The spa director
is typically brought on about 6 - 18 months prior to opening,
depending on the start-up team and consultants. Supervisors
usually start 3 - 6 months out and the reception / reservation
department will start about 2 - 3 months before opening. The
line staff will probably need a minimum of 2 weeks for training
which includes not only their technical training, but also retailing,
hospitality training, and resort orientation. In addition to
training the spa team, you will also have to orient and train
the resort staff.
The soft opening
is about 3 - 5 days, but really depends on the size of the spa.
This is the time when the spa team practices on one-another;
practice on resort staff and then to "outsiders" who
have a link to the resort.
Once the spa is open,
keep monitoring and training your team. Refine the guest experience
when necessary. Make sure the seamless integration of the spa
and hotel continues. Stay "on-trend." Make market-driven
adjustments - speak with the guests, look at your comment cards,
etc. Be aware of what your competition is doing. Don't copy
them but, rather, stay true to your unique value proposition.
CONCLUSIONS
- Spas have become
and expected amenity at resorts...not just a luxury
- Define a marketable
concept
- Properly plan
a flexible, comfortable and efficient facility
- Make realistic
financial decisions
- Make sure the
spa director is an integral resort manager
- Provide on-going
training
- Adjust to trends
______________________________________________________________________________
Byline: Patty
Monteson is the co-owner of Pompano Beach, Florida-based Health
Fitness Dynamics, Inc. (www.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; Silverado
Resort & Country Club; La Posada de Santa Fe; Hotel Crescent
Court.
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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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