More Spa Profitability - How, When, Where...

By Jane Segerberg Founder & President, Segerberg Spa Consulting, LLC | August 09, 2010

As a major player in the Hospitality Industry, spas have become independent profit centers that justify their existence with bottom line income that adds to overall resort profitability. In addition, spas can enhance resort/hotel occupancy, length of stay and occupancy ratios. Spas also provide the type of experience that all guests want and hotels/resorts should strive to provide throughout the property - a memorable experience that is caring, warm, empathetic and creative.

It is no wonder that the number of spas in hotels/resorts continue to grow at a rapid rate. The result of rapid growth, of course, is increased competition. The combination of intense competition, a very savvy spa clientele that demands exceptional experiences and mounting staff turnover requires a serious look at current spa operating and compensation models. Guests want a specialized experience that is more than the plush robe and cup of tea, while spa staff demands a pleasant work atmosphere, motivation and adequate compensation. It becomes rapidly apparent that having an attractive spa that merely provides efficient service is critical but does not define success. As the number of spas increase so do guest and staff expectations and loyalty to any one spa decreases.

The goal, here, is to increase the level of profit while at the same time building an increase in both guest and staff happiness and loyalty that in turn grows more profit and recognition for the resort/hotel property. To remain competitive, spas need to provide superior, insightful service at every service touch point and develop a deeper relationship with each guest. By operating efficiently during periods of high demand and creatively increasing business during mid to slower periods, spas can increase their net profit. Incentives throughout the spa can assist in keeping staff focused on creatively engaging guests in more services and opportunities while also generating better guest service and loyalty.

The Case for Incentives

You probably began reading this article to discover a few tactics to beef up the weaker financial areas of your spa. Actually, incentive strategy programs that are managed well create a perfect cycle of happier employees taking better care of guests who are pleased to spend more for additional services and retail while visiting the spa and are even more delighted to return. Staff is excited to deliver a guest experience that goes beyond normal standard operating procedures. A planned incentive strategy rewards positive behavior which results in a high level of performance at each guest interaction.

The rapid growth of new spas has exposed staff to many more opportunities causing an increase in staff turnover rates. Incentive pay recognizes staff for a job well done and develops a contented staff that will remain loyal to the spa business. Incentives coupled with good communication from management and good communication between spa departments promotes a higher level of esprit de corps which filters throughout the spa to all guests and further increases guest satisfaction.

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Human Resources: Value Creation

Businesses must evolve to stay competitive and this is also true of employment positions within those organizations. In the hotel industry, for example, the role that HR professionals perform continues to broaden and expand. Today, they are generally responsible for five key areas - government compliance; payroll and benefits; employee acquisition and retention; training and development; and organizational structure and culture. In this enlarged capacity, HR professionals are no longer seen as part of an administrative cost center, but rather as a member of the leadership team that creates strategic value within their organization. HR professionals help to define company policies and plans; enact and enforce systems of accountability; and utilize definable metrics to measure and justify outcomes. Of course, there are always new issues for HR professionals to address. Though seemingly safe for the moment, will the Affordable Care Act ultimately be repealed and replaced and, if so, what will the ramifications be? There are issues pertaining to Millennials in the workforce and women in leadership roles, as well as determining the appropriate use of social media within the organization. There are new onboarding processes and e-learning training platforms to evaluate, in addition to keeping abreast of political issues like the minimum wage hike movement, or the re-evaluation of overtime rules. Finally, there are genuine immigration and deportation issues that affect HR professionals, especially if they are located in Dreamer Cities, or employ a workforce that could be adversely impacted by federal government policies. The March Hotel Business Review will take a look at some of the issues, strategies and techniques that HR professionals are employing to create and sustain value in their organization.