Ms. Singer

Spas, Health & Fitness

SpaProfit Maximation: Do You Have a Profitable Spa?

By Judy Singer, President & Co-Owner, Health Fitness Dynamics, Inc.

Spas can be and should be profitable business ventures. Based on over a quarter century of experience and expertise in every facet of spa planning, marketing and management, my company, Health Fitness Dynamics, Inc. (HFD), has created a “tool box” of strategies and techniques that helps spas be more profitable based on maximizing revenues, managing wages and minimizing expenses without compromising or diminishing the experiential expectations of the guests and the financial expectations of the staff, owners, operators, investors and asset managers.

Too many spas are financial under-performers. They do not know what to do or how to do it. HFD has created a “GPS approach” for spas. There is a starting point and destination with clear directions and a coaching message that tells you when it is time to “re-calculate” and change direction if you go off-course. HFD’s program is called Spa Profit Maximization - Spa ProMax™. It consists of VERY SENSIBLE AND SOUND BUSINESS PRINCIPLES AND BEST PRACTICES.

The following is an overview of 18 common sense, simplistic principles or P’s within the Spa ProMax™ program. When you follow the P’s, the ultimate destination is Profitability.

PLAN

The spa facility is a critical building block. The spa must be planned to be:

• Operationally efficient for the staff.

• Comfortable, private and stress-free for the guests.

• Non-labor intensive for the operator.

PROGRAMS

Spas need to focus on the “experience” and not just “treatments.”

• Create a Concept: Think of this as creating a Broadway play. Everything you do needs to be thoughtfully designed and executed so the audience (guests) becomes raving fans.

• More is Not Necessarily Better: Be careful not to create what amounts to the encyclopedia of spa services.

• Competitive Pricing: Look at what everyone else is charging, the length of the treatments, the overall experience, etc. then determine what you can charge in relationship to the experience you offer.

• If You Charge More, Offer More: If you can create an exceptional, “knock your socks off,” “WOW” experience, people will pay for it.

• Don’t Discount…Do Value-Added: Offer value by offering add-ons and give-aways,

• Gift Cards/Certificates: You want people to use their gift cards. You need people to come in if you want them to come back.

• Up-Sell and Link-Sell to Create an Experience: People should have an experience and not just a treatment. Think what you can do to create a memory and a “wow.”

• Hospitality: Being service-oriented is different than giving a service (treatment).

PACKAGES

When you package the spa, you want to think in terms of how you can maximize the utilization of all areas within both the spa and resort; therefore, consider 2 types of packages:

• Spa treatment packages.

• Resort spa packages.

PRICE

Spas have typically been planned and marketed to the wealthy so prices have been high. A client once told us “the rich will make you poor, the poor will make you rich.”

• Know your value proposition so people are not judging you just on price.

• Be competitively positioned.

• To offer an exceptional, memorable experience.

• Fairly compensate your staff.

• Establish an appropriate profitability factor for every treatment.

PURPOSEFUL

Spa owners/operators need to make sure they understand the needs and desires of their guests so that the spa experience is relevant, value-oriented, market-driven and trend-sensitive.

• Many guests feel the need to justify going to a spa.

• Make sure you offer an experience that is “on-trend” rather than “trendy.”

• People want to feel that the time and money they spend in the spa will be worth their investment.

PERSONALIZE

Guests want to feel they are the “center of attention” and that they have a say in creating the experience they want rather than one that is easy for the staff to provide.

• It is important to meet the needs, interests, budget and time restrictions of your guests.

• Guests do not want to feel that the spa experience is a de-personalized, homogenous experience.

• Try to provide a guest-centric environment where the staff are trained and empowered to customize and modify services.

• People want it “their way” not your way or they will take the highway to the next spa in order to get their own Special Personalized Approach (SPA).

PLEASURE

Spas should be pleasurable.

• Create a design flow that is stress-free for the guests and operationally efficient for the staff.

• Offer options in selecting music, colors, lighting and temperature so they can enhance the desired feeling that can be anything from feeling relaxed or re-energized.

• Select robes and slippers that are comfortable and flattering.

• Have enough comfort zones so that people can find places for “me” time and/or “we” time.

PAMPER

Some people think this is a “bad” word because it connotes self-indulgence. People should not think of themselves as being “selfish” if they are taking care of themselves. Spas have an opportunity to re-define pampering in a more positive and beneficial way.

• Anticipate, deliver and exceed the guests’ expectations so that guests can relax, reduce stress and “let go” of the need to always be in control or in charge.

• Offer a “time-out:” It is very common for people to constantly be “on the go,” multi-tasking, taking care of everyone except themselves, etc.

• Provide services that not only feel good but also have health and healing or wellness benefits.

PROMOTE

You need to pro-actively let people know who you are, what you do and how you are different from and better than your competitors. Remember the saying “if you build it, they will come.” Well, don’t expect this to happen!!!! You need to constantly have a front-of-mind presence with your market so when they “think spa,” they think of your spa. Once they are in the door, the focus needs to be on establishing the relationship and creating the bond if you want to have loyalty and retention. Your marketing efforts should be targeted to these primary markets:

• Internal guests can use the spa as a vacation and/or conference enhancer.

• External guests can use the spa as part of their wellness program and/or as a “day-cation” for a little “me” time or “we” time for celebrations and special occasions.

PRE-SELL

You want to pre-sell as many appointments as possible. If you wait for the impulse guest, it will be impossible to have a profitable spa because you will not be able to properly control your staffing schedule and payroll. Plan your pre-sales script for each market:

• Hotel Social/Leisure Guests.

• Hotel Group/Conference Guests.

• Community Day Guests and Members.

PRODUCTS

It is important to select products that provide noticeable results, have retail potential, are embraced by the staff, have the appropriate profit margin for the owner/operator and offer a strong training and marketing support program.

When selecting a product line, evaluate the product as well as the company. The product company should be your partner by offering the following:

• On-going training programs for treatments and product knowledge.

• Cooperative advertising materials and programs.

• Retail merchandizing assistance in setting up retail displays and training the staff.

• Liability insurance.

• Product buy-back programs and low minimum orders.

When selecting products, consider all the options:

• Branded Product Lines.

• Private Label and Custom-Designed Products.

• Retail as an Annuity.

• Mail and E-Order.

• Re-order...Don’t Run Out

PEOPLE: YOUR GUESTS

The spa business is a people business, e.g., everything you do revolves around your guests.

• Invest in Your Guests.

• Invest in Your Community.

PEOPLE: PERSONNEL

While the hardware (the spa facility) provides the curb appeal, it’s the software (the spa staff) that is the heart and soul of your business. Your staff are your most important asset because spas are about the relationship between your staff and your guests. It is important, therefore, to select, train and retain the best team possible.

• Hire Well.

• Provide On-Going Training.

• Cross-Train.

• Let your team know they are important.

PRIDE & PASSION

It is important to hire people who not only have the right credentials and attitude, but are also proud and passionate about everything they do.

• The staff should love what they do, want to make a difference in the lives of everyone they touch, love to learn and grow personally and professionally, and go “above and beyond.”

• When your staff are proud and passionate, they can create an extraordinary guest experience.

• When the staff exhibit passion, this helps to establish your spa as a place that has a wonderful spa team. The spa experience is really more about the connection between people than the bricks and mortar.

PAYROLL

If you do not control payroll, it’s unlikely that your spa will be profitable. Payroll is the spa’s most costly expense; therefore, it is critical to have the right compensation program. There are many ways to pay and reward your service providers to show that they are valued and that your success is their success.

• Compensation Program: There are many options that can be used for your full-time, part-time and on-call service providers. HFD recommends a four-tier compensation program: base hourly rate; flat rate productivity incentive; automatic gratuity; and retail commission.

• Team Incentives: When everyone works together to achieve departmental and team goals, there can be greater earnings for the service providers as well as for the spa support staff, supervisors and managers.

• Benefits: Think about a benefits menu so that your staff can select what is important to them.

PRODUCTIVITY

Since labor is the most costly expense and because the staff are your most important asset, it is critical to make sure you understand how to properly staff your spa.

• Measure and Monitor Productivity. The staff should be busy providing “in-spa” services and “home spa” product recommendations and “self-healing” programs.

• Offer Incentives to be cross-trained and busy health advocates.

PFUN

It is important for the spa to be a place that is enjoyable for both the guests and the staff.

• Spas sometimes are very “serious.” Never lose sight of the fact that people like to have fun.

• Promote the “feel good experience” so your guests feel and look better when they leave than when they arrived.

• While spas can be an escape from reality and/or a change your life experience, they are always places that create joy.

PROFIT

HFD has used the above P’s to help create over $700 million of successful spa ventures.

• You need to believe in the fact that spas can be economically viable business ventures.

• The potential for profit does exist, but it takes a dedicated, business-oriented leader to put the P’s into action so that the profit potential becomes a reality.

• Make sure the staff understand your vision and expectations and that they are prepared for and have the tools to contribute to your success as well as theirs.

In future Spa Profit Maximization - Spa ProMax™ articles, I will refer to the above plus add more strategies, techniques and tools so that you have an easy to follow map with 3 mini-destinations:

• Revenue Maximization

• Wage Management

• Expensive Minimization

The map will keep you posted on where you are, where you are going, re-routing if you go off course and knowing when you have arrived at your ultimate destination....PROFITABILITY.

In the meantime, get comfortable with the journey of the 18 P’s and don’t forget to have PFUN along the way.

Judith L. Singer, Ed.D., ISHC, is the President & Co-Owner of Pompano Beach, Florida-based Health Fitness Dynamics, Inc. (HFD) (www.hfdspa.com) an internationally recognized spa consulting company that specializes in planning, marketing and operational advisory services for spas within fine hotels, resorts, day spas and mixed-use developments. HFD is dedicated to helping spas be marketable and profitable business ventures. Since its inception in 1983, HFD has been the consulting firm to over $750 million of completed spa projects. A partial list of clients includes: The Allison, Banyan Tree Mayakoba, Mount Washington Resort, The Umstead Hotel and Spa, Rosewood Mayakoba, Canyon Ranch in the Berkshires, Little Dix Bay, Four Seasons Hulalai, Miraval, Malliouhana, Cranwell, Pinehurst, The Homestead, The Greenbrier, Bacara, Silverado and the Delano. Dr. Singer is the past chairperson of The International Society of Hospitality Consultants (www.ISHC.com) and was on the ISPA Committee for the inaugural edition of the Uniform System of Financial Reporting for Spas. Ms. Singer can be contacted at 954 -942-0049 or judysinger@hfdspa.com Extended Bio...

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