Spa Menu Engineering
By Kristi Dickinson General Manager, Canyon Ranch Woodside | October 27, 2019
In a labor-intensive department such as spa, profitability is essential to the future success (and survival) of the department. For many hotels, the struggle for profitability and fear of running "in the red", is so great that they opt to outsource the entire facility to specialty operators. This short-term strategy is unfortunate, because well-run spas with unique identities can be major profit contributors.
According to the 2018 Spa Industry Study by the International Spa Association (ISPA), nearly one third of resort and hotel spas operated with a profit margin of 25% or higher. Menu engineering is one strategy you can use to transform your spa from an amenity into a profit center.
The goal of menu engineering is to increase the profit per guest. This is done via detailed analysis of the contribution margin and popularity of individual treatments, as well as the strategic positioning of the treatments on the menu designed to encourage guests to select those with the optimal profitability.
According to an International Spa Association Snapshot Survey on Spa Menu Engineering, the average number of spa treatments on the menu for all spas is 45. Interestingly, responses for the number of treatments on the spa menu ranged from 5 to 200. ISPA research indicated that 60 percent of spas planned to add or create new treatment offerings, 45 percent indicated they would introduce new product lines, and 28 percent planned to create a new spa menu. How many of those spas are making these decisions based on regular profit and sales analysis? Sadly, it is safe to assume very few understand menu engineering and how impactful it can be to their business.
Important Questions to Ask
When I teach menu engineering there are some key questions to begin with.