Best Practices Controlling Your Spa's Labor Costs
By Judy Singer President & Co-Owner, Health Fitness Dynamics, Inc. | November 17, 2009
With the tremendous growth of spas within the lodging industry, there is increasing attention being paid to how can the spa be an economically strong department within a lodging or mixed-use real estate venture. I believe that the answer to a spa's revenue and profit potential is the STAFF.
The staff are your most important asset. They are the heart and soul of your business. They relate to guests in a way that is very different from that of their colleagues in other hospitality departments. They generate most of the revenues in the spa, and they are the most costly operating expense of a spa.
The spa industry, much like the larger hospitality industry, is experiencing a significant shortage of qualified staff. Due to the one-on-one nature of the spa experience (most of the revenue comes from spa treatments where there is one service provider providing a treatment to one guest), the impact of this shortage can be the difference between success or failure.
As the founder, co-owner and consultant in an international spa consulting company, I never under-estimate the need to educate our clients on the economic realities of a spa venture as it relates to the number of staff needed as well as the compensation and benefits program required to recruit, train and retain the spa team. Spas are a labor-intensive business. It is not uncommon for 50% or more of every dollar to be dedicated to the compensation program. If you want to give your guests an exceptional experience, there is very little room for error in your staffing program.
HFD has developed many staffing tools that have been adopted by most of the successful spas in the United States. The following are among the key strategies to help spas maximize their financial potential and minimize their staff-related revenue-expense ratio:
- Find spa staff, especially the spa director, who understand the "business of spas" as well as the "spa business."
- Recruit people based on passion and attitude. Technical skills are not enough. People need to have a desire and natural inclination to go "above and beyond" for guests as well as their colleagues.
- Provide a strong pre-opening training program. Hospitality training is just as important as technical, treatment, product and retail training.
- Cross-train staff so you have maximum coverage without over-hiring or over-staffing. This provides flexibility in being able to generate treatment revenues while maximizing your staff's earning potential.
- Compensate staff so they are rewarded based on their contribution to the spa's financial success. HFD advocates a four-tier compensation program for most of the line staff: guaranteed hourly rate, productivity incentive, gratuity and retail commission.
- Use financial tools that allow you to create and operate a "business." These tools should help you monitor and manage your revenues, payroll and operating expenses. Pay particular attention to yield management and productivity.
- Work with hospitality schools that want to add spa courses to their curriculum so that students have more career options, e.g., they can start in spa management positions rather than at the hotel front desk. Spas will have the opportunity to create internship programs which can increase guest service plus be a long-term recruiting tool.
- Consider creating your own training schools for licensed as well as non-licensed positions. This will become a source of revenue for the spa plus a means of recruiting. In 2006, I was asked by PROFESSIONAL SPA magazine to share some thoughts on how spas can be more profitable. This is what I said....
"We all know that payroll is a spa's most costly operating expense. Rather than looking at your staff as an expense, why not change the paradigm and look at them as "revenue-generators" and "profit-makers." Focus on how they can and should be part of the spa's financial success and how you can reward them.