Best Practices: Revenue Maximization for Spas
By Judy Singer President & Co-Owner, Health Fitness Dynamics, Inc. | May 13, 2012
Spas need to and should be profitable. You may be saying "of course," but not many spas are being managed or marketed as multi-million dollar businesses. Some people in the spa industry think that if the spa is managed as a "business," it will negatively impact the guest experience. I do not think that a well-managed spa needs to sacrifice quality and service in order to make money.
It amazes me that spas have been "allowed" to be "lazy assets," but now, as a response to the challenging economy, there is a necessity and sense of urgency to focus on how spas can be profitable business ventures. Developers, investors, asset managers, hotel/resort operators and directors of finance are carefully examining every department within their lodging establishment with an eye on how to deliver the spa experience in an economically logical way so the spa is profitable. Even stand-alone/non-lodging spas have embarked in a serious re-evaluation process regarding how they are doing business...so they can stay in business. I believe that the future of the spa industry and its impact on the lodging and real estate industries may become stronger as a result of applying common sense...and much needed... business practices.
As a result of careful scrutiny and due diligence, we are seeing the creation and use of spa-specific business tools to help spas attain higher levels of financial performance and profitability. Spa business management is still in its infancy, but it is certain to be the next area of emphasis in the spa industry. Spa PMS software companies have added many business reports to their scheduling program. Hospitality consultants are modifying their lodging-related financial management tools, tactics and best practices so that they can be used by the spa. Spa directors are being given business management tools, training, support and mentorship so they can be responsible and accountable "business managers. A variety of companies are trying to establish benchmark and metric programs so spas can see how they are doing within their chain, competitive set and the global spa industry. The spa mantra is how to offer a competitive and desired spa experience in the most economical manner so that the spa makes money. This is not easy, but it is necessary, and it certainly is possible.
A Consultant's View
HFD's focus since our inception in 1977 is to help spas be more marketable and profitable by paying attention to not only the guest experience, but also to the operational business tactics and strategies. Spas are finally being "held to a higher standard" by asset managers, owners, investors and operators who are focused on measuring and monitoring the spa's contribution to selling rooms and real estate as well as it being an independent profit center. Spas need to financially contribute to the hotel/resort...they are not just occupancy-based marketing tools.
The first, and obvious, step in being profitable is to generate enough revenues to exceed your expenses. Some spas are too focused on decreasing expenses rather than increasing revenues. This is like trying to save pennies rather than trying to make dollars. Revenue management...or as I prefer to refer to it as revenue maximization... is an art as well as a science. It has been used extensively in many industries. The time has come to incorporate it into the business practices of the spa industry.