How to Maximize Your Spa's Bottom Line

By Gary Henkin President & Founder, WTS International | June 14, 2009

With the popularity of spas at hotels and resorts growing at a tremendous rate during the past several years, so has competition and the challenges to produce a positive financial result. Whether you are planning to add a spa or you already have one, it is important to realize that the spa isn't just a viable amenity. Right from the very beginning of the planning and design process through pre and post opening, one should develop the most appropriate operating and promotional modality in order to produce black ink to the bottom line. This is particularly true in the very challenging economic environment that pervades the entire hospitality industry worldwide.

Numerous factors have an impact on bottom line potential (e.g. location, competition, spa size and design, outside local market potential, operating structure, et. al.); however, the two most critical factors influencing net operating income are: operational efficiency and a successful marketing approach. Spa revenue can come from a variety of sources, but the typical drivers come most frequently from the number and types of services, retail product sales and from membership and/or daily usage fees. Expenses that need to be monitored to foster a positive bottom line include first and foremost salaries and wages for staff. Other expense items that require constant evaluation are administrative costs, operating supplies, laundry costs, professional products and marketing expenses.

To produce the best opportunity to maximize your spa's net operating income potential, below are our "Top 16" suggestions for consideration. They are:

1. Prepare from the start to produce net profits. This sounds overtly simplistic, but too often owners and developers do not. They are often caught up in their "vision" for the spa. Therefore, think through your staffing module, marketing plan and operating budget carefully before you come out of the gate.

2. Create a simple, clear and compelling sales and promotional plan which can readily be understood and executed by your spa management staff. Unfortunately, too many of these plans are riddled with complexity and excessive items that, to many spa personnel, are confusing and can't be easily executed. Take 3-5 items focused on "capturing" the hotel or resort guest internally and an equal number focused on maximizing non-guest traffic; the simpler plans that have clarity and are compelling to the customer are the ones that have the greatest chance for implementation and success.

3. Work to consistently increase the average guest ticket. As this rises, so too will your financial outcome. An increase in this average (which includes both service and product revenue) by as little as $5-$10 can make an enormous difference in your profit picture.

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Sales & Marketing: Selling Experiences

There are innumerable strategies that Hotel Sales and Marketing Directors employ to find, engage and entice guests to their property, and those strategies are constantly evolving. A breakthrough technology, pioneering platform, or even a simple algorithm update can cause new trends to emerge and upend the best laid plans. Sales and marketing departments must remain agile so they can adapt to the ever changing digital landscape. As an example, the popularity of virtual reality is on the rise, as 360 interactive technologies become more mainstream. Chatbots and artificial intelligence are also poised to become the next big things, as they take guest personalization to a whole new level. But one sales and marketing trend that is currently resulting in major benefits for hotels is experiential marketing - the effort to deliver an experience to potential guests. Mainly this is accomplished through the creative use of video and images, and by utilizing what has become known as User Generated Content. By sharing actual personal content (videos and pictures) from satisfied guests who have experienced the delights of a property, prospective guests can more easily imagine themselves having the same experience. Similarly, Hotel Generated Content is equally important. Hotels are more than beds and effective video presentations can tell a compelling story - a story about what makes the hotel appealing and unique. A video walk-through of rooms is essential, as are video tours in different areas of a hotel. The goal is to highlight what makes the property exceptional, but also to show real people having real fun - an experience that prospective guests can have too. The June Hotel Business Review will report on some of these issues and strategies, and examine how some sales and marketing professionals are integrating them into their operations.