Profitable Spa Operations in the Next Normal

By Ilana Alberico CEO, ISM Spa | November 08, 2020

There is no getting around it-we are living in a time that threatens the livelihood of the hospitality industry. However, with scarcity comes creativity and the opportunity to innovate.  Despite immediate concerns, the need for healing touch hasn't gone away. In fact, it is stronger than ever before. Recent research conducted by our team at ISM Spa shows that spas have a necessary place in today's landscape. To thrive, however, our business model needs to evolve.

At the outbreak of the pandemic, the 20 spas we managed experienced layoffs and closures across the board. Once state-mandates allowed us to safely re-open, by leveraging technology, we were able to quickly welcome guests and therapists back to a revitalized version of spa. This new beginning comes with new challenges, like implementing social distancing and strict sanitation protocols. It also creates new, innovative ways of working and the need for a flexible, profitable operating model.

The "next normal," for the spa industry implies a dynamic and dramatic restructuring. How do we reimagine a spa operations model that enables personalization while at the same time leans into technology to automate our operations allowing us to drive profitability? How do we budget and forecast for spa services in this next normal? In this article, I will explore proven spa best practices to help you operate your spas safely and profitably while delighting your guests.

The New Guest Value Proposition

The spa economy, with global revenues of $93.6 billion yearly pre pandemic, is showing signs of initial recovery. Guests still crave spa treatments as an integral part of their stay at a luxury property. Now more than ever, however, they are demanding that their spa experience be worth their time and money.  Time outside the cocoon of the home is precious.

Adding to the complications, many of the amenity touchpoints that define a luxury spa ap-pointment have been temporarily eliminated from the guest experience. With the steam and sauna, along with relaxation areas including snacks and exotic teas no longer part of the pic-ture, how do we define a luxury experience? What is the new value proposition?

We have combined our decades of experience, hundreds of thousands of unique guest data points, and observations from "in the trenches" to create five best practices to delight guests and produce a healthy bottom line.

Best Practices

1. Optimize Technology

Innovation in tech is leading to increased level of choice, control, and customization across all categories - why not spa?  Spa operators traditionally rely on hotel and resort management software to manage their staff scheduling, reservations, inventory, and reporting. Spa directors report that that these programs have certain limitations but optimizing enabling technology can lead to increased revenues.  The tech of the future must act as the business partner to the Spa Director, alleviating laborious inputs and empowering the Spa Director to rebuild their business by attracting the highest quality therapists and driving personalized guest experiences. 

Dynamic staffing based on demand is not compatible within traditional hotel and resort spa management software, so some spas rely on clunky staffing apps, which erode profitability due to the requirement to purchase a block of hours regardless of the number of treatments booked, little to no preemptive insight into the therapists, and manual accounting practices.

Future AI Technologies will bring the ability to personalize and customize the treatment specifically for that guest based on their goals and preferences. The 'next normal' is a chance to create a new kind of freedom for guests, therapists, and resort spas by harnessing the power of algorithms, apps and analytics. For hotels and resorts, this means optimizing RevPar and gaining access to flexible staffing solutions.

Effective spa revenue management allocates the right treatment room at the right price at the right time.

2. Develop a Spa Revenue Strategy

Spas have traditionally been limited in their revenue management practices and relied on discounting, which ultimately erodes brand value. Dynamic pricing is usually based on the highest demand level, with discounts applied during periods of lower demand. Few take a strategic approach inclusive of leveraging technology to enable price yielding, treatment duration, subscriptions, and memberships into a coherent revenue management plan. It is helpful to think of your spa offerings as a portfolio and manage demand to drive consumers to the more profitable elements of your portfolio. This shifts the percent of sales within our portfolio to higher profit items and, therefore, drive higher revenues. 

Effective spa revenue management is the practice of allocating the right treatment room to the right guest at the right price at the right time. The determination of "right" entails achieving the most revenue while providing the greatest value to the guest.

Guests still crave spa treatments as an integral part of their stay at a luxury property.

3. Touchless Everything

Touchless is the word of the day. From the booking process, to check in, check out, and product purchase, technology is enabling remote transactions for nearly every process besides the massage itself (and there is even a touchless solution for that!) Contactless tech will continue to innovate the guest experience while building trust.

The most robust approach to bypass all check-in touchpoints is clearly the availability of a mobile app solution. Investment in tech innovations for spas is a long way off when compared to technology development on the hotel side, such as The Hilton Honors app that serves as a remote control for loyalty members' travel experiences. Guests are in control of personalizing their stay, including the ability to choose their rooms, check in digitally and use their phones as keys. Amsterdam-based hotel operator CitizenM announced features in an app to facilitate a fully contactless guest experience. Guests can now check in and check out, order and pay for food, pay room bills and more all through a mobile device.

At ISM Spa, we are reimaging our spas to get rid of large, impersonal spa reception desks. Spa front desks may be replaced with arrival relaxation pods and spa menus are replaced with a choice of duration and complete customization based on the guest's needs and the therapist's expertise. Therapists are loving having the freedom to design a treatment experience that is unique and personal to that guest. In the words of one of our therapists "Eliminating the tired, traditional hotel/resort spa menu of services and replacing with customized massages and facials meets the personalized wellness needs of our guests."

Contactless tech will continue to innovate the guest experience while building trust.

4. Safety is a MUST, but Not a Differentiator

"It is assumed that all luxury spas will adhere to the highest level of sanitation and safety. Yet many spa guests remain wary. ISM research shows that safety is a huge factor. Although as of this publishing only 33% of respondents have returned to the spa since the shutdown, 77% say they are interested in returning to one that creates an environment where safety is prioritized. Thorough sanitation after each guest and following all CDC guidelines are the most important safety factors guests site to reassure them that it is safe to return to their spa.

Although safety in and of itself is not a differentiator, guests want peace of mind to fully relax during a high touch service. That reassurance comes through effective safety messaging and building trust around solid sanitation practices. Every property should have a safety and sanitation policy spelled out online like ISM Covid-19 protocols or Hyatt's Global Care & Cleanliness Commitment  which outline operational guidance and resources around employee and guest safety.

5. Market to Local Community

With travel rates down significantly, our resort spas have made a drastic shift to focus on driving traffic from locals. For the unforeseeable future, it's time to shift your marketing efforts and get creative with staycation offerings. Locals require a different marketing strategy than hotel guests, including community outreach and groups.

Marketing to small groups of locals is another effective way to return to business safely. Spas with less than six treatment rooms can sell the entire spa to a group for birthdays, wedding and girlfriend getaways. Booking groups of family and friends ensures that no one else comes in the spa area during their event. Spa Directors can assign providers for a block of time and guests can completely customize their spa experiences based on the guest needs and the skills of the providers.

Conclusion

As demand for spa services returns, we must facilitate a safe guest experience, satisfy the guests' desire for personalization, and manage dynamic staffing needs to meet fluctuating demand. We need to find a balance between what worked previously and what needs to happen to succeed in the next normal as we step into the future. What does your next normal look like?

Ms. Alberico Ilana Alberico is an award-winning business visionary and serial entrepreneur. Her 20+ years in the spa industry spans from folding towels in a spa locker room, to the treatment room as a massage therapist, to the boardrooms of leading developers, owners, and hotel companies as a spa operations partner. Today, she leads a dynamic collection of wellness companies including boutique wellness design and spa management firm ISM Spa, luxury skin care line Privai, and Spa Space Chicago, a successful urban day spa. As CEO of ISM Spa, Ms. Alberico oversees a team of hundreds operating 20 full-service luxury spas across the US. ISM-managed signature spa brands conceptualized by her and her team include Poseidon Spa for the Kessler Collection, Privai Wellness & Spa at Renaissance® Orlando at SeaWorld, and her newest concept R+R Wellness at Grand Hyatt Nashville. Accolades for ISM include twice being named to Inc. Magazine's Fastest Growing Companies in the US, and recipient of the International Spa Association's Innovate Award for Outstanding Leadership. In recognition for her many achievements, Ms. Alberico was awarded the 2015 Entrepreneur of the Year in Asheville, NC. Ilana Alberico can be contacted at +1 404-490-3314 or ilana.alberico@ismspa.com Please visit http://www.ismspa.com for more information. Extended Biography

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The following is the Privacy Policy for HotelExecutive

We can be reached via telephone, email, or online at our contact page. When you visit our site we do not log any information regarding your domain or email address. Information Sharing: We do not share user information with any third parties other than via press release distribution as described below.

Hotel Newswire is a newswire service that distributes press releases on behalf of our users. If you decide to submit a press release for distribution through our system we will transmit your entire press release including any personal information therein contained to our media contacts and online distribution points including search engines. This is the only redistribution of your information that we engage in. Your submission of press releases through our system indicates consent with this policy. The information we collect during your registration process is used to notify users about updates to our service and inform users of any special events hosted by Hotel Newswire. This information is not shared with other organizations for commercial or non-commercial purposes.

Cookies: Our system requires the use of cookies to enable the user to log back into our website to access information from the newswire, without having to log in each time using the required username and password.

If you do not want to receive email from us in the future, please let us know by following instructions included in our communication with you. Users who supply us with telephone numbers online may receive telephone contact from us regarding their account, or informing them of new products and services available on the HotelExecutive website. If you do not wish to receive such telephone calls, please edit your account and remove your phone number from your account profile. This can be done from your user account menu.

Ad Servers: We do not partner with or have any relationship with any ad server companies. From time to time, we may use customer information for new uses not previously disclosed in our privacy notice. If our information practices change at any time, we will post the policy changes to our website to notify you of these changes and provide you with the ability to opt out of these new uses. If you are concerned about how your information is used, you should check back at our website periodically.

Upon request we provide site visitors with access to all information (including proprietary information) that we maintain about them. Users can access this information by logging in to their account.

Security: We always use industry-standard encryption technologies while transferring and receiving user data exchanged with our site. We have appropriate security measures in place in our physical facilities to protect against the loss, misuse, or alteration of information that we have collected from you on our site. We do not store credit card information in our systems.

If you feel that this site is not following its stated information policy, you may contact us.

Kristie Willmott
Herve Tardy
Nina Curtis
Zoe Connolly
Rob Rush
John Mavros
David Lund
Kathleen Pohlid
Coming up in January 2021...