How Spas Have Changed Their Business to Stay In Business
By Judy Singer President & Co-Owner, Health Fitness Dynamics, Inc. | May 15, 2011
I have been a spa consultant for since 1983. During these 28 years, spas went from being loss-leaders to break-even to profit centers. More often than not, I saw that, for the most part, the lodging industry did not have high or even realistic expectations for a spa's tangible and intangible potential... it was typically under-estimated.
HFD's advice to developers was always that when you build a multi-million dollar spa venture, you do it because you want another profit center and you want to enhance your "core" business, e.g., the spa should contribute to occupancy, room rate, additional revenue per guest, longer guest stays, etc. HFD has always approached spa development and management from a business perspective... the spa needs to have substance as well as sizzle.
While the economy was strong, most GMs thought their spas were doing well, but I don't think many of them really understood how well they "should" or "could" do. They did not realize that if the spa was really marketed and managed as a business rather than as a department, the spa profits would have been significantly better. While some lodging properties are "serious" about the spa being a viable financial asset, others have lower expectations and are content with what I would say was a lack-luster performance.
When the economy faltered over the past few years, it forced the lodging industry to really examine every component of their overall lodging operation so all of a sudden spas (like all departments) were put under the microscope because they needed to be "serious" contributors to the bottom line. As a result, Directors of Finance needed to get more involved in terms of really examining spa financials, understanding what to measure and monitor and how to help their Spa Directors to understand what the numbers really meant.
Many Directors of Finance were at a loss, and some still are, because the spa industry is not noted for doing a good job with benchmarking and creating useful metrics. Spa Directors needed either a new set of skills or an advanced course in the business of spa marketing and management. They needed a new set of financial tools so they could focus in on the key indicators that significantly impact their business.
I think the challenges imposed by the economic downturn have resulted in spas being more of a business center. It's been a tough learning curve, and there is still a lot to do, but I see more progress in terms of learning the business side of spa operations than ever before. The hard times have forced many spas to re-think and re-invent some of their business practices, and we are better off because of this.