Hotel Spas: The Potential Challenge in Profitability

By Michael Haynie, SR. President, Parkway Hospitality Management | July 22, 2012

More than a decade ago, spas in general were "in." Like low-calorie menu items and personal trainers, everyone wanted to talk about and be seen at the spa. Hotels soon followed the trend, and spas began cropping up in hotels all over the country. Many establishments tried to expand the health club concept which they had adopted in previous years, upgrading their workout facilities to transform them into the latest trend at that time - the health spa kick. The profitability model for these never seemed to make sense nor be achievable, but many operators and companies looked at this amenity as just that: a potential loss leader which would attract additional market share because it was an amenity the property had.

Fast forward to 2012 and the current economic situation, and everyone is watching their wallets a little more closely. For some, spa services might be seen as a necessity for health or beauty reasons, but for most people, they are still a luxury. With the ever-increasing cost of air travel and gasoline prices, travelers need to cut corners. Marketing to outside customers, providing complementary services and partnering with local spas and treatment professionals are just some of the ways that hotels can provide their guests the spa services they want without having to sacrifice profitability.

Marketing to Outside Customers

Just like a good signature restaurant, a hotel spa must have the ability to attract transient or outside customers and not be wholly reliant on hotel guests. Resort hotels have a much better opportunity to capture hotel guests within the spa, as many resort guests go to the resort exclusively to experience the amenities such as a spa, pool or health club. It does make perfect sense for an actively marketed "resort" hotel, which is typically a four- or five-star property, to consider a spa among its amenities. The key ingredient to the resort spa's success is the ability to market the services to transient customers and hotel guests alike.

In hotels that are geared more toward business travelers, many guests are off at meetings during the course of the week, and thus have very limited opportunity to go to a hotel spa. That's why it is crucial to market to customers outside of the hotel. Offering locals discounts for spa services is a great way to attract new customers and create a solid customer base who can become repeat customers.

Incentives for locals can include discounts off of certain spa packages; frequent customer cards which allow them to buy a certain number of services and get the next one free; and "slow day" discounts to draw customers in on the least busy days of the week. As an offshoot of the frequent customer cards, the hotel spa can create a rewards program for customers, in which every dollar spent can equal points. When customers get to a certain number of points, they can be "cashed in" for free services at different levels. Direct mail and email blasts to locals offering them a "welcome" discount (or a "welcome back" discount for past customers) can help encourage people to visit or revisit the spa.

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Coming up in June 2019...

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.