A Spa with a Hotel: What Would Change?

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June 18, 2018
Revenue Management
John Burns - john@burns-htc.com

It began with a simple question posed by ResortSuite CEO Frank Pitsikalis at a recent conference. He asked, “What if, rather than describing it as a hotel with a spa, we described it as a spa with a hotel? Phrased that way, would we manage the spa operation differently?” 
 
The question intrigued me. By identifying the hotel first before the spa, we acknowledge the importance of the lodging operation. In North America, unlike in Europe where extensive spa resorts are common, the spa is a non-core amenity. Its effective and productive operation is generally accorded a lower oversight priority – often much lower than the rooms division or the F&B operation.
 
This question prompted me to recall my own experience with hotel spa operations. Over the last two decades, I have examined many hotel-based spas. Although they’re almost always a potentially significant revenue generator, they have been consciously (or more often, unconsciously) given a back-seat position in terms of examination, management focus and performance expectations.  
 
Every hotel spa I have examined has had considerable room for operational improvement and increased revenue generation. 
 
1. Hotels rigorously track guestroom occupancy, but often neglect to apply the same metric to the spa. In my experience, if we divide the total number of available treatment room hours in a day, week or month by the number of used (e.g., sold) treatment room hours, the resulting spa occupancy figure would be in the 25 percent to 35 percent range, maybe even lower. That means that 65 percent to 75 percent of the time the facility is empty, generating no revenue.
 
We can control variable costs during those empty times by not having contract technicians on duty, but fixed costs remain. More significant, the opportunity cost of those unoccupied treatment rooms – not only in terms of lost service revenue but also in lost spa product sales and possibly lost F&B sales – can be appreciable.
 
2. I once visited a resort with a large spa. They managed the rooms operation diligently, including attentively monitoring reports from the hotel’s PBX to track reservation department call volume, hold times, average talk time and abandoned calls. Performance was well within industry norms. They answered 80 percent of calls within 20 seconds and allowed less than 5 percent of incoming calls to hold so long that the caller hung up or abandoned.
 
The resort’s spa used the same PBX as the resort. I asked how the spa’s call handling metrics compared with those of the reservation department. No one knew. They didn’t produce reports for the spa, or monitor statistics. Unbeknownst to both resort and spa management, the average hold time was often longer than 20 minutes and nearly 25 percent of callers hung up because their calls were not answered. 
 
3. Most hotels have ongoing email communication with past overnight guests. But only a fraction keep a client mail list for spa users and periodically communicate with local patrons. Remember, these clients are typically open to short-notice or off-hour specials. They make repeat visits, generate additional F&B income, refer their friends for spa services and buy gift cards. 
 
Is there a frequent client program for the spa that prompts clients to return and rewards them in some small way when they do?
 
4. Rooms occupancy forecasting is vital to efficient (and profitable) hotel operation. Attaching the same priority to spa appointment forecasting is much less common. Not only does accurate spa forecasting enable appropriate staffing (and delivery of promised levels of customer service), it highlights opportunities to generate additional business.
 
Recognizing periods of high demand opens up opportunities to engineer service availability. You can mark less profitable treatments as unavailable. (Do you know which of your services is the most and least profitable?) You can carefully manage treatment room assignments to minimize down time, and have contract technicians available.
 
Also, are you applying cancellation penalty, deposit (or full prepayment) policies for high demand periods? 
 
Periods of low demand offer equally interesting opportunities. Aside from closely controlling labor costs, they open up promotional opportunities. Why not offer 30 percent off a manicure when combined with a facial? How about a free bottle of skin care product with a massage? Or maybe a mid-week Happy Hour discount on late afternoon or evening appointments? Perhaps a F&B offer – a cocktail or two-for-one appetizers in the bar. The options are endless once the forecast reveals when you can – and should – get creative.
 
5. Meetings and conferences, especially those that include participants’ spouses, offer another often-untapped opportunity. Send them the spa’s phone number and email address for appointments or advance consultation on treatment options in advance of arrival. Offer nominal discounts. The event organizer may be interested in paying for a relaxation break – when a spa or fitness center representative spends a few minutes during a coffee break describing wellness techniques and highlighting spa services.
 
Temporarily adopting a spa-first mindset also prompts some tough questions:
  • Do we have the best possible spa staff? Do they need further training?
  • Is our revenue manager giving the spa an appropriate portion of time considering its revenue potential?
  • Are the spa operating hours optimum? 
  • Do we offer the right treatments and products?
  • Do we capture the right portion of local business? 
  • Is the spa a positive asset to the hotel?
There are numerous spa management systems available, system such as Book4Time, ResortSuite SPA, SkyWire, SpaSoft and TAC Reservation Assistant. Each can increase spa operation efficiency. 
 
If a spa management system is in place, an easy question is, are you using it fully and effectively? What features are not being used today that might be helpful?
 
If we thought about it as a spa with a hotel, would we prioritize the attention, resources and expectations differently?
 
John Burns is president of Hospitality Technology Consulting and he can be reached at john@burns-htc.com.

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