Can a Spa Increase a Hotel’s Earnings?

| August 18, 2011 | Comments (0)

Far from being a simple fashion phenomenon, health and wellness take it’s place as a fundamental part of consumer tendencies of our society today.  All those in the tourism industry have obviously stepped right into the wellness breach.  That also includes the hotel industry, and especially the top-of-the-range market.  There isn’t one hotel today that doesn’t talk about spas, despite high investment costs and varying profitability.
The success of the wellness industry can no longer be denied.  It has been shown by the increase in activity by more than 15% per year, as recorded for several years now by Les Thermalies Exhibition in Paris, by the launch of specialised tour operators, and also by the proliferation of wellness gift packs and the creation of specific packages by the large tour operators (Jet Tours, Thomas Cook, etc.) and the international hotel groups (Accord, Relais & Châteaux…).

Supply And Demand

Over and above a simple and short-lived fashion phenomenon, spas clearly respond to consumer demand where clients want to live better at all costs and let themselves be taken in by the idea of being pampered.  The spa tendency is so strong and the demand so high that no investor would think of building an upmarket complex today without including a spa.  However, the level of investment for quality facilities is relatively high:- one would have to budget about R10 000 per square metre for a 3 star complex, and up to R35 000 or more per square metre for a 4 star complex, thus for a 300m2 spa, a budget ranging from R3M to R10M.  In other words, the economic stakes are enormous.
Especially since spas do not necessarily constitute a strong differentiating factor as today many, many 4-star hotels already have one.  The truth still remains that spas have indeed become a selection criterion for clients, especially when it comes to luxury hotels. According to a survey carried out by a volunteer 4-star chain, 93% of their clients choose a hotel based on the fact that it contains a spa, even if only 34% of them actually use the spa itself.

Spa packages evolve substantially as the quality of the spa facilities increases.  All these factors play a major role in the image of the hotel.  Some Asian hotel chains have therefore taken great care to develop truly luxurious spas (Banyan tree, Six Senses, Aman Resort, Shangri-la, Mandarin Oriental, etc.)  Not forgetting Accor who, having been present on the spa market for more than 20 years with Thalassa, have also launched their concept named “Le Spa by Accord Thalassa”.

In the resort category, there has been an increase in the integration of spa facilities into the rooms themselves.  This category has become an exclusive product, with a big impact on the cost of development which has improved the quality of the services.

On the other end of the scale, holiday residences (Meteor Resorts, Residence & Spa), as well as 3-star hotel complexes have created their own spa packages, using simpler products and requiring less staff. This strategy generally enables seasonal highs of a destination to be spread out or for hotels to diversify their clientele by developing the individual leisure segment.  This latter strategy obviously calls for more optimised spa management since the 3-star clientele does not have the same buying power as the tourists who stay in luxury hotel complexes.  In such a sector, limiting staff costs is often a highly strategic policy, just as it is to open the spa to outside clients (the local population) thus being able to increase the volume of the potential demand.  One risk factor however lies in the depersonalisation of the spa services with for example, less individual treatments. Up until now, few managers have made this error, and the group treatments offered more often constitute a loss leader which enables them to further develop the main target, i.e. individual treatments.

Another heavy tendency, this time in terms of the demand:- the spa clients are still very much composed of women.  Men are however wanting to take care of themselves more and more.  The proof is in the fact that they now total 30% of the spa clientele.  Faced with this increase in the masculine clientele, the spa industry responded rapidly.  More than 90% of the spas now have treatments specifically aimed at men.
Despite the fact that the development of wellness is now a major development in the hotel industry, the profitability of this type of facility remains uncertain. For hotel clients, the spa activity remains seasonal: first due to the seasonal nature of the destination; then due to the seasonal nature of leisure demand (weekends, school holidays, etc.); the seasonal nature of the week, of the day even.  Most of the time, clients would like to treat themselves to a treatment in the evening, enabling them to be able to forget the stress of their days’ work.  One way of responding to this additional constraint has been to better manage the treatment booking system.

For example, some chains or hotels give their clients the possibility to book treatments at the same time they book their stay.  In this way, clients are able to be “treated” at the times that suit them best.  As for the manager, they optimise the management of their schedules, etc.

Another response that will no doubt make its appearance shortly: putting into place a sliding scale for the spa.  For example, going to the spa at the beginning of the afternoon should cost your client less.  This is also one way for the manager to rationalise staff numbers present throughout the day.

Advice for Optimising a Hotel Spa

• Carry out a market survey and start thinking about the integration of a hotel spa as early as possible in the process.
• Hire qualified staff trained for the treatments offered.
• Manage the spa after having received appropriate training.
• Give importance to an outside light source.
•  Pay attention to the interior decoration and bring it in line with that of the hotel.
•  Don’t hesitate to show hotel guests around the spa.

• Talk about all the available treatments that are on offer.
• Use cosmetic products in line with the wellness philosophy.
• Make sure clients know that a spa exists from the moment they make their hotel booking.
• Sell spa packages that can be booked ahead of time so as to be able to better plan the spa schedule.
• Create invitations for hotel guests to discover the spa, not forgetting external clients.
• Always give more of what the clients can expect of spa services (a refreshing drink, a snack, a calming herbal tea…).
• Put spa brochures in the hotel rooms.
• Identify facilities that can be invoiced directly (for example 20 minutes of balneotherapy), those that can be included in a treatment package (Turkish bath) and those that are more difficult to make profitable (bathing pool).

Profitability of a Hotel Spa

• The spa products are based on: individual treatments; treatment packages (2 or 3 treatments together) or accommodation packages (including treatments), water facilities (pool, spa, sauna, Turkish bath) for which a supplement is charged by some hotels, classes or consultations (yoga, relaxation, nutritionists, dieticians, acupuncturists), subscriptions and the sale of products in a boutique (cosmetics, wellness accessories such as teas and herbal teas, robes, incense, books), decorative objects (scented candles, statuettes).

• Operating budget: the main operating costs are staff salaries which total 40 to 55% of the turnover, hence the necessity to find the right balance between hands on treatments requiring staff and autonomous treatments that require equipment only.

• Estimation of provisional turnover: depending on the various phases of activity of the spa and the provisional occupancy rate, a solution can be to hire short-term contract staff or to call in external staff.
A spa is not a loss-making entity just for the sake of image and communication.  It is a profit making centre and should bring added value to a hotel complex.  The gross operating profit generally becomes positive in the second year of operation and represents 20 to 30% of the turnover from the 5th year in activity on.

Does a Potential Local Clientele Exist ?

Depending on the size of the project, the local clientele can become one of the main target populations.

For complexes established in a medium- to large-sized agglomeration, local clients could be targeted as it is easier to secure their loyalty in such areas.
A local clientele has its importance in that it covers the fixed costs of the spa.

Certain top-of-the-range spas function as private clubs to which their clients can subscribe by paying an entrance fee.  It’s done on the basis of an exclusive membership with high rates.  Evaluating the potential local clientele should be done according to behavioural criteria (types of products bought: cosmetics, clothes, luxury accessories, women’s magazines, fashion, travel, etc.), buying habits (belonging to a group, social recognition, personal pleasure…).

It’s useful to target a certain type of client.  A catch rate of 0,5 to 2% should be applied to this population and will determine the volume of the potential clients from the local area.  After that, a qualitative and quantitative study will enable you to quantify your potential clients’ expectations: face to face interviews or round table discussions can be used to get to know your clients’ needs.  A postage, phone or internet survey will enable you to estimate the volume of clients interested in your project.

What Are Your Potential Clients’ Expectations?

A client’s reactions to the services offered by a spa vary according to the aim of their stay at the hotel: they are more or less receptive to the spa depending on whether they are on holiday, on business, whether they’re in their own country or on a tropical island. Their use of a spa differs according to their availability, whether they’re alone or there as a couple, or in a group.  Clients on business, mostly men, and who have quite traditional needs, can be divided as follows: massages (70%), Turkish bath/sauna (15%), pools (10%), beauty treatments (5%).  If a spa package was sold as part of a special hotel package for a group (seminar or tourism) it should be adapted accordingly and should include group treatments to as to maintain the group spirit and also to make the organisation and management easier for the hotel and for the spa manager.

With respect to clients who are individual tourists, the use of various facilities and services are mainly the choice of women who like the relaxation and beauty treatments (body treatments 40%, face 30%, hair removal 25%, manicures 5%).  Treatments for couples are also sought after, hence the necessity of double treatment cubicles.

A spa is a space for relaxation, for recharging one’s batteries and for physical and pychological wellness. The concept is based on three essential elements:

• Water: this fundamental element is omnipresent in any spa (spa bath, affusion shower, Japanese bath, Turkish bath, spa…).

• A certain philosophy: the aim of a spa is to teach or to allow the clients to experience an art of living based on spiritual values.  It’s a holistic vision of man seeking to regain a balance and harmony between body and mind and also between the environment and him/herself.  A spa is part of a collective movement for a return to nature, to everything natural, to ecological values, to the notion of sharing and to a certain humanistic nature.

• Personalised services:  your client looks for total care and support, for pampering almost of a maternal nature, for wellness ambassadors devoted to their well-being, without any promiscuity towards other clients so that they can feel unique, alone in a bubble of harmony.

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Category: Spa Articles

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