By Ilana Alberico CEO, ISM Spa
Spas need to embrace technology more than any sector of hospitality. The automation of reoccurring and administrative functions such as inventory management, scheduling, payroll, and reservations will reduce labor costs while re-growing our businesses. By harnessing technology, our front desk and Spa Directors are empowered to be experience makers rather than administrative workers.
Unfortunately, with existing technologies in the spa industry, we have seen nominal incremental change and limited innovation. Spa management solutions have added real-time scheduling, online spa booking, and on-the-go mobile apps, but the “guessing game” of scheduling remains a challenge.
In Part 1 of this article, we will explore best practices to leverage technology back of house. In Part 2, we will address technology for front of house operations and the guest experience.
5 Best Practices for Leveraging Technology Back of House
- Control Labour Costs
Using technology to reduce costs is the first step to value-engineering a spa. Since salaried and hourly labor is the largest expense within hotel spa departments, it is also the first place to look when attempting to cut costs. CBRE’s 2019 Trends® in the Hotel Spa Industry confirms that labor costs are the greatest expense within hotel spa departments, comprising 57.3 percent of total department revenue. This includes the cost of front desk personnel, spa therapists, and technicians who are both direct hotel employees and independent contractors.
Spa operators are constantly challenged to keep up with demand while controlling staffing costs. There is a delicate balance between ensuring staff availability for short-lead bookings without overstaffing.
“With margins so thin these days due to longer turn times, volume constraints, fluctuating demand and government regulation, margins are razor thin,” said Amanda Al-Masri, MMH, Founder & CEO of Al-Masri Consulting and the Former Global Director of Spa Operations & Development for Starwood and Vice President of Spa Services for Equinox. “The ability to control cost of labor is the difference between a profitable spa and a loss leader.”
As the adage goes, “you can’t manage what you can’t measure.” Traditional spa management software provides reporting features that identify demand patterns that can be analyzed to inform labor decisions. Dynamic staffing based on demand, however, is not a function that exists today within traditional spa management software.
As the industry looks to technology and innovation to drive operational efficiencies and enhance overall service, these solutions must be holistic in nature. They need to consider optimizing the experience for all potential users in a three-sided marketplace: spas, therapist, and guests. Spa Space, a new patent-pending technology in beta testing across the Southeastern U.S., is an example of technology that optimizes back-of-house operating efficiencies through dynamic staffing and enhanced guest services. With examples like this, technology has the potential to impact and improve the entire spa business model by migrating the industry from a static operating model to a dynamic, demand-driven staffing model.
- Move Reservations Online
Spa reservations have traditionally been a pain for spa operators (and guests when they can’t get anyone on the phone). Many spas maintain central reservations call centers to book reservations, as well as a reception desk for check-in and check-out. Today, most spa management programs offer the ability to book online 24/7. This has led to widespread adoption in the spa sector of online capabilities for improving the efficiency and effectiveness of guest engagement and contact. Nearly 9 in 10 spas have online booking features in place (Source CBRE).
The most frequently mentioned online feature that spas had in place in 2018 was the ability to book an appointment online, mentioned by two in three spas (66%), ranging from 49% in the resort/hotel sector to 69% of day spas. Spas also used online features to help their clients choose treatments and/or therapists, with 63% sharing relevant performance data online.
- Adopt a Dynamic Pricing Strategy
The spa industry, with its periods of variable demand, shares many of the attributes that make revenue management such a necessity in the hospitality industry. This includes sales via reservation, targeting customer segments, and managing perishable inventory. Spas have the potential to leverage revenue management strategies like dynamic pricing and dynamic availability. However, many spas are still offering the same services for the same amount of time at the same prices – even during high-demand periods.
Spa management programs offer reports on both demand and production to help spas analyze their business. This allows them to understand how to dynamically price their offerings. The goal is increased revenue during periods of high demand and increased bookings during times of low demand. Dynamic availability is another strategy that increases profits by managing the mix of services on offer. Examples are shortening your menu to higher margin services, or not offering longer services during peak times. By cutting off longer services or lower-margin services during your peak times, you will service more guests.
The place to start with implementation of any revenue management strategy is assessing your current operations to get a thorough understanding of a spa’s current business metrics. Spa operators who study their data can make better decisions about their business, including when to add or remove low profitability products or services, and when to change pricing. Analyzing booking history, reports and forecasting customer behavior is a time-consuming process, but establishing a baseline is crucial for measuring the success of any strategy. Although spa software solutions offer reporting tools, the data must still be processed and analyzed by human brain power.
- Smart Technology as Recruiting and Retention Tool
The best spa technology frees people up to do what they do best. Spa will always be a high touch business-the goal of supporting software and apps in the spa environment should be to make the work of human staff more efficient and effective rather than replacing it. Technology should support relationships based on mutual trust and understanding.
The use of smart technology can improve the employee experience, leading to improvements in recruitment and retention in a tight labor market. According to CBRE, “While the culture shift towards health-consciousness and environmentalism provides hotels spas opportunities to capture more revenue through creative initiatives, rising labor costs have put upward pressure on operating expenses.”
One of the benefits of enabling technology is that it can be used to give therapists full control over their schedule-leading to a sense of ownership and empowerment. The gig economy “work where you want, when you want” mentality is much different than adhering to strict protocols in the treatment room due to strict brand standards. Therapists can nurture their individual talents and areas of expertise, leading to overall job satisfaction, and, therefore, increased retention.
Using technology to empower your workforce will create a business model driven by entrepreneurial thinking vs. a static business model unable to flex with the changing demands of the time.
As the future of the industry moves towards automation and big data, we cannot forget the importance of the human factor in all aspects of spa operations. Using technology and data for yield management, scheduling, and reservations does not eliminate the need for a dedicated workforce to ensure excellence in operations.
What will need to change is the skills and expertise of the spa workforce. Skill sets for spa management in the future will include flexible human resource management, data analytics, advanced communication skills, and overall comfort with technology. While at the same time, providers’ skills will become more and more specialized as guests become increasingly educated and attuned to specifically what they need to keep their bodies and minds healthy.
As in other industries before it, the future of spa will be driven by higher levels of customization, on-demand services, and the unforgiving power of public opinion. When used smartly, technology will free up your spa workforce to focus more on optimizing the spa experience to answer these demands, which, in turn, will lead to higher levels of guest satisfaction and a healthier performance metrics.
Ultimately, Human Touch can never be digitized. Authentic care and healing modalities delivered by a talented spa professional will always be the driving force for our industry. The success model of the future will be a marriage of technology, human touch specialists, and passionate leadership of spa properties.
Spas must adopt a new level of operational efficiency to replace outdated manual practices of operation like payroll, inventory management, and scheduling. The power of technology facilitates a new wellness marketplace where personalization reigns and operational processes are automated.
Technology will never replace the healing benefits of human touch that you get at a spa. That’s not the intent. But what technology can deliver is control of the experience, optimized revenue management, cost savings efficiencies, and most importantly, flexibility to meet the increasingly customized demands of the guest.
In the future, leading technology companies will partner with the Spa Director to alleviate time consuming administrative tasks. Spa Directors will be empowered to rebuild their business by attracting the highest quality therapists and driving personalized guest experiences.
Ms. Ilana Alberico is an award-winning business visionary and serial entrepreneur. Her 20+ years in the spa industry spans from folding towels to 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