Resort spas invigorate revenue with effective marketing, service

By: Stacey Mieyal Higgins
Hotel & Motel Management
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NATIONAL REPORT—Resort spas are experiencing an increase in revenue per occupied room, according to a study by Health Fitness Dynamics.
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The study found the average spa-specific revenue per occupied room for U.S. Resort spas increased from $30.58 in 2003 to $34.37 for the first three quarters of 2004. Thirty-six spas were included in the survey.
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Judy Singer, co-founder and co-owner of HFD, a Pompano Beach, Fla.-based spa consulting company, attributed the growth to an increase in spa awareness and higher use of spa treatments.
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“Hotels are doing better jobs of marketing spas,” Singer said. “A big one is pre-arrival marketing, so when someone is booking a reservation online, some kind of spa icon or spa menu pops up to let them know the spa is here.”
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At the Cranwell Resort, Spa & Golf Club in Lenox, Mass., employees are trained to upsell spa packages, said Lewis Kiesler, g.m.
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“As years go by, we’re getting more savvy with spa packages for certain segments, such as women, reunions and weddings,” he said.
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The 35,000-square-foot spa at Cranwell has 16 treatment rooms and opened three years ago.
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“About 80 percent of the decision to build a spa was based on assisting occupancy in the shoulder season,” Kiesler said. “It turned out to be the right thing to do.”
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The girl’s-night-out package at the Ballantyne Resort spa in Charlotte, N.C., has been a huge success, said Judy Stell, spa director. The package includes a one- or two-night stay and an hour spa treatment.
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The 14,000-square-foot spa, which opened in 2001, relies heavily on repeat guests.
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“We all want to keep guests coming back and we do that by keeping them happy while they’re here,” Stell said.
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Profit potential Spas that focus on selling retail products to their customers will increase their profitability, Singer said.
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“When you give a personal treatment, it’s one on one, which means high labor costs,” she said. “When you look at the profit from a treatment, you’re lucky if it’s 30 [percent] to 40 percent, but if you could sell retail after the treatment, that’s your annuity.”
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Kim Huber, director of The Spa at Pinehurst Resort in Pinehurst, N.C., said the spa has increased revenues above the HFD average.
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“We are increasing guests per roomnight and the average revenue per guest increases because they are spending more buying more retail,” Huber said.
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The 31,000-square-foot spa has a simple menu that complements the golf resort, which is hosting the 2005 U.S. Open Championship.
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“We try not to get into the trendy and be consistent with what we offer,” she said. “We’re not rewriting internal protocol and that’s where product costs can get way out of line.”
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The Pinehurst spa offers proprietary products made with indigenous materials that are available at 11 retail shops at the resort.
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“The retail shop is staffed and managed by resort retail operations, but we advise them and they take direction from me,” Huber said.
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The products don’t have to be proprietary, but there is more profit potential if they are, Singer said.
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“If you can come up with a signature product for personal grooming with your fragrance, your texture, your bottle and your brand and people used it in the spa and loved it, they will buy it again,” she said.
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Many are focusing on increasing group business.
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“More groups are utilizing the spa as part of their meetings,” Kiesler said.
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Some groups give out Cranwell gift certificates.
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“There’s a huge market for gift certificates so that is coming back to us,” Kiesler said.
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At Pinehurst, increasing group guests is a goal of the resort, according to Huber.
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“We are definitely trying to increase to around 20 percent group guests [of the resort guests to the spa],” she said of the spa’s specific goal.
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Controlling costs An effective inventory system will allow the spa to control product costs, according to Singer.
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“If you put too much product on a guest’s skin, you may not be doing the guest a favor,” she said.
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Huber said the spa has a great dispensing program.
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“We make sure we maximize the number of treatments per gallon of product,” she said. “The goal is to be efficient and not have staff take at will.”
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Kiesler said managing product expenses over time has improved.
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“We provide certain locker room supplies and we have found better providers,” he said.
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Cost percentages also can be lowered by increasing prices, Kiesler said.
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“As we progress in our sophistication, we’ve been able to do that,” he said.
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