Lead Stories

Reopening A Profitable Spa In 2021

By Larry and Adam Mogelonsky | January 29, 2021

Most spa operations have yet to properly recover from the rigors of 2020. Our hope is that as we emerge from the pandemic in Q3 and Q4 of 2021, you can not only bring hotel occupancy levels back up to healthy numbers, but also relaunch your spa so that you can maximize per-guest revenue capture while keeping labor costs low.

To increase total revenue per available guest room (TRevPAR), you need strong software in place to automate the management of this operation and to identify profit optimization activities. This is particularly important now because due to the new requirements for increased cleanliness and appointment buffers, your spa margins are razor thin. To let tech do the heavy lifting, you can start by looking at your PMS and integrated spa booking engine.

The Halo Effect of TRevPAR

What is the primary driver of room reservations at your property? It may be because you are a rural resort and guests are choosing you for a socially distanced vacation. Or maybe it’s one of your amenities such as the gourmet restaurant, your golf course or, for the focus of this article, your spa.

This is what we call the ‘halo effect’ in that marketable facilities will act as a primary driver of hotel bookings, especially in contrast to home sharing accommodations, such as those listed on Airbnb, which typically do not have onsite amenities. Thus, building a tech environment that enables your property to relaunch the spa without drastic cost overruns should be a foremost task for the months ahead.

Beyond just the leisure segment, thinking in terms of TRevPAR will still be instrumental for all guest types in the coming decade because of how fundamentally the world of hospitality has changed. Operating and marketing costs are constantly blooming while customers have an increasing number of other competitive options at their disposal. In the hotel of the future, you will need to derive incremental revenues from all guests in order to make the whole venture worthwhile.

Revenue Management Now Also for Amenities

In the pursuit of go-to-market strategy for a hotel spa that’s focused on TRevPAR, we dove into a ResortSuite product demonstration with CEO Frank Pitsikalis, CEO of the company which develops integrated hotel, resort, wellness center, spa and club management software. What he emphasized regarding modern spa management software is ‘dynamic availability.’ In a spa that is yield-managed much like a hotel’s room inventory, you have to protect your high-demand hours and days while trying to fill the low-demand ones. That is, you have an opportunity cost whereby you wouldn’t want to fill your peak times with lower margin treatments.

The example that Pitsikalis showed us was a traditionally busy Saturday 1 p.m. through 4 p.m. period, where the same aesthetician was able to complete a bikini wax or a facial. Both were 30 minutes in length, yet the latter treatment earned the hotel $25 more in profit.

With the right software in place, the resort could then prevent users from reserving lower margin options during a high-demand period like a Saturday afternoon, instead directing customers to book at, say, 9 a.m., 5 p.m. or on another day. At first glance, it’s only a $25 difference. But in today’s landscape, such a granular analysis of opportunity costs is crucial when you have to maintain time buffers between all individuals for proper social distancing.

The Bottom Line

Integrating the spa booking platform with the PMS means you have richer guest profiles to then create more attractive offers and even do some one-to-one marketing that motivates those customers with a higher TRevPAR to come back. This should be common sense by now, but it is worth reiterating because such a direct PMS integration can mean more ancillary revenues right from the website reservation engine whereby a room booking flows directly into a spa appointment portal.

Technology is thus the backbone that will allow you to ramp back up to better financial health in all revenue streams (dining, spa and golf to name three prominent ones) without incurring a likewise uptick in fixed labor costs. Now is the time to make the necessary upgrades to your hotel’s tech stack in preparation for the projected travel recovery in Q3 and Q4 later this year.

Credit
Larry and Adam Mogelonsky

Together, Larry and Adam Mogelonsky represent one of the world’s most published writing teams in hospitality, with over a decade’s worth of material online. As the partners of Hotel Mogel Consulting Limited, a Toronto-based consulting practice, Larry focuses on asset management, sales and operations while Adam specializes in hotel technology and marketing. Their experience encompasses properties around the world, both branded and independent, and ranging from luxury and boutique to select-service. Their work includes six books “Are You an Ostrich or a Llama?” (2012), “Llamas Rule” (2013), “Hotel Llama” (2015), “The Llama is Inn” (2017), “The Hotel Mogel” (2018) and “More Hotel Mogel” (2020). You can reach Larry at larry@hotelmogel.com or Adam at adam@hotelmogel.com to discuss hotel business challenges or to book speaking engagements.


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