spa-business

Making sense of the hotel spa

In today's world, the hotel spa still remains either a cost center or a profit center, depending on how it is run. Here are some tips to make it successful.

After significant economic, financial and geopolitical turmoil over the last years, the global spa and wellness industry is not only surviving but thriving. Data recently released by the Global Spa & Wellness Economy Monitor reveals that the sector is stronger than ever with an annual growth rate of 7.7%. 

In today's world, the hotel spa still remains either a cost center or a profit center, depending on how it is run. If either role can be beneficial to the hotel, knowing which one you are looking to pursue, to what end, with which partner and in what context, is essential.

A little spa history 

Prior to 20 years ago, hotels spas were found only at the most exclusive resorts. Today, however, they are found in hotels of all sizes. When the spa boom began, hotels assumed that adding a spa to their offerings would draw in guests easily. Unfortunately, as the addition of spas became more common among hotels, the spa lost its exotic appeal.

Out of competitiveness and desperation, hotels made their spas bigger and more elaborate. Because of the expense involved, turning a profit became more and more challenging. Even today, many hotel owners struggle to achieve a decent ROI.

Moving forward

In spite of the issues, spas can still be an integral part of the establishment. In order to operate a spa successfully, one must learn from the mistakes others have made and apply them to the development of their spa. However, because of the complexity of the spa business, it is nearly impossible for a hotel manager to make all of the right decisions without help.


Recruit an experienced spa manager

A qualified spa manager can act as a designer, consultant and advisor. He/she can also oversee the daily operations of the spa once it is established. If a hotel hire the right person, this option provides it with a competent staff member dedicated completely to the operation of its spa. However, with the wrong person on board, one may not realize his/her deficiencies until they have already had a profound effect on the development of the spa.

Partner with a spa management company

Spa management companies are similar to hotel management companies. They typically employ one of two business models: a management contract model or a revenue share model. With a management contract model, the company receives a percentage of the gross operating revenue and the gross operating profit. With a revenue share model, the company receives a portion of the top line revenue.

This option alleviates most of the hotel responsibility for the spa's day-to-day operations, allowing its manager to focus its attention on other issues. However, it implies less control over decisions made by the spa, such as the retail products sold, pricing and treatments offered. In addition, this option may reduce the amount of revenue one takes in from the spa.

Contract with a product house

Another option involves contracting with a product house, which is a skin care or cosmetic brand that will run the spa under its own name. As with a spa management company, this option relieves the hotel of the burden of managing the spa's daily operations, but it will also prevent it from having control over important decisions made within the spa. In addition, because many product houses impose a minimum annual product order requirement on their clients, one may lose money if the products don't sell quickly enough.

Hire a spa consultant 

A spa consultant is a professional who comes to the hotel to help its management team establish or revitalize its spa. Once the spa is up and running, the hotel resumes control. However, one can continue to contact the consultant if they have questions or concerns in the future.

Hiring a spa consultant offers several advantages, including retained control over the decision-making process and flexibility. Spa consultants don't have to follow any guidelines with regard to treatment menus or product lines, nor will they require the hotel to purchase a minimum amount of product each year. That being said, finding the right spa consultant can be a challenge. In addition, once the spa consultant leaves, the hotel is left to manage the spa on a daily basis.

Each of the options above comes with unique advantages and disadvantages, making it difficult to determine which is best for your hotel. In many cases, hotels decide to combine two or more of the options above to maximize benefits and minimize risks. Regardless of the options chosen, one needs to set clear, realistic goals for their spa and focus on them every step of the way. Managed properly, the spa will be an invaluable asset to any establishment. Managed poorly, it will drain its resources and damage its reputation.