Budget Spas: An Interesting Business Opportunity



The current state of the spa industry is creating additional room for the development of budget and low-cost business initiatives within this field. Moreover, taking into consideration past experiences from the airline, hotel and fitness industry, the implementation of budget or low-cost strategies has appeared as an inevitable step for any growing sector.


At some point, the development of time-based leisure industries has always embraced the implementation of budget services and products. In fact, during the last years, we have witnessed an unprecedented boom of budget and low-cost flights, hotels and fitness centers.

Now, it is a good time for the spa industry to explore even further this business opportunity. Budget spas represent an interesting alternative that can increase volumes, improve profitability, and expand the existing market for the spa industry.


The Entrance of Budget Services into The Market

Traditionally, the entrance of budget and low-cost competitors into the market is seen as a disruptive process that forces the market to readapt to a new environment. Although budget alternatives are usually disruptive at the beginning, past experiences from the industries previously mentioned have proved that the arrival of low-cost businesses provide markets with higher competition.

Thanks to this competition, existing players are forced to adjust prices and redefine their business models in order to compete against low-cost rivals. In this context, while the two extremes of the market remain fairly stable, the middle section of it feels the pressure and loss-making sites are either removed from the market or purchased by budget operators.


Current Conditions in The Spa Industry

There are some indications that suggest the time for the spa industry to embrace budget spas has arrived. All across the industry, the combination of high prices, low volumes, unstable profitability, and a large restrained demand, is shaping an ideal scenario for the implementation of budget spas.

One of the biggest problems that has affected the spa industry for years is the perception that surrounds it. Traditionally connected to a luxurious service, many spas have favored the high prices that the whole industry maintains in order to justify that connection. By doing this, the spa industry not only has shaped general perceptions about itself but also has excluded a big chunk of potential clients from its services.


The Impact of Budget Spas

Budget spas offering treatments and services at lower prices will be able to tackle the obstacles related to high prices. At the same time, budget spas will help the industry as a whole to move away from the idea that spas are available only to a selected group of people. In other words, budget spas offer the potential to unfold the existing restrained demand bringing into the market a large segment of the population that still see spas and their services as exclusive and luxurious activities.

As an extension of the above, budget spas will allow the industry to increase its low volumes. By bringing into the market additional customers who are able to pay and afford different services and treatments, the spa industry will significantly increase its overall transaction volumes. In the same way, a good combination of prices with a higher demand for services will allow the industry to improve its overall profitability.

There are already several successful stories in the spa industry related to the implementation of budget treatments and services. Companies like Massage Envy, Woodhouse Day Spas, and Skin Essential Spas, have been able to increase their markets, volumes and profitability thanks to a smart offer of services defined by convenient prices and a good knowledge of the customer.

All things considered, budget spas appear as a wonderful option to tackle some of the obstacles that have affected the spa industry in terms of pricing, profitability, market size, volumes, and business perception. It would be a mistake not to explore this business opportunity further.


Source: Spa Business

By Sonal

Sonal Uberoi creates and delivers smarter spas around the world. Spas and hotel groups hire Sonal to help them design, set up and manage their wellness businesses. Her finance background and worldwide operations experience in the spa, wellness and hospitality sectors make Sonal the go-to expert for business optimisation solutions. Connect with Sonal on LinkedIn www.linkedin.com/in/sonaluberoi.

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