This month, we would like to share some articles dealing with spas’ day-to-day operations and revenue/profit strategies. We would like to kick off this series with a post where we will take a look at the benefits that hoteliers can perceive if they add their spas to their revenue management system.
In order to do this, we are going to share some of the insights that Patrick Landman, CEO of Xotels and hotel management expert, shared on a very interesting article published in Tnooz, the global provider of content to the travel, tourism and hospitality industry. Although a challenging issue, the hotel industry needs to change the way it has been operating its spa facilities. Let’ see why.
Weak Business Practices
In recent years, we have witnessed a boom of spa facilities in hotels, resorts and upscale bed and breakfasts around the world. This trend, however, has not been properly implemented by the hotel industry. We have seen, in fact, that adding a spa to your property for the sake of adding value to your facility or increasing your guest’s experience is not enough to transform the spa into a profitable part of the whole business.
In other words, the rationale behind this boom of spa facilities has not been supported by a winning strategy based on profit and revenue goals. Because of this, “most of the time, the spa is underutilized or even empty. As a result spas in hotels often represent an additional cost factor, instead of an incremental revenue source.”
Very often, hoteliers tend to forget that the spa facility is also a vital element of the hotel’s revenue stream. By treating these structures as mere accessories to the property, hoteliers have repeatedly used poor business practices to deal with their spas.
The Value of Revenue Management
Most of the time, hoteliers use tactical pricing techniques to sell the services of their spas. Although discounts, gifts and special deals and packages are valid channels to accomplish this goal, hoteliers have failed to develop “a strategy that allows grouping these techniques into a policy of revenue management.”
With such a policy in place, hoteliers will be able to attract additional clients during the low season and grow revenue during the high season. While an attractive offer of treatments will do the trick during the low season, a set of optimised strategies will do the same during the high season.
Revenue management is, in fact, a valuable tool that offers assistance in four key areas related to the operations of the spa: Contribution analysis, productivity management, sales follow-up, and cost management.
By implementing revenue management, the hotel can effectively address different questions regarding the spa in terms of the profitability of its services, seasonal periods, product and gift spending, cost control and time management. According to Patrick Landman, revenue management helps the hotel to increase the income generated by the spa.
At Spa Balance, we totally agree with Patrick Landman’s recipe for managing a profitable hotel spa. The hotel industry needs to change the model that it has been using to deal with spa facilities. It is time for hoteliers to add spas to their revenue management strategies instead of using the spa as a hugely discounted “bait” to sell rooms. We believe this change and a little bit of innovation will help spas to flourish within the hotel industry.