How to open a spa: Part 1 – Concept and feasibility


We are happy to kick off a new series of eight articles featuring tips and recommendations dealing with the process of opening a new spa from start to finish. During the next two months, we will be covering the most important aspects of conceiving and implementing a spa.

This week, we would like to discuss the first step you need to take when opening your spa: defining the concept and studying the feasibility of your new business. This post will provide you with a good understanding of the foundations you need to build for your spa.


Back to basics: Business plan and key questions

Every successful spa has been designed with a solid concept behind. In order to develop such a concept, you need to implement a business plan and answer some essential questions about the core activities of your future spa.

As far as the business plan goes, you do not need to spend months and months writing a long and complex document. Your business plan needs to be a basic guide aimed at helping you to map out your operational and financial objectives and how you will achieve them. You also need to answer some important questions about your spa’s target audience and the services you will be offering. Some of these questions include the following:

  • What type of spa are you going to open? A destination spa, an urban spa, a medispa, etc.?
  • Who will your target audience be? What kind of customers will you target? What are their buying habits?
  • What types of services will you offer? Which of your customer segments will buy which of your services? What kinds of treatments do you think you will sell the most of?

Carrying out a SWOT analysis will give you a clear idea about the strengths, weaknesses, opportunities and threats surrounding your new business. This will then allow you to further define the concept of your spa.


Market trends and PEST analysis

After writing your business plan and answering key questions about your business, it is time for you to analyse the market and the environment where your new spa will be operating. The first thing you need to do in this phase consists in answering the following questions:

  • Who are your competitors?
  • How is the market evolving in your location?
  • What are the market trends? What are the consumer trends?

It is important to know your competitors well. We advise you to conduct detailed studies about your competitors so you can identify their SWOTS (strengths, weaknesses, opportunities and threats). If possible, try out their treatments and analyse your experience from the customer’s point of view and not yours as that will be naturally overly, and maybe unreasonably, critical. Keep in mind their operational challenges in terms of quality of service and treatment as that is something that will also affect you.

Apart from these market considerations, you should also carry out a complete PEST analysis that gives you a good picture of the political, economical, social and technological factors surrounding your spa. It is important to understand how these factors will impact your spa in the future.


Setting yourself apart

Now that you are clear about what you want to do with your spa and the environment that surrounds it, you need to provide your future business with a Unique Selling Point (USP). In other words, you need to set your spa apart from the competition and answer the following questions: What will make you different from your competitors? Why customers should favour your spa over your competitors?

While answering these questions, it is important to remember that you will need to think about the perceived value of your treatments and service offering over that of your competitors from your customer’s point of view, and not from your point of view.


Numbers and pricing strategy

Whether we like it or not, we all know the success of every single business depends on its numbers. It is crucial to be in control of all the economic and financial variables related to your business.

It would be good, for example, to get involved with the process of writing the profit and loss account. Likewise, you need to brainstorm about worst and best case scenarios for your business while answering the following questions: Does your business make sense? Will it give you the return on investment you are looking for?

Once you get a sense of the numbers and financial feasibility behind your future spa, you need to work on a coherent pricing strategy that brings together all the variables affecting your potential income. In order to do that, it is essential that you answer the following questions about your business:

  • Based on the type of spa you would like to have, what will your average treatment price be?
  • What will your average treatment time be?
  • What kinds of services will you be able to sell as add-ons? What kinds of facilities would you be able to add as add-ons?
  • Will you offer memberships?
  • What price is fair for your customers?


In a nutshell

f you are looking to open a spa from scratch, the first step is to put on paper your idea. Do your homework – understand your competitor set and your target audience and know your market inside out. Then, work on your numbers to ensure that your spa concept makes business sense.

Next week, we will discuss the spatial distribution and client flow that you need to consider for your new spa.

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