EVERYONE’S TALKING ABOUT the race for beauty
ANDREW GIBSON
Group director of spa, Mandarin Oriental
A
ny business that provides body treat- ments and skincare simply can’t aff ord to ignore the fast-growing,
multi-billion dollar beauty industry. Research by STR shows that spa treatments
yield more revenue-per-treatment-per-hour than beauty treatments, leading many spas to perceive things like waxing, manicure and pedicure as additional, cumbersome serv- ices with low profi t margins. But beauty isn’t limited to grooming and
with so many innovative ways of providing treatments with a mix of therapeutic relax- ation and health benefi ts, there’s plenty of room for beauty in spas, especially given STR found revenue-per-hour from spa treatments has declined in the US over the last two years, while revenue from beauty has been stable. Market demand for vanity is so great that
all spa operators should consider the role of beauty in their business, but not let it dictate the ethics of that business. Spas should have a philosophy and a story
behind the journeys they off er. T is creates an identity that enables guests to connect. Spas may be holistic, for example, with stated or implied natural products and treatments, or they may pride themselves on result-driven treatments using the latest technology. Sim- ply adding beauty services may completely destroy the brand message that has been built, with consequences for the existing customer profi le and loyalty. If your spa is part of a chain, the action of one spa could aff ect the business of all others. Imagine the brand con- fusion if one outlet of an all-natural spa chain started off ering Botox! Assuming a clear union of spa and beauty
treatments can be found, there are excellent revenue opportunities for spas. T e STR fi gures indicate that beauty doesn’t yield as much per hour as spa treatments, but a little further explanation is required. T e fi gures don’t look at the return per square metre or the retail ratios and when these factors are taken into account, beauty looks an attractive proposition.
A well thought out beauty
strategy can significantly boost revenues and have a number of other benefits, including attracting new customers, strengthening the spa experience – and therefore the pricing – and meeting the demand for shorter treatments. Launching into beauty
also gives operators the opportunity to create beauty rooms that are smaller than spa treatment rooms, so more can occupy the same footprint and gen- erate higher overall revenue. In addition, there will also be opportunities to design additional multi-use sta- tions such as those for hair, manicures and pedicures. In some operations, intro-
ducing a beauty off er could also transfer some of the lower profi tability treatments out of the spa and into the beauty rooms. Since suppliers tend to have excellent
retailing experience, adding beauty also ena- bles operators to leverage the marketing and promotional power of major beauty brands, improve the visual presentation and retail science of product displays and increase retail opportunities through product rec- ommendations and homecare sales. Beauty maintenance is a regular purchase
which can increase the frequency of visits by customers. T is business can then be enhanced by off ering multiple sessions or courses to address particular requirements. One of the consequences of a maturing
spa industry is that research provides more information about the business models of spas. Coupled with the economic pressures to justify investment cost and regardless of the validity of the information, investors and owners are more inclined to seek a quantifi -
Market demand for vanity is so great that all spa operators should consider the role of beauty in their business, but not let vanity dictate the ethics of that business
22 Read Spa Business online
spabusiness.com / digital
Treatments like manicures can be completed quickly in a very small space - in some cases in public areas
able return on investment for their spa. Heat and wet areas, large hydropools and
areas that are off ered free to guests don’t gen- erate transparent returns, whereas treatment rooms have established formulae showing return per square metre. T is puts pressure on the design of future spas, making beauty treatments in small rooms – with high pric- ing, regular repeat guests and good retail margins – a compelling proposition. If the design of spas is changed to the
model currently being developed on the high street by prominent names, then the guest journey and experience will be lost and there will just be salons in hotels. T ere’s a place for both and that’s why
Mandarin Oriental will launch a philosophy for beauty soon which will allow our spas to develop their own beauty strategy without compromising their core principles. In fact, it will meet one of our philosophies to pro- vide our guests with informed choices.
Mandarin Oriental Hotel Group operates spas within its hotels across the globe. Details:
www.mandarinoriental.com
SPA BUSINESS 1 2011 ©Cybertrek 2011
PHOTO:
ISTOCK.COM/©RICH LEGG
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