RESEARCH Payroll costs in
smaller spas are still unacceptably high at 66.5 per cent of total incomes
IT IS POSSIBLE TO CREATE SPAS IN SMALLER SPACES WHILE MAINTAINING THE
DESIRED EXPERIENCE... BUT THE OPPORTUNITY COST OF ANY SPA SPACE SHOULD BE CAREFULLY ANALYSED
TABLE 2: PAYROLL ANALYSIS SIZE OF SPA Per square foot values Total payroll costs US$
Spa sq ſt greater than 15,000
63.58 Payroll as % of spa revenue 50.9%
mouth was also essential. T is meant that those guests who were making it into the spa now became our marketing team.” Park adds: “We got creative. We used Con-
stant Contacts, Twitter and Facebook for the majority of our advertising. We love PR and any chance we got to do that, we did – it was a low-cost, eff ective tool to get the word out. Partnering with the local convention and visitors bureau has also worked for us.” In addition, many operators also used cre-
ative forms of packaging and discounting to encourage usage. Suzy Johlfs, spa director at the Westin in Avon, Colorado, says: “We cre- ated stories around the discount to protect the value of the service. Being a ski resort we came up with a To Ski Or Not To Ski off er by matching the price of a liſt ticket (us$105
– €74, £65) for a Swedish massage while the liſt s were open from 8am to 3pm.”
OPTIMISING PERFORMANCE
Every expenditure line was scrutinised for potential reduction and indeed costs were lowered signifi cantly. Nevertheless, the payroll costs in the smaller spas are still unaccept- ably high at 66.5 per cent of total revenues (see Table 2). In certain hotels, however, some people are beginning to question the current workload on those who were lucky to keep their jobs. Yet most operators still believe that it is possible to cut labour costs without
Spa sq ſt from 6,000 to 15,000
82.81 61.7%
Spa sq ſt less than 6,000
147.03 64.4%
Spa revenue greater than US$3m
75.20 48.9%
aff ecting the customer experience, particu- larly by optimising staffi ng schedules to meet the peaks and troughs of demand (see p22). Mark Woodworth, president at PKF-HR
says: “Enhanced cost containment strategies must not be forgotten. If these memories stay intact, we just might see profi t growth sooner than later.” Despite this, Mary Tabac- chi, professor at Cornell University, wonders
“what eff ect the cost cuts have had on cus- tomer as well as employee satisfaction”. Most operators state that their goal has been to ensure that costs to compromise quality. Yet shorter treatments or a reduction in ameni- ties do have a certain impact on the overall spa journey, particularly for core spa-goers used to experiencing the full off ering. On the other hand, there are certain les-
sons which can improve profi tability while having little or no impact on the actual spa journey. McCarthy says: “Build it right and you get a better guest experience and higher profi t margins.” He feels that it is possible to create spas in smaller spaces while maintain- ing the desired experience. Tabacchi agrees and believes that the opportunity cost of any spa space should be carefully analysed. In terms of marketing, utilising and opti-
mising social media and guerilla marketing makes sense. Also, achieving high customer satisfaction which translates into positive word of mouth has always been seen as a key goal.
34 Read Spa Business online
spabusiness.com / digital SPA TURNOVER
Spa revenue US$1m – US$3 m
82.80 57.5%
Spa revenue less than US$1m
61.28 66.5%
Any survey about the profi tability of spas
within hotels, raises the wider question as to their overall benefi t. T e PKF-HR sur- vey reports on departmental profi t, which excludes undistributed expenses and fi xed charges. So, even if some spas might be prof- itable at departmental level, they may not be truly paying their way. Tabacchi confi rms that operators feel they
need to off er spa facilities because “we know that hotel guests oſt en say they want a spa or they will not book – but when they arrive at the hotel – the guest may never use the spa.” So, do spas increase hotel room occupancy,
average achieved room rate or both? Accord- ing to Tabacchi: “We know from the work of Jan Freitag [vice-president of global spa development at Smith Travel Research] that spas probably result in an increase in the average daily room rate or ADR and hence in revenue per available room or RevPAR – but probably do not for the most part increase room occupancy (see sb10/3 p42). I use the word ‘probably’ because there are other fac- tors that cause an increase in ADR.” Given the levels of departmental profi tabil-
ity and loss reported in the PKF-HR survey, there will be hotels questioning, and analysing, the overall benefi ts of their spa space. ● To purchase a copy of the 2010 Trends® in
the Hotel Spa Industry report by PKF-HR, visit
www.pkfc.com/store, or call +1 866 842 8754.
SPA BUSINESS 2 2011 ©Cybertrek 2011
PHOTO:
SHUTTERSTOCK.COM/PRODAKSZYN
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