OPINION I
n Europe, we have 5.5 million subscribers and 30-35 per cent
of our merchants are spa operators, including com- panies such as Le Méridien Munich and Seaham Hall UK. A typical complaint about deal sites
RENE FRELING General manager, Local Deals UK, Travelzoo
is that the merchant doesn’t break-even, let alone make money. But they’re not thinking in the right way. Did they fi ll a treatment room that would have been empty otherwise? T en it’s almost pure profi t because they would’ve still had the same overheads, with the only extra cost being the products used. However, I would say that only 20 per cent of a spa’s business should come from deals. When choosing a deal site, a spa oper-
ator needs to focus on whether the demographic of its subscribers matches their target market. According to Alexa –
the web traffi c tracking fi rm – Groupon’s customers are in their 20s and Living- Social’s in their 30s – a good fi t for spas with a younger audience. Our UK and US subscribers would suit spas with older customers, because they’re in their late 40s on average and 60 per cent are women. T inking about price point, how a deal
is packaged and the volume of custom- ers is also key. An hour treatment at £39-59 (us$61-92, €45-68) won’t overload a spa, but the cost is high enough to deter those only looking for the next cheap deal. Redemption can also be lower with cheaper prices – it’s easier not to turn up to a deal you’ve only spent £20 (us$31, €23) on.
Price point, how a deal is packaged and the volume of customers is key. An hour treatment at £39-59 won’t overload a spa but will deter those looking for a cheap deal
I
oversee 32 UK spas and look for deal companies that have national
DISCOUNT DEALS A £39-59 price point
usually generates 1,000 sold deals in the UK and US; 500-600 in France, Germany and Spain; and lower in Asia because the business is new there.
T ose deals will equate to around 42 extra people a week over the sixth months that it’s valid for – although volume will be higher at the start and towards the end. For £59-79 (us$92-123, €68-91), we would
include a 90-minute treatment, plus add- ons like the use of facilities or lunch. T at would bring in 500-750 customers in the UK and US. It’s crucial that spas have a strat- egy on how to handle this extra volume. Do they have enough space? Do receptionists know how to deal with the calls and – most importantly – have they been trained to upsell? Off ering the use of facilities for £10 more, for example, is a great extra because it doesn’t cost the operator anything. We take a 30-40 per cent cut on sold deals
depending on the discount – the bigger the treatment discount, the less our cut is.
Freling has worked for Travelzoo for nearly three years and took on his UK role in December 2010. Details:
www.travelzoo.com
coverage. As some are still relatively new, they’re only focused around major cities which doesn’t work so well for us. I’ve recently acquired a spa locked into a
JUSTIN MUSGROVE Group spa director, Bannatyne Fitness Ltd, UK
Groupon deal and while we’re getting lots of customers, it’s costing us £2 (us$3, €2.3) a head. Operators shouldn’t be seduced by high head counts unless there’s profi tability at the bottom line. T e contract ends next month and we won’t be renewing it. We’ve tried incentivising staff to get a percentage of retail sales or rebookings from daily deal customers, but they spend nothing and are only loyal to the deal (not the operator). So, we prefer voucher deal companies and
partner with 10 of them including SpaSeek- ers, Spabreaks, I Need Pampering, Treat Me, Buyagiſt , Wahanda, Last Minute and Activ- ity Superstore, which is the deal company behind big UK retailers such as M&S and Boots. T eir cuts range from 15-30 per cent, but we always look at breakage to0. Typically 30 per cent of deals are never redeemed, but Wahanda and Last Minute pay up front so
any non-redemption of vouchers benefi ts ourselves. We take that into consideration when formulating the best packages. We used to get the best results from Last
Minute, but this year Buyagiſt is top. T e best packages are two-for-one deals,
which are the mainstay of voucher deal sites. And our most successful is a £65 (us$101, €75) two-for-one which includes a 45-minute Elemis treatment and full use of club facili- ties. Having well-known suppliers, such as Elemis, adds value to the deal – we can prob- ably charge about 10 per cent more. We change the deals annually according to
feedback. We dropped a manicure two-for- one recently as people didn’t view it as a spa experience. For individuals or odd-number groups, we’ve introduced a £35 (us$55, €40) package, because not everyone comes to a spa in pairs. We’ve also found that some peo- ple prefer a higher price point – husbands like to spend £100-plus (us$156, €115) on
26 Read Spa Business online
spabusiness.com / digital
a giſt as they feel it would be more of an experience. So, we’ve introduced a £120 (us$187, €138) deal and three at £99 (us$154, €114). Around 30 per cent of our customers come through
deal sites and there’ll be a signifi cant, ongo- ing need for them in the future. However, we’re looking to grow our direct business and incentivise clients coming via voucher deals to return. But making up your own off ers to undercut the deal companies is a big ‘no no’. T e logistics of handling deal customers
shouldn’t be underestimated. We partner with 10 deal companies, all of which have diff er- ent ways of redeeming vouchers. We have 20 call centre staff who understand these mecha- nisms and how to book in clients on deals. We’ve just installed SpaBooker, which
allows us to off er our full menu via real- time, online booking. T e next phase will be to link up to deal sites. Ultimately, we want the customer to be able to book their own slot, even with giſt vouchers and online deals from a third party.
Musgrove joined Bannatyne in 2007 from Center Parcs. Details:
www.bannatyne.co.uk
SPA BUSINESS 4 2011 ©Cybertrek 2011
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