Health, fitness, and wellness industries are growing at a global rate of 8.7% per year.
Research has shown this increase in the market growth isn’t only due to the services and prices increasing in the industry, but more closely aligned with consumer interest in health and fitness as a way to boost body image concerns and improve physical and mental health.
Individuals who look after their bodies with an active lifestyle have fewer health problems, improved mental health and more energy on a daily basis. When positive habits form in one wellness component such as exercise, it will reinforce habits in another such as healthier eating.
Spas are in a prime position to promote and encourage many different aspects of health and wellbeing as this trend continues to rise.
A growing revenue strategy in the hospitality sector is creating ‘experiences’. Experiences work especially well for spas, as the promotion of a healthy lifestyle, fitness and wellness all incorporate into the services offered. Resulting in attracting clientele who are dedicated to this lifestyle and are looking for experiences that incorporate their interests.
While cultivating a holistic spa experience is important, you also need to carefully manage the day to day operations of the business to maximise your revenue potential.
Before you can get started on your spa revenue generating ideas, the first thing you need to do is assess your profitability.
Your spa assessment should include average treatment rates (ATR), treatment room utilisation (TRU), and therapist utilisation.
It’s important to maximise the revenue potential for your business. You should view your spa with each treatment room being perishable. If you miss an opportunity to fill a room for an hour with a treatment, you’ve missed out on revenue potential.
On average a spa loses around 15% of their daily business from turning away bookings. This amount can stack up to thousands of pounds in missed opportunities very quickly.
It should also be noted that first-time customers who are turned away tend not to ever come back.
Treatment bookings need to be tightly managed and booking slots need to stick to either an hourly or 30-minute duration of time to maximise booking potential in a day.
If customers are being turned away, you should consider incorporating spa management software tracking into your booking system to see turn-away trends.
Maybe you don’t have enough treatment rooms or therapists to fill treatment rooms? Maybe you don’t have enough qualified therapists for specialist treatments? Once you know the trending reasons for losing business you can make smart business decisions to reduce turn-aways and maximise your booking potential.
One of the most painful truths for spas is the labour cost of delivering treatment can sometimes exceed 50%. With treatments being one of the central attractions to a spa, it’s important to initiate methods of maximising the earning potential of each service when possible.
One clever way to do this is to create win-win scenarios to align the motivations of your therapists with your spa goals. Encouraging a compensation strategy for your employees to deliver on your values is one of the most successful strategies you can implement.
There are a number of ways to do this, to name a few:
Within treatments, spa therapists can offer to add on services to enhance the guest experience. For example, they could suggest additional treatments within treatment blocks for an additional cost. (Such as an Indian head massage or hand massage while a facial mask is on).
This is something you can reserve for the spa receptionists as they’ll primarily be managing the bookings mainly for walk-ins. But each day, allow them to see the revenue generated and have a daily goal to reach based on therapists working that day.
If they can be motivated with a monthly bonus, they will be motivated to maximise booking space and cater as many walk-in bookings as possible.
For example, if a guest wanted to book a full body massage for an hour slot but there was only a 30-minute slot available, instead of turning the guest away, the team will be motivated to offer a neck, back and shoulder massage for 30 minutes instead.
Therapists should offer product recommendations with each treatment serviced. The suggestion of products should suit the identified needs of the guest.
For example, if a guest has identified on their consultation form that they have trouble sleeping, the therapist should take them to the product display and upsell products that promote better sleep.
We will go into more detail on spa retail later in the post.
It’s essential that the rewards for your employees suit their interests. So you can give team bonuses for each time a monthly revenue goal is met. Or for retail, therapists can earn free products when they reach their sales targets.
When you reward and celebrate your spa successes with your employees, you create a unified team- all working towards a shared goal. This creates more satisfied and loyal staff which is absolutely essential to keeping turnover low, as the cost of rehiring is a huge sunk cost to the business.
You need to offer a level of service with suitable pricing to meet your target market.
To get started on this, review your treatment list and ensure you’re not only offering services that are profitable for your spa but a variety of treatments that reach your quality of service provision within a justified price.
Getting your treatment list right is essential for attracting the right customers who are willing to pay the prices you set.
As your team becomes more experienced in offering treatment upgrades, they will be more able to identify other customer needs that the guest will benefit from. Tying back into the lifestyle and wellness experience.
From my own personal experience in a spa, making recommendations to guests on the different types of treatments or products that will benefit the guest was almost always well received. Especially if the therapist can share scientific facts to support the body and health improvements in their suggestions.
The best way to have success with treatment upgrades or retail upselling is to ask the guest what it is they are mostly wanting to achieve from the treatment.
Guests have a range of needs from wanting to be relaxed, to improving aching muscles, or even improving skin conditions.
From identifying the guest's problem area from both the consultation form and discussion prior to treatment, the therapist should pay special attention in these areas when carrying out the service.
Post-treatment, the therapist should provide at-home solutions for the guest to implement in their spare time to improve their problem area.
These should be a mixture of lifestyle changes with using the available spa products to enhance the effectiveness.
For example, for someone with trouble sleeping, a therapist can recommend limited screen-time before bed and set up a bedtime routine to encourage better sleep. Then complimenting their new routine with incorporating a lavender room mist and nighttime face mask to support the new routine and encourage better sleep.
Likewise, for a guest with aching muscles, a therapist could suggest an in-treatment upgrade to switch a Swedish massage to a hot stones massage. Then post-treatment, the therapist should suggest a course of deep tissue massage to drain the lactic acid build-up and encourage muscle recovery. They can then upsell products for an at-home care routine by recommending a deep muscle bath soak and cooling muscle gel to be applied after exercise.
Retail should be used to boost top-line revenue. This can sometimes be up to 30% of total spa revenue if done correctly- revenue you do not want to miss out on!
You should 100% be selling products for your spa.
If you’re already selling spa products, then product training is absolutely essential. Organise quarterly product training sessions with all your therapists and your product retailer.
Therapists who are able to educationally upsell and describe eloquently the product benefits have a much higher success rate than those who don’t. Guests who are into the health and fitness experience value the recommendations as part of the service and appreciate the additional advice their therapist is able to provide to improve their wellness.
We’ve touched upon this throughout the post, but yield management is a key component for maximising your revenue so it deserves special attention.
The best way to manage your yield is to adjust your prices in response to demand and competition.
You should aim to optimise intake and minimise your downtime to improve revenue and efficiency.
You can implement spa management systems that automatically do this for you by adjusting the prices when demand increases or drop prices when demand falls. And you can set your own parameters so the pricing stays within your brand.
You can also incorporate manual yield management simply by adjusting prices for walk-ins. If your spa is in a hotel you can send the concierge and front desk team daily promotions for guests checking in with special offers to maximise bookings.
Another method is to use email campaigns for your local market, by sending out ‘last-minute’ spa promotions to sell spaces fast. Your loyal spa community will welcome the huge savings they’ll make from your offers, while you get to fill all unsold spaces.
Last but certainly not least you should create a well-established online presence and allow online and mobile booking as standard.
A surprising but consistent trend also shows that guests who book online also spend more! This is estimated to be down to the fact that the easier booking makes guests visit the spa more frequently. Maybe it’s due to convenience, avoiding discussions with phone agents, or even booking at the last minute.
All we know is that if you can offer online booking- especially over mobile devices you are maximising your guest pool.
For more information on spa revenue generating ideas and the different promotions you can introduce to maximise your returns take a look at some of our past posts here: Spa Marketing Strategies Promotions.
Good luck with improving your spa revenue. If you found this post helpful, please help us in return by sharing it on your social media.
See you next time!