More Spa Profitability - How, When, Where...
By Jane Segerberg, Founder & President, Segerberg Spa Consulting, LLC
As a major player in the Hospitality Industry, spas have become independent profit centers that justify their existence with bottom line income that adds to overall resort profitability. In addition, spas can enhance resort/hotel occupancy, length of stay and occupancy ratios. Spas also provide the type of experience that all guests want and hotels/resorts should strive to provide throughout the property - a memorable experience that is caring, warm, empathetic and creative.
It is no wonder that the number of spas in hotels/resorts continue to grow at a rapid rate. The result of rapid growth, of course, is increased competition. The combination of intense competition, a very savvy spa clientele that demands exceptional experiences and mounting staff turnover requires a serious look at current spa operating and compensation models. Guests want a specialized experience that is more than the plush robe and cup of tea, while spa staff demands a pleasant work atmosphere, motivation and adequate compensation. It becomes rapidly apparent that having an attractive spa that merely provides efficient service is critical but does not define success. As the number of spas increase so do guest and staff expectations and loyalty to any one spa decreases.
The goal, here, is to increase the level of profit while at the same time building an increase in both guest and staff happiness and loyalty that in turn grows more profit and recognition for the resort/hotel property. To remain competitive, spas need to provide superior, insightful service at every service touch point and develop a deeper relationship with each guest. By operating efficiently during periods of high demand and creatively increasing business during mid to slower periods, spas can increase their net profit. Incentives throughout the spa can assist in keeping staff focused on creatively engaging guests in more services and opportunities while also generating better guest service and loyalty.
The Case for Incentives
You probably began reading this article to discover a few tactics to beef up the weaker financial areas of your spa. Actually, incentive strategy programs that are managed well create a perfect cycle of happier employees taking better care of guests who are pleased to spend more for additional services and retail while visiting the spa and are even more delighted to return. Staff is excited to deliver a guest experience that goes beyond normal standard operating procedures. A planned incentive strategy rewards positive behavior which results in a high level of performance at each guest interaction.
The rapid growth of new spas has exposed staff to many more opportunities causing an increase in staff turnover rates. Incentive pay recognizes staff for a job well done and develops a contented staff that will remain loyal to the spa business. Incentives coupled with good communication from management and good communication between spa departments promotes a higher level of esprit de corps which filters throughout the spa to all guests and further increases guest satisfaction.
The days are gone when providing courteous, respectful and expedient service will set a business above and apart from all the rest. As hospitality businesses strive to differentiate themselves with caring, warm and memorable service delivered with heart and soul, it is the spa that is the epitome of that opportunity. When employee incentive programs create more interest in engaging guests in more spa opportunities, employees become more involved in accurately using tools and time to understand each guest's area of interest. Personalized treatment combinations, personalized mailings and special guest incentives can easily target guest preferences.
Traditional hourly rates for support staff (i.e. reception, reservations, retail, attendants, etc.) and commission based pay for treatment staff focuses solely on being there to do a job rather than on overall individual performance and overall spa performance. Wage incentives are needed in all areas of the spa to inspire productive behavior, motivation to expand skills and a team environment. Selfish attitudes are abandoned and teamwork develops which in turn increases guest and employee retention rates, the level of guest service and ultimately the goal of profitability.
For example, if the spa reservations staff is on an incentive program to increase average revenue per guest, reservations will spend time with new guests to learn about their tastes and repeat guest interests will be recorded for future access upon the guest's return. The result is a win for both the guest and the spa. The guest has a better, more personalized experience plus desire to return and the spa reaps increased revenue on the first visit and the increased likelihood of a second visit.
Successful implementation of an incentive strategy requires a management team that is committed to planning, leadership and good communication. Management should plan extensively for a successful strategy that impacts all guest interaction areas within the spa as well as involving the integration and teamwork of all spa departments. In addition, the spa's vision and culture should be represented in the strategy. Incentive program design should reflect the intention to reward constructive behavior and inspire peak performance while increasing revenue and yielding significant profit. The adoption of incentive based compensation should focus on results that increase staff morale, guest retention, productivity, retail sales and skill levels. Look for ways to reinforce the employee's role in guest service and development of job skill competencies and plan for timely rewards. Employees remain focused if their rewards are weekly or monthly (or, if it is an annual bonus, the tally is presented monthly).
Place incentives where all guest service touch points will be affected. For example, knowledge about guest purchases and preferences allow the spa to treat each guest as an individual. The reservations specialist that is inspired to spend quality time with the guest can collect information on the guest's desires and craft a combination of treatments and activities that result in increased service and retail revenue along with a satisfied guest. By tracking the overall number of bookings and average treatment revenue per guest, the overall reservations team and individual members of the team can be rewarded. In addition, in-depth recording of guest preferences leads to better marketing of the spa before and after the guest's stay. The possibilities are endless and begin and end with the dedication and imagination of spa management. The success of the program depends on the clear and concise communication of the performance criteria along with understandable goals.
In the example above, when reservation specialists are rewarded for raising the dollars of the average guest treatment ticket, they must increase their knowledge of all treatments and combinations of treatments, spend time listening to and interpreting guest desires and become thoughtful and creative with each guest interaction rather than just taking orders. Raising the average treatment ticket from $80/hour to $100/hour results in considerable income for the spa (for example, a spa that sees an average of 50 guests per day would increase revenue by $7,000 per week or $364,000 per year) just on that one incentive touch point alone. Employees can receive bonuses that significantly impact their income (e.g. $0.50 to $1.00 per hour worked) yet not the spa's expenses. The additional outcome is that guests are cared for in the reservation process and will be more likely to re-book, return and provide positive recommendations for friends and family to visit the spa.
Spa attendant's incentives tend to be more subjective since there is no direct sales measurement attached to the position. Guest satisfaction feedback regarding the level of service and cleanliness in the locker rooms and lounges can be measured and the share in the gratuity pool can be adjusted accordingly. Attendants will also need clear and constant communication about the impact that their position plays in the guest's desire to return. Attendants could also share in the incentive reward of increased repeat guests if locker room and lounge guest satisfaction levels are high.
Desk staff typically greet and prepare guests for their treatments and close the final sale of re-booking and retail sales. Sliding scale incentive rewards for closing sales works well here. Even though therapists tend to receive the bulk of the sales commission, a sales incentive to close the sale encourages a higher knowledge and interest level in satisfying the guest's questions and needs. Once again, if overall retail sales are $600,000 and staff receives 0.5% of retail sales per capita hours worked with a goal of $700,000 to receive 1% of retail sales per capita hours worked, both the employees and the spa wins.
It is fairly common to have spa treatment staff rewarded with increased hourly rates based on their skill competencies. Additional reward items to consider are retail sales and guest retention rates. Of course, in order to offer spa treatments, staff must be available. The scheduling of staff for efficiency and availability to guests coupled with the variable availability of staff can be a difficult task. Revenue is not realized if guests cannot buy a massage simply because there are not enough therapists on duty. By rewarding the scheduler for increased sales of massage body and/or esthetic treatments, a seemingly thankless and daunting task can become a financial win for both the spa and the scheduler. Here again, a sliding scale incentive bonus works well.
Management is limited only by its own level of creativity in creating an incentive strategy that excites the entire spa staff. Incentive strategies require management accountability for training. Employees need the training and the tools to perform well. Budgets may need to be adjusted for timely and consistent hospitality and sales training. Spa software may need to be upgraded for better tracking capabilities.
With a focus on overall job performance employees are inspired to have a positive impact on the guest experience. The spa will respond to guest needs before they visit the spa, guests will have a more pleasant experience when they arrive and the spa will have gathered quality information about the guest in order to continue to serve the guest better.
In the spa business, human interaction and positive relationship building are integral to success. A happy and loyal staff will obvious have positive effects on guest satisfaction and loyalty as well as profitability.
Jane Segerberg is founder and president of Segerberg Spa Consulting, LLC., a multi-faceted spa consulting and management company with an industry reputation for creating spas that work –they are compelling for the property’s market, attain recognition, engage guests in memorable experiences and achieve bottom line success. Over Jane’s thirty-year history in the wellness, hospitality and spa industry, she has become recognized for providing outstanding service and keen attention to detail. For company information please view http://www.segerbergspa.com. Ms. Segerberg can be contacted at 912-222-1518 or firstname.lastname@example.org Extended Bio...
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