Mr. Stoup

Spas, Health & Wellness

Spa Asset Managers Drive Revenue and Property Values

By David Stoup, Chairman, Trilogy Spa Holdings, LLC

Why Should You Build and Operate a Spa?

Properly operated hotel spas provide an owner the opportunity to boost property profits while driving additional value through the implementation of robust Social Media and Public Relations programming, and the sale of incremental, attractive room packages.

The question is: are you providing your spa with the support and experience necessary to achieve these objectives? Unfortunately, it is all too common for Hotel Spas to be underperforming in some, if not all, the above categories. If that is the case, a spa asset manager may be a worthwhile investment for your property.

What a Spa Asset Manager Adds

A spa asset manager brings their depth of experience in the spa industry to your property, complementing the strengths of your Spa Director and allowing your executive team to focus their time on the major operating departments of the property.

Compared to the rooms or food and beverage departments, the spa is often a small portion of the P&L. Successful spas require the implementation of a unique operating model. The challenges spas face often require a significant investment of time to fully understand and address for someone who has never been a Spa Director. Hiring, training and retaining specialized licensed staff, developing and monitoring marketing initiatives, tracking and reacting to financial performance, all while staying up-to-date on the latest trends of a specialty industry, is no small task.

Too often much of this responsibility is placed on the Spa Director without the resources or experience to oversee the entire operation. Very rarely will one person be a strong marketer, operator, financial analyst, innovative product developer- all, and at an affordable salary. A spa asset manager supports a Spa Director in the areas where they may lack experience or are outside their depth of knowledge, and allow them to focus their time on their areas of strength.

Evaluating and Responding to the Opportunity

One of the first ways a spa asset manager will support a Spa Director is by providing them with the tools and resources to gain visibility into how the spa's business is performing. Key performance indicators such as treatment room productivity, therapist productivity, per treatment costs, demand-based pricing, guest capture, and retail penetration by service type, provide the tools to track and evaluate where opportunities may exist. Understanding how the spa is currently performing is necessary to understand where improvements are needed, and how to best address areas of opportunity.

Depending on where the opportunity exists, a spa asset manager works in close collaboration with the Spa Director to implement a series of proven strategies to increase performance. Utilizing weekly calls and bi-monthly visits, the spa asset manager maintains close contact with the Spa Director as strategies are created, and new initiatives are being implemented to increase profitability.

As an example, to help increase retail product penetration the spa asset manager and Spa Director begin by working together to evaluate the overall retail program. This includes re-evaluating the retail mix, introduction or evaluation of targeted therapist incentives, sales training for the receptionists and therapists and the creation of tailored collateral to assist therapists in product recommendations.

These tools already exist within the spa asset manager's "toolbox" and are available to be quickly adapted and implemented to any location. Instead of re-inventing the wheel, a Spa Director simply offers a few key data points to the spa asset manager who can quickly begin executing solutions. Most importantly, the solutions come from best practices at other properties where they have been proven successful, minimizing time-consuming and costly trial and error.

Supplemental Support for the Spa Director

Commonly, the Spa Director's strength is in running the day-to-day operations. It is uncommon they are both a creative marketer and talented financial analyst. The spa asset manager assists the Spa Director by providing additional support in those areas where they lack the necessary experience to deliver results.

One of the most overlooked opportunities lies in spa marketing. Rarely, does the spa's marketing program extend far beyond a page on the hotel's website. There may be signage throughout the property that is rarely changed and limited collateral in the room. That is typically the extent of the spa's marketing program.

An under-performing marketing program is a tremendous missed opportunity that is often the cause of underperformance in maximizing hotel guest capture, sales, and profits. A marketing program does not require a substantial investment, but it does require the knowledge to recognize the right marketing message and how to distribute it in a cost effective manner.

An example of a common "marketing miss" would be in pre-arrival messaging to hotel guests. Introducing the spa's offers to a hotel guest either at the time of booking or prior to their arrival is an effective means to drive hotel guest capture. A spa asset manager and their home office Marketing department know the offers that work best in a variety of circumstances and tailor the message accordingly to ensure the marketing is effective, and accurately measured, especially if the guest can book the offer online. Unfortunately, many hotel Spas still do not support this feature, but adoption is slowly growing and can be expedited and implemented at a lesser cost with the help of a spa asset manager. Marketing to hotel guests is important. It is even more critical for local guests.

Marketing to a local guest can take many different forms. Recently, this has grown to include promotional websites such as Travel Zoo and Gilt City, yet the most important driver remains review websites and word of mouth for attracting a first-time guest. Where many hotel spas fall short is in guest information capture and engagement.

Often, a hotel spa does not utilize email marketing, Instagram or Facebook, and doesn't have its own website. A spa asset manager can help your property's spa to bring these engagement tools online at a very low cost and provide a way for the spa to engage with consumers directly, drive repeat business, and encourage consumer reviews. A spa asset manager routinely assists the Spa Director in monitoring these sites or coordinating to develop these sites within brand standards.

In addition to assisting with the marketing campaign concept and execution, the spa asset manager works with the Spa Director to develop a system to track and evaluate the effectiveness of the marketing message. This most crucial step in developing an effective marketing system is unfortunately too often overlooked. A high percentage of spa reservations are still taken by phone or in person. Implementing an accurate reservation tracking system is necessary to understand why a guest is making the reservation, particularly in the case of a new guest. The spa asset manager can help the Spa Director to implement a system using best practices from other spas that have successfully implemented a reservation tracking system already.

Simplify the Spa for the Hotel Executive Team

Probably the key benefit of a spa asset manager is the ability to streamline the involvement of the executive team in dealing with the spa operation. Given a spa is typically a small portion of the overall property P&L, it would stand to reason that the spa should occupy a small part of the executive team's time. However, if a spa is under-performing (financially or in terms of guest satisfaction), oftentimes the Hotel executive team must quickly shift their attention to addressing the problem. Virtually no GM or AGM has risen to their current position from being a Spa Director. As a part of the executive team, they find themselves spending a disproportionate amount of time learning spa best practices, implementing solutions and evaluating their impact. This inevitably leaves less time to focus on the rooms and food and beverage departments which are a far larger portion of the business and more in line with their experience and strengths.

The spa asset manager provides them easy visibility into the performance and initiatives of the spa. Clear and concise metrics and dashboards allow for the executive team to understand where the spa currently stands, how it is changing over time, and what the impact of certain initiatives lie. Similar to how an asset manager provides clarity into a Hotel's operation for an Owner, a spa asset manager can provide the necessary insights for a Spa to both the executive team and an Owner to evaluate the Spa's performance so they can make informed decisions regarding new initiatives. The reporting and tools that currently exist today are not designed to understand the intricacies of the spa business and allow an operator to see where an opportunity may exist. Day spas are a complex, $16 billion industry in the US.(1) Most day spas operate in standalone locations with fixed rent obligations, few built-in demand drivers, and no overall operating support. These day spas hardly resemble the operational situation of a hotel spa. Many hotel spa expenses, are covered via undistributed operating expenses and the spa is an amenity to the overall property. Being truly profitable, with all undistributed expenses properly allocated, is simply a bonus.

A Hotel Spa Director is commonly a specialist in guest service, not in creating a sustainable business. For a Hotel Spa to deliver true profitability, differentiation through substantial marketing, social media and public relations engagement, and hotel room sales, it requires a seasoned spa expert - a Spa Asset Manager.

References:

(1) 2016 ISPA US Industry Study

David Stoup is the Chairman of Trilogy Spa Holdings, a boutique spa management company dedicated to creating unique, high performance hospitality spa environments in four and five star properties. Mr. Stoup is also the Co-Chairman and CEO of Healthy Lifestyle Brands, LLC (HLB), the owner of the website www.drweil.com, the leading Integrative Medicine website on the internet. Mr. Stoup both founded and re-invented a variety of companies, concentrating on upscale consumer products and services firms. Mr. Stoup’s interest also extends to the non-profit world. He serves as a Member of the Board of Directors for the Amazon Conservation Team, Founder of YPO’s Global Youth Exchange and as a Board Member of St. Joseph’s Medical Center. Mr. Stoup can be contacted at 602-432-3252 or DStoup@trilogyspaholdings.com Extended Bio...

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