Four places where spas lose revenue

where spas lose revenue

You’re probably leaving money on the table. Check out these areas where spas lose revenue.

Is your spa or hospitality business capturing all possible revenue? This is kind of a rhetorical question. Because the answer is, surely, no. All types of businesses in all types of industries wind up leaving money on the table. Spa is no exception. And, these days, it’s more important than ever to capture as much as possible. It’s been a difficult couple of years, and nobody can afford to be negligent. Every dollar counts.

This is why, as we move through the final quarter of 2021, everyone should be taking a look at where they’re losing the most revenue and creating strategies to stop this from happening.

Let’s look at some areas where spas lose revenue:

Retail – not training teams and stocking the right items

Marriott’s Senior Corporate Director of Spa Operations for the Americas, Suzanne Holbrook (who is our Spotlight interview this month), points to retail as one area where spas leave money on the table. She said, “You’ve got to have the right items in the shop that people want and you should only keep what is selling,” and on top of that, you have to train your team.

“I’ve been a massage therapist and an esthetician. It doesn’t matter how good you are, it’s not enough if you’re not educating your guests on how to take care of themselves when they go home, whether it’s skincare or taking care of their arthritis or their bad back. I think it’s our responsibility to educate our guests because they will go to Macy’s or Bloomingdale’s and buy their skincare from someone that’s not a specialist or a massage therapist. So, it’s important that we educate our teams and have them understand it’s not about sales. We don’t even say the word retail. It’s about an additional service that we offer to our guests, to educate and help them on that path to wellness. That’s how they will remember us when they go home.”

Train your teams and make sure everyone is working towards the same goal. Find the best way to appeal to your particular client base. It might involve shifting the narrative.

Shane Upson, Director of Spa Operations at San Manuel Casino, said in an interview, “I believe in changing the narrative from sales to solutions. Don’t talk about retail products and items. You’re talking about solutions. You’re listening to the guests’ needs, wants, and concerns, and offering them solutions. People are open to solutions. They’re not open to being sold products.”

Yield – not optimizing intake during downtimes

Yield management is a dynamic pricing strategy used by airlines and hotels and it means adjusting the price of a product or service in response to market factors like demand or competition.

A successful yield management system will increase revenue, and optimize intake. Marriott Hotels reportedly credits yield management for an additional $100 million in revenue per year.

Learn to manage your yield and you will see results.

For more on this topic view our webinar with Marriott’s Suzanne Holbrook.

Leadership – Stretching leaders too thin to focus on the bottom line

Holbrook also said another reason spas lose revenue is because the industry is limited on leadership. She explained, “There’s usually one spa director doing everything, which doesn’t allow them to focus on the big picture of driving numbers, driving sales and marketing, driving yield management.”

Spa managers and directors are working the floor, doing HR, payroll, scheduling, and taking care of administrative tasks. Holbrook said, “I suggest to GMs all the time that they hire a sales coordinator, someone to be dedicated to your sales. In the hotel, you wouldn’t not have someone dedicated to managing your rooms and your sales department, but you’re expecting the spa director to do everything.  And it takes them away from focusing on the business.

“There’s a lot of money left there. If you worry about the extra $40,000 it’s going to cost you’ll miss the hundreds of thousand of dollars you could make if you made that change.”

Be sure you’re focused on the right things. Implementing a software system that takes care of day-to-day tasks will help free up staff time.

Discounting – Discounting with no strategy or goal

There is some disagreement over whether discounts should ever be offered, but if you are going to discount your services, do so with a clear cut strategy and goals.

In a 2020 interview, Emma Darby, COO of Resense, pointed to discounting with no clear strategy as a poor revenue generator. She said that, while it’s common to offer something like 25% off a massage, this is not necessarily an effective way of doing things.

Darby explained, “Giving 25% off is just taking 25% off your top if you’re not using that promotion to fill your off-peak times, for example. It’s more effective to create something compelling and solve a problem than it is to just offer 25% off.”

Kathryn Moore of Spa Connectors suggested another tactic: upgrades. Moore said, “What’s more effective than discounts are upgrades to more popular services and making it easy for the guest to upgrade ‘in-treatment.’ The therapists also become more engaged in the guest’s total experience and are more apt to recommend a product regimen to compliment the service.”

Holbrook also offers an example of how effective this can be, saying, “I launched a company-wide program about 10 years ago called Spa Plus, where the front desk or therapist could offer an upgrade, like stones or some CBD for, say, $40, and they would get a percentage of that sale…That program probably made us about $8 million in 2019 in just incremental revenue.”

If you’re going to discount, have a strategy. Or consider other ways of doing essentially the same thing.

Gift cards – not selling gift cards online

Gift cards are a huge revenue driver, particularly around the holidays, but selling them online is much more cost effective than selling them in store.

At busy resort and hotel spas, it’s not unheard of to have to hire an extra 10-15 people around the holidays just to sell gift cards. Selling them online cuts that cost dramatically. If you have even a few team members spending time selling gift cards, that can add up to several hours a week that would be better spent on other tasks. 

If you can find where your spa is leaving the most money on the table, you can recapture that loss. You can’t afford to lose revenue. Nobody can. Start fixing things now.

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