Secrets of Spa Succe$$

Reaping spas’ full benefits requires seamless operations and attention to “nitty-gritty” details.

by Diana Mirel (editor@clubandresortbusiness.com)
January 2008
 

The goal behind creating the 35,000-sq. ft., $9 million spa at Cranwell Resort, Spa and Golf Club in Lenox, Mass., was simple: to drive offseason occupancy. Five years later, management can safely say the mission has been accomplished.
“The spa helps us fill rooms, and that is what resorts need, to take some of the peaks and valleys away from occupancy,” says­ Lewis M. Kiesler, Cranwell’s President and General Manager. Today, the resort’s spa is a multimillion-dollar producer, now representing 20 percent of the property’s overall revenue.

Successfully integrating spas into a property doesn’t come automatically, though. Earning the right payoffs requires complex, behind-the-scenes operational efficiency, while still maintaining the spas’ role as an oasis of calm.
“Operations should be seamless,” says Sheila Bracewell, Spa Director at PGA Tour Spa Laterra in St. Augustine, Fla.

“[Members and guests] should think working here is the easiest job in the world. They don’t need to know that it means constantly walking the property to ensure everything is running smoothly.”

Attracting the Best
With Spa Asia reporting a 16 percent growth in spas globally over the past year, and the International Spa Association reporting a 6 percent growth in North America, clubs and resorts are recognizing what an asset spas can be. The industry’s growth, however, has caused a high demand for world-class service providers, which makes finding educated, spa-savvy employees a constant challenge.

This challenge is exacerbated in more isolated regions. For instance, the Old Edwards Inn and Spa in Highlands, N.C., is located in a beautiful, yet remote mountain location where housing can be costly. To help recruit employees, the resort built 35 affordable modular homes near the property for its service providers, with rents ranging from $525 to $625 per month.

Many clubs and resorts find talent by establishing relationships with local massage and beauty schools. “We see students as they are coming up through school and we bring them here as interns,” says Lisa Meinhofer, Spa Director at Nemacolin Woodlands Resort in Farmington, Pa. “That way they can learn the business while getting valuable hands-on experiences. Plus, we are able to groom them to work here.”

The Happiness Connection
Happy, satisfied employees usually translate into equally happy members and guests. “You want to make sure the customers get treated royally, with the full, red-carpet treatment,” says Mario C. Gomes, CEO and General Manager of Old Edwards Inn and Spa. “To have that, the main ingredient is people. You have to have happy associates. If they are happy, they will perform magic on the customers—and the customers will come back.”

So how can you keep spa employees happy? Cranwell Resort, Spa and Golf Club credits its low turnover rate, in part, to its booked schedule. “We have a fairly steady stream of guests, so there is some consistency in the earnings,” says Kiesler. Employees also enjoy discounts in the spa shop and the restaurants, free golf, and about 50 percent off any spa services that they use themselves.

Nemacolin Woodlands also strives to extend its family-friendly philosophy to every member of its staff, and uses discounts to show its sincerity. “We make things available and accessible to [staff] and their family members,” says Meinhofer. “For example, our spa associates pay a nominal fee for a service at the spa. If a massage is $105, they only pay $25. We make things attractive, to help keep them once we get them.”

While the service team is the foundation of successful spa operations, it will only be as strong as its training. Jaime Huffman, Executive Spa Director at the Grove Park Inn Resort in Asheville, N.C., believes a spa staff should be trained in all areas of operations, including customer service and expectations, education on treatments and products, and sales techniques.

And this training must be ongoing. Employees at the PGA Tour Spa Laterra go to monthly training sessions and department meetings, to stay abreast of industry trends and learn new techniques.

“They are constantly getting additional education,” says Bracewell. “They are also encouraged to trade services with one another during downtime. Then they can cross-promote each other.”

Superior Stocking
Retail product sales can account for 10 to 25 percent of total spa revenue, so this part of spa operations should also merit significant management attention. But many spas slip up on the details in this critical area, because with so many suppliers in such a competitive environment, stocking the shelves can become a dizzying and daunting task.

Going straight to the experts—your service providers—can help spas zero in on which products will sell best. “We’ll take something to the staff and let them decide,” says Bracewell. “They are ultimately the ones selling it. I can be excited about it, but if they aren’t, it isn’t going to move off the shelf.”

Taking a closer look at vendors can also make a world of difference. “The key questions are: What will the [supplier] do to train our staff?” says Kiesler. “What is their supply time? Do they backorder a lot? How quickly can we get the product?”
Vendors who are available for product education and sales training add tremendous value to spa operations. “Pick a line where you are going to have support,” says Bracewell. “You’ve got to have training and help with the trends.”

Keeping tabs on regular members and guests can also help spa directors determine the right product mix. “It is about really getting to know your clientele,” says Michelle Doherty, Director of Spa and Recreation at the Ritz-Carlton Golf Club and Spa in Jupiter, Fla., which puts a heavy emphasis on spa retailing that now represents 20-25 percent of total spa revenue.

“We want to encourage people to come back,” says Doherty. “When you go to the doctor, he or she gives you a prescription; we mirror that practice. We analyze the body, we tell customers what they should be doing, and hopefully they take our advice.” Many spas keep prescription-style notepads in treatment rooms, so providers can jot down recommendations for their clients after treatments.

Of course, there is a fine line between making recommendations and pressuring clients who have already made considerable investments in spa treatments and amenities to spend even more on products.

The secret, successful spa operators say, is selling products you believe in.

“Don’t sell anything you don’t like, because then you won’t be believable,” says Nemacolin Woodlands’ Mein-hofer. “If there is a product you love and that’s the only thing you ever want to sell, then you’re doing better to sell that than to sell nothing.”

At Old Edwards Inn and Spa, therapists are taught to explain the products as they are providing a service, while not overwhelming the client with too much chatter. “During the service, if they are applying some kind of lotion or oil, they can tell the customer what the scent is and describe the ingredients,” suggests Gomes. “But you have to find the right window.”
In addition to relying on spa associates to sell products, operators like Cranwell Resort, Spa and Golf Club have expanded their re­tail shops to the Internet. Online sales continue to increase each month, managers at Cranwell report.

Pricing and Profitability
Typically, spas will simply double the wholesale cost of products to set their retail prices. Clubs and resorts should also do a monthly retail inventory to determine the profitability of the retail mix. When products are not moving as quickly as expected, there needs to be flexibility, to make changes and offer specials.

PGA Tour Spa Laterra offers preferred pricing for its members, giving them about 15% off all services and retail purchases. The spa will occasionally add further discounted prices for specials throughout the year.

“We stay away from too much discounting, because if you have a viable product, you shouldn’t have to discount it,” says Bracewell. “But we find in this economy that sometimes you have to do something special.”

With spa services ranging from traditional massages and scrubs to exotic light therapies and healing treatments, pricing the basic part of the menu has become equally tricky. Old Edwards Inn and Spa does a quarterly comparative analysis of other spas’ rates, to ensure that charges for its services are in line with national averages.

At Nemacolin Woodlands, in addition to an annual pricing comparison, Meinhofer also pays special attention to overall economic conditions. “We don’t want to inflate our prices, because there is price sensitivity right now,” says Meinhofer. “We heard a lot this year from our executive committee about people not wanting to feel ‘nickled and dimed.’ ”

Spa scheduling software is also a critical tool for helping to gauge the profitability of spa operations. It all begins with efficient room utilization. The spa software at Cranwell gives a complete overview of when and how each treatment room will be utilized, and for how long. A monthly financial statement then further determines the spa’s productivity, after Kiesler and his spa director calculate the percentage of the payroll for the therapists, compared with the treatment revenue.

“If those numbers get out of line, that indicates that maybe we’re overscheduled or we’re not utilizing our rooms properly,” says Kiesler. This then results in increased or decreased staff, depending on demand.

Constant monitoring of sales trends also helps to get a better read on service performance. At the Ritz-Carlton Club and Spa in Jupiter, Doherty reviews the statistics produced by daily and monthly reports that indicate which services are the most, and least, popular. If it’s clear that certain services are not gaining much traction, she’ll create specials to try to draw in more business.

“If facials are slower than massages, we’ll highlight one or two facials that month and offer discounts and packages, to encourage business,” she says. “Members especially take advantage of these deals.”

Doherty also listens to feedback from monthly meetings with the club’s spa advisory board, which is comprised of five or six spa-fluent members.

Well-Equipped
As spas grow, equipment vendors are lurking around every corner. It is equally important to do your homework before taking the plunge into the latest fads, particularly ones that require specialized—and often pricey—pieces of equipment.
If you do invest in specialized equipment, Huffman urges making sure the rooms where the equipment will be housed can also be used for alternate treatments. This will ensure productivity, whether or not the new treatment is a success.
Gomes agrees that research is important when equipping the spa. He notes the importance of not only seeing the equipment in person, but also trying it out, to make sure it is up to the spa’s standards and protocols.