“… if spas can increase utilization of their available inventory of service slots — even at lower rates — the effect on overall margins can be particularly positive …”
of spa treatments and services are booked via reservations made days — or even weeks or months — in advance .
Does the industry have the ability to price the same service at different amounts based on certain conditions ? Spas commonly have segmented customer bases — that is , customer bases in which different types of guests are willing to pay different prices for services at different times . A resort hotel that offers local guests discounted pricing during off-peak periods is just one example . effect on guests ’ purchasing behavior . Because of this price sensitivity , spas can develop strategies that provide guests with lower-priced service options during off-peak periods as a way of driving additional revenue .
COMING SOON
After considering the questions above , it seems clear that revenue management strategies — and yield management in particular — are a good fit for the spa industry . But each spa within that industry is unique , and applying these practices to an individual business requires a considerable amount of forethought and analysis . In the next issue of Pulse , we ’ ll explore the application of these strategies in spas specifically , including a detailed breakdown of how spas can use yield management to generate additional revenues without adding a single therapist or treatment room to the mix . We ’ ll also cover the considerations most crucial for spa leaders when determining how to approach developing their own custom revenue management strategy . n
Does the industry have generally low variable costs ? Aside from fixed costs like initial construction and some administrative staff , spas ’ variable costs , including treatment staff , retail products and room cleaning and sanitization are relatively low . This means that , if spas can increase utilization of their available inventory of service slots — even at lower rates — the effect on overall margins can be particularly positive due to a combination of a generally high gross margin per service and those low variable costs .
Is pricing a powerful driver of customers ’ purchasing decisions in the industry ? In the spa industry , pricing has a clear
Special thanks to FRANK PITSIKALIS for providing background information and valuable feedback on this article .
AUGUST 2021 ■ PULSE 19