ASK THE EXPERT
JAN FREITAG
B
enchmarking is a systematic tool needed to learn and continually
improve the spa industry’s best practices. But many spa owners or spa
directors are sometimes unsure what key metrics to look into when
comparing their performance against their competitors and more importantly,
how to use the data to effectively make strategic business decisions.
Pulse asks Smith Travel Research (STR) Senior Vice President Jan Freitag,
who is also one of this year’s Professional Development Sessions speakers, to
share data from the Spa STAR Report, an online benchmarking tool for the spa
industry, as well as provide insights on how to effectively use it in creating
yield management strategies.
1.
What is the significance of having access and
understanding of the Spa STAR Report?
At STR, we strongly believe that you cannot manage what
you cannot measure. The Spa STAR data helps you understand your competitive landscape and see what trends, in
terms of average treatment rate and utilization, emerge over
time in your comp set. This then helps you to adjust your
pricing and hopefully be more profitable.
2.
Based on the Spa STAR Report, what trends
are you seeing in the treatment rates and room
utilization categories?
In our sample set, average treatment rates (ATR) reached their
peaks in 2007. We saw significant discounts from 2008 to
2010. Over the two-year period, ATR fell from $146 to $136.
Since 2009, the ATR has remained relatively stable, implying
that operators do not yet feel that they have the ability to
increase prices.
The utilization percentage varies between 20 [to] 30
percent, and fluctuates throughout the year. Over the last
three years, we have reported higher utilization rates in the
earlier part of the year which then decreases as the year progresses. Obviously, this number is easily changed as you can
keep treatment rooms closed more easily than hotel rooms,
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but the trend, it seems, is that the maximum utilization is
well below 40 percent.
3.
Aside from treatment rates and room utilization, what are the other critical metrics that
the report measures and how are these metrics important to business revenue and operations?
Retail revenue, with its high profit margins, is an important
revenue source. Change in retail revenue per treatment can
guide the manager in deciding if the retail store is fulfilling its
potential. The report tracks nine key metrics (see sidebar).
4.
How can spa owners use the data to assist
them in yield management or strategic pricing
decisions?
The most important step is participation. Once the spa
gathers the requisite data and submits [to STR], its results
TO CELEBRATE THE 2012 ISPA CONFERENCE
“INSPIRE” THEME, Pulse asks this issue’s guest expert,
Jan Freitag, the question: What inspires you?
“Good discussion with good people
over a good glass of wine.”