offered their designer and contractors sweat equity in exchange
for renovation services.
Initially, Kabuki Spa & Springs’ profit margin was 10 percent
but, Nelsen says, they managed to grow the business from
two to four million dollars in revenue per annum over the next
five years.
Conley attributes a big part of their growth to the economic
benefit of the sento bath model wherein the communal bathing
aspect and its low overhead allowed the day spa to offer its
clients an affordable service. By having a set space that is not
fully dependent on spa services, they were able to offer an
affordable $22 bath experience without the usual overhead typ-
ically attached to having a full-time therapist onboard.
“As you know, payroll can eat up to 65 percent of costs,
[especially with high] massage commissions,” Nelsen says,
adding that unlike a traditional day spa, the bathhouse is a onetime investment that could offer a consistent revenue stream.
According to her, the bathing service accounts for 20
percent of Kabuki’s spa revenue. Because they do not rely on
their bath services for the majority of their revenue, Nelsen says
the impact is less felt when there is a decline in bath services;
however, since the bathhouse is considered as an additional
revenue stream, profitability is evident once demand is high.
Because they were able to brand themselves as a sento spa,
Kabuki Springs & Spa has also used the sento model to create
a line of body products that accounts for another five to 10
percent of their revenue.
Schloss Elmau Luxury Spa: Value Added
and Diversified Revenue Stream Helped Weather the
Recession
Schloss Elmau Luxury Spa is located in Elmau, Germany. The
owners spent €10 million ($13.5 million) to add a Badehaus
“By having a set space that is not fully
dependent on spa services, they were
able to offer an affordable $22 bath
experience without the usual overhead
typically attached to having a
full-time therapist onboard.”
Kabuki Spa & Springs’ sento model allows the day spa to operate at a lower overhead cost.
46 PULSE
n
June 2012