Pulse September 2021 | Page 21

with a mix of low- , medium- and high-margin treatments , resulting in $ 975 in profit .
● In scenario B , low-margin treatments have been made unavailable during the spa ’ s high-demand period , so those appointments are filled only with more profitable treatments , increasing profits by more than 145 % to $ 1,450 .
● In scenario C , low- and medium-margin services have been made unavailable during the spa ’ s high-demand period , which increases the day ’ s profits even further , to $ 1,750 . In each of these scenarios , the spa books the same total number of services ( 23 ) on the hypothetical day in question . The difference in results comes , of course , from managing the availability of specific treatments so that high-margin treatments are booked more often , while lower-margin treatments are made available only during periods of lower demand .
A DYNAMIC APPROACH
The yield management strategy on display in the preceding example is called “ dynamic availability ,” which we defined in part one of this series as “ adjusting the availability of certain services ( massage or facial appointments , for example ) based on customer demand , in real time .” By managing the mix of services being sold so that during high-demand hours only higher-margin services
are sold , spas can increase their overall margin on treatments without adding therapists , treatment rooms or new services into the equation . Because the emphasis is on the services ’ margin rather than its list price , dynamic availability may result in increased profits even if overall revenues remain similar .
The three scenarios represented by the example are , of course , simplified to demonstrate the basic possibilities of a yield management strategy that utilizes dynamic availability . In an actual spa , leaders will have to weigh a number of variables within their operation as they evaluate how such a strategy might work for their business . These variables include the spa ’ s peak business hours , its available staff , the use of its treatment spaces and the length of its services , in addition to the details about service margins discussed above . It ’ s also critical that spa leaders evaluate the spa ’ s current overall profit performance to establish the baseline against which future performance can then be judged .
Aside from the obvious potential boost to spa profits , dynamic availability has the added benefit of being essentially invisible to guests , unlike revenue management strategies that rely on adjusting service prices rather than service availability . For example , variable pricing — adjusting service prices based on the day of the week or time of day the service is booked — may allow spas to increase overall profits by increasing the margins on all services performed during high-demand periods such as weekends . However , that strategy may also
SEPTEMBER 2021 PULSE 19