24 May 2024 World leisure: news, training & property
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Spa Business
2023 issue 4

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Leisure Management - Recipe for success

Jeremy McCarthy

Recipe for success

Spas are complex, challenging businesses, yet many still turn a profit. Jeremy McCarthy explains what these thriving facilities all have in common

Do a few key services really well to reduce complexity, says McCarthy photo: shutterstock/Lobachad

You’ve probably heard the joke...

Q: What’s the easiest way to make a million dollars in the spa industry?

A: Start with 2 million! It’s not easy to be successful in our sector for two reasons.

Firstly, these are complex businesses which require a lot of knowledge in diverse areas including leadership, customer service, wellness therapies, products and retail, finance, sales and marketing, software systems and more.

Secondly, they are low-margin operations which require large numbers of highly paid and well-trained employees. Most spas simply don’t make enough money to pay for the calibre of talent necessary.

This relationship between complexity and profitability is the greatest challenge spa owners and operators face. However, many have still found ways to create successful businesses. So how do they do it? Here are some strategies they use:

1 Partner
Many successful spas can be found within hotel premises, where they can offload some of the complexity – relying on the property’s expertise and support in areas such as housekeeping, maintenance, marketing and food and beverage. In this synergistic relationship, the hotel also benefits from offering a great experience that builds loyalty and goodwill.

2 Size
A larger spa with more treatment rooms has greater revenue-generating potential, leading to higher margins and supporting more experienced leaders. This can create an upward spiral resulting in increased success. Unfortunately, because spa margins are not high, there’s often pressure from investors to reduce size and smaller facilities struggle to make enough money to offset the fixed costs and turn a profit.

3 Scale
Having multiple locations can allow a spa business to draw enough income from across its operations to fund an experienced central leadership team who can share their support and expertise in each business unit.

4 Specialise
Spas can reduce complexity by streamlining their offering down to a few key services and building a reputation for doing those services very well. Many spas try too hard to keep up with all of the latest wellness trends and continually expand their menu to offer so much that it confuses customers and costs more in terms of stock and training.

5 Passion
Much of the success of the spa industry is fuelled by the passion of our people. People who have foregone other, potentially more lucrative career opportunities, in favour of working in a more meaningful industry that gives them a deep sense of purpose. The spa industry would simply not be what it is today without these hard-working individuals who have a passion for wellness and for helping people feel at their best. One of the best ways for a spa operator to be successful is to create a working environment that attracts the best people and enables them to do their best work.

6 Experience
Give your guests a great experience that they’ll want to have again and again and will want to tell all their friends about. The winning spas are those who really know their guests and give them exactly what they need.

7 Storytelling
Give your guests a story to tell. The best spa is not necessarily the one with the most products or treatments. It’s the one that has a compelling story. And simple stories are easier to tell and to remember.
Essentially, most strategies for successful spa operations work by virtue of their ability to reduce or offset the complexity of the operation. The key to success is the focus on quality, caring and above all, simplicity.

Jeremy McCarthy has worked in the spa industry for 34 years. As group director of spa and wellness for Mandarin Oriental, he oversees spa, wellness and leisure operations at 35 luxury hotels globally. Contact him with your views on Twitter @jeremymcc

Originally published in Spa Business 2023 issue 4

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