Spa economics: Turning relaxation into revenue

How improving the understanding of a spa’s commercial benefits shifts hoteliers’ thinking about the wellness sector.

It wasn’t too long ago that some hoteliers would openly treat spa managers and therapists as a ‘nice to have’, with some general managers even known to refer to spa therapists as “beauty dollies”. Thankfully, times have changed: led by improved social equalities and a heightened appreciation of the commercial value a spa can bring to a hotel. 

In the UK, the wellness market is estimated to hit £30.6 billion in 2023, but it’s not just financially savvy for hotels to create a memorable spa experience - it’s also vital in meeting today’s guests’ expectations. There’s no doubt spa is a lucrative business - wellness travellers spend 53% more than typical tourists, and it’s believed hotels which don’t invest in this area may risk alienating future investors. 

What consumers want

A report by Mindbody and Classpass found, despite the squeeze on disposable incomes, people will continue to spend on wellness, considering it an essential area of their lives. 

Hilton found 50% of travellers like to address their physical or mental wellbeing when travelling, and increasingly, hotel guests expect a wide array of leisure facilities and activities when they book a room, even if only visiting for one night. 

Paired with Barclay’s Wellness Imperative report, which found almost a third of UK adults expect health and wellness offerings to be included as standard by hotels, it’s clear that wellness is closely woven into people’s lives.  

Understanding the business of spa

Within a hotel, profit margins vary greatly across different departments. Rooms dominate revenue planning thanks to an average profit margin of around 75%. But spa, with a typical range between 15% to 25%, is rapidly catching other areas such as F&B (around 25%) and becoming increasingly profitable with a new breed of spa professionals, armed with products and services to help their business. 

Creating a commercial culture within a spa is key in positioning wellness as an important revenue stream as part of the wider hotel team. 

To do this, spa leaders need to be results focused, have a deep understanding of their P&L and strategically plan how to grow their business. They need to create ways to optimise their profit and enhance the overall guest experience, to encourage word-of-mouth referrals and repeat business - each providing a lower customer acquisition cost than other marketing methods. 

Improving your commercial understanding

Key steps to consider as you improve the commercial standing of your spa within your hotel include: 

• Understand your customers - what treatments do they book and when? Are there opportunities to grow your spa users from in-house guests or members, or should you focus on the local market? What can you do to improve product sales? 

• Use the data you have - understand your sales figures and identify seasonal trends as well as any regular quiet periods. Use reports to see how and where the business is performing well, and build an action plan to grow your business.

• Think in numbers - wellness may be rejuvenating for guests, but nothing will revitalise senior hotel stakeholders more than the financials. Just like other revenue generating departments, set clear budget goals that are measurable, and report back using metrics that align with your hotel’s wider commercial strategy such as revenue per treatment room (RevPAT), per square foot, per guest, or payroll as a percentage of revenue.

Strategic spa management

Leading strategists such as Sonal Uberoi - who empowers spa managers to commercialise their offering with her ESSENCE model - encourage the positioning of wellness as an asset to hotels. Today’s guests want transformative experiences, and hoteliers can cater for that by focusing on the holistic guest experience. 

Spa managers are also aided in becoming more strategic by spa management technology, further driving wellness towards being viewed as a serious business function. We provide a comprehensive reporting functionality to our users, helping spa managers engineer their understanding of items such as the most profitable treatments, top sellers, and the most utilised therapists. 

Our experience management system helps spa managers grow commercially; grouped with our sister ecommerce platform, spas and hotels receive a full ecommerce solution to enhance their guests’ booking journey. 

Read more about how ecommerce is helping hotel and resort spas.