What does the inaugural spa benchmarking data from the UK reveal about the country’s spa sector? Key operators give their opinions on the numbers

Spas in the UK are good at getting the most out of their employees but have a way to go when it comes to product sales. These are two of the takeaway points from the very first set of spa benchmarking figures in the UK that have been collated by the UK Spa Association (see p345).

Formed in early 2013 by the merging of two existing spa organisations, the association launched its national benchmarking tool just over a year later. The statistics are produced by comparing four key performance indicators – average treatment per revenue hour, retail sales as a percentage of spa revenue, therapist utilisation and treatment room utilisation – which are tracked on a monthly basis (see Graph 1). While data for the first six months (April to September 2014) is based on only 67 UK spas, it gives a starting point for measuring the sector. Indeed, the number of spas participating in the scheme has already grown to 128.

“As we continue to add spas to the system, the data will become more robust and we’ll be able to report on performance by regions,” says Alex de Carvalho, vice-chair of the UK Spa Association. “Enhancements scheduled for next year will also allow us to analyse contribution by treatment type such as massage, facials etc.”

TREATMENT REVENUE
From April to September 2014, the average revenue per treatment hour in UK spas was £40.49 (US$62, €56). But De Carvalho says this number is influenced by the mix of spas participating, as day spas make up 89 per cent of the sample. The average revenue per treatment hour for hotel spas is considerably higher at £67.15 (US$102, €93).

Liz Holmes, who oversees the 38 spas at Virgin Active health clubs comments on the price disparity. “The term day spa tends to also cover high street beauty salons where clients want an efficient, yet professional, service at a reasonable price.

“On the other hand, massage rituals – which were the most popular treatment when I managed the spa at Rockliffe Hall [resort] – are a luxurious treat for a special occasion and clients expect to pay more an hour.”

She says day spas could increase income by creating special packages that command more revenue such as mother and daughter treats and ‘girly nights’.

Brian Hunter, operations director at Lifehouse Spa & Hotel, adds: “Guests have more time on their hands if they stay overnight and the opportunity to ‘buy up’ and add on more treatment time [and price] is much greater at a hotel.

“But day spas shouldn’t be too concerned as it’s not just about how much you can charge. In a busy spa, having a flexible approach, constantly reviewing your package offering and being able to ‘manage’ and ‘yield’ your pricing at times of greater demand is essential too.”

Dave Courteen, founder of spa contract management company Imagine, disagrees about the difference in income. “We operate both stand-alone day spas and hotel spas and would not see such a wide disparity in revenue across two types of facilities. I see no reason why a hotel spa should be able to command a higher price for the same treatment. This [the incongruity] might be due to treatment profiles differing across the sites surveyed and it would be useful to understand the breakdown of treatment type in this case.

“But overall the benchmarking survey is an excellent initiative. It’s so valuable to gain some industry perspective.”

RETAIL
With retail accounting for only 9 per cent of spa revenue, the sale of products in spas continues to be a key area of opportunity. Retail figures are notoriously low in spa facilities worldwide compared to rival sectors and the new data further underlines a call for action. Anna Hubbard, business manager for the UK’s Good Spa Guide says it shouldn’t be a difficult sell: “Our spa consumers tend to be money-rich but time-poor and being on-site gives them an ideal opportunity to stock up on skincare must-haves.”

The customer journey from both a design and spa team point of view is vital. But don’t overlook competitor channels she advises. “The best product deals are generally online so operators need to make sure they offer a unique incentive to buy at the spa. And how about a loyalty card that offers a discount on products after a certain number of treatments?

Holmes concurs that spas need to be mindful of their retail rivals: “The high street beauty retail offer has become so experiential and expertly driven that spas could really do with catching up.” But I’ve recently seen some terrific exceptions – Nirvana Spa and Ragdale Hall have created fun and interesting promotions in their retail spaces which are apparently very successful.”

Retail sales can be influenced by what skincare brands spa owners choose to offer guests in the first place says Hunter: “Ensure the product house is known by your customers and that you don’t just go with what you like personally. And make sure you have a great relationship with your supplier so that you can work together to create a successful seasonal marketing plan.”

Courteen offers a different point of view on the matter: “Retail is largely dependent on the type of treatment – it’s much easier to sell through a facial. But we offer customer workshops in topics such as skincare or make-up to help improve retail.

“The other key point with retail is that, as operators, we make far greater margin on treatments so we’ll always put our efforts into driving up treatment revenue rather than focus too much on product sales.”

THERAPIST UTILISATION
The good news is that spa managers in the survey are demonstrating an ability to effectively manage their resources by reaching an impressive average of 81 per cent therapist utilisation.

Hunter says: “Anything between 75-80 per cent maximum is bang on target for optimal therapist utilisation. It means that therapists are working at capacity and creating revenue and this is achieved through effective scheduling and selling.”

Holmes says that this KPI “provides an ideal reflection of the productivity of a treatment business,” but that there are other things to take into consideration too. “As utilisation rises it’s important to look at average spend vs volume because when any business is maximised it may appear to be successful and yet be moving into the ‘busy fools’ territory.”

Hubbard, who’s also managed spas at the Four Seasons Hampshire and Bedford Lodge in the UK, cautions: “I’ve always benchmarked at 75 per cent, if the team is any busier then you need to recruit more staff, schedule better or approve holidays at a quieter time. Eighty-one per cent therapist utilisation will not allow the therapists to breathe and that’s when standards drop.”

Courteen agrees and points out that it’s important to factor in therapist down time too. He says: “We realise therapists need time to set up and clear rooms and time for training, staff meetings and breaks but they’re still being paid. So we measure utilisation based on the actual treatment time as a percentage of total number of hours worked as it enables us to work out how much of a therapist’s time is revenue generating.”

TREATMENT ROOM UTILISATION
While therapist utilisation figures are high, there’s room for considerable growth when it comes to treatment room occupancy which sits at an average of 41 per cent according to the survey. Yet this is a number that can vary greatly from one spa to another says Hunter – “It depends on how many treatment rooms you have, how many hours per day they’re available, what time the peaks and troughs are and what the business mix is.”

Courteen feels that room occupancy should always be lower than therapist occupancy. He explains: “The therapists on duty can be flexed according to the demands of the business, but a room is obviously a fixed resourced. The challenge is to design a spa with the optimum number or rooms and to drive in business in the quiet periods.”

It’s to be expected that there are times (such as later in the evening) when spas won’t be running at full volume, reasons Holmes, but it’s considered excellent client service to still offer those slots. And yes off-peak packages are a great way to fill quieter periods, but this can backfire. She concludes: “Let’s not start trying to push water uphill by driving clients, on price, into time slots which are not ideal to them. Like all good KPI analysis, we must balance them with excellent customer service feedback scores to ensure the future business strategy is a fit with our client expectation.”