SPA CLIENTS MAY BE ACCUSTOMED TO SERVICE CHARGE ADDITIONS “ We have increased our automatic service charge to 22 percent from 20 percent in many of our luxury properties , and up to 25 percent on groups , following the banquet department charge ,” says Marriott International ’ s Suzanne Holbrook .“ We have not received any pushback with the increase in service charges . It is always an option for our guests ; they have the flexibility to change the amount they leave .”
Trilogy Spa Holdings ’ Patrick McDirmit says ,“ We charge an automatic 20 percent service charge , with 18 percent going to the provider and two percent going to the hourly support team .” He adds ,“ Trilogy has not received any pushback regarding the service charge ; it seems to be a standard operating procedure , especially in the luxury hotel setting .” Whenever considering imposing a service charge , it is important to consider that the value your guests receive is equal to the change or increase in the service charge amount . The guests should walk away with the feeling of , It was more expensive for the service , but it was worth it .
TAX CONSIDERATIONS ARE AN IMPORTANT CAVEAT PCH Hotel & Resorts ’ Taylor Fields brings a different perspective to the discussion as his properties do not impose an automatic service charge .“ In some states , unless the whole service charge amount is going to the provider , it ’ s seen as revenue and sales tax will need to be paid on that service charge amount ,” Taylor notes .“ We have decided to elevate our hourly wages and take on the additional expenses , versus putting that on our customers by charging a service charge .”
Taylor feels confident in the compensation package his company offers to spa employees .“ I can pull a payroll report from our corporate software for a specific period , and it ’ ll show me how many services were completed , gratuity
RELATED : Tax changes proposed for tipping For those in the U . S ., see the Legislative Updates column on page 48 for more information about the proposed Small Business Tax Fairness and Compliance Simplification Act , also known as the 45B FICA Tax Tip Credit .
amounts from credit cards , hourly rates , et cetera — and when I sit down with providers it eases their minds seeing those total numbers .”
When considering adding a service charge , it is crucial to look at governmental guidelines because service charges and gratuities are treated differently .
TIPPING HASN ’ T GONE “ FULL TECHNOLOGY ” ( YET ) With technology ’ s continuous expansion , we see more and more ways for individuals to tip or transfer money to others in everyday transactions . Asked if they have policies in place for how employees should handle Venmo-style tips from guests , most panelists shared they have not encountered the situation in their spas .
“ Marriott requires employees to run their tips through their online system ,” notes Suzanne .
Taylor shares that at PCH ,“ cash gratuity is accepted , and the provider signs off that they report their tip in the time management system .”
2023 shows promise for spa industry growth To close out the session , ISPA ’ s Patrick asked panelists to share a positive trend they have seen within their spas during the first quarter of this year .
Trilogy ’ s Patrick saw a couple of opportunities in the beginning of 2023 .“ Small groups are up over 40 percent from year to year ,” he says .“ The void of hotel groups hasn ’ t come back all the way yet , and so those smaller groups are sustaining our group numbers . We ’ re also seeing a renewed interest in lifestyle fitness offerings .”
Suzanne commented about an emerging treatment option .“ We ’ re seeing a large trend in other countries with thermal experiences ,” she says .“ It hasn ’ t gotten as popular in the United States yet , but Marriott is beginning to build properties with thermal experiences and those will be an additional charge or require a specific membership .”
Both Suzanne and Taylor agreed dynamic pricing continues to grow and is an area where spas can be profitable .
Patrick Huey commented on a larger , and promising , spa industry trend .“ Demand is robust for both treatment rooms and spas ,” he reports .“ More than 500,000 jobs have been created and the economy has grown at three percent . Wellness has become not just a luxury , but a way of life — and if we continue to see the economy grow , demand will grow , and we ’ ll all be the beneficiary of it .” n
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