REVENUE MANAGEMENT IN THE SPA INDUSTRY CONTINUED FROM PAGE 16
some seats did not result in a fully booked flight , as shown in Example D , the overall revenue generated by the flight is still far higher than it would have been if every seat had been offered to customers only at the higher price point .
The numbers may not be quite so clean and neat when airlines practice revenue management in real life , but there is no question that these strategies have had generated far more revenue for that industry than the old static approach . That said , an airplane is not a spa , and it ’ s more than reasonable to wonder whether the principles demonstrated by the example of the 100-seat flight are as good a fit ( or a fit at all ) for the spa industry . To answer that question , it ’ s best to narrow our focus to the specific strategies that are likely to most useful for spas , specifically yield management .
ZEROING IN ON YIELD MANAGMENT
Before any spa leader dives into planning their own revenue management strategy , it ’ s worth examining what characteristics make a practice such as yield management a fit for the spa industry in the first place . Though the answers to some of the individual questions below may seem obvious in some cases , think of them as a kind of checklist that allows us to definitively understand how different aspects of the spa industry impact a spa leader ’ s decision to employ a strategy like yield management .
Does the industry sell perishable inventory ? Massage appointments may not “ perish ” in the way that a loaf of bread or a banana does , but every hour that a treatment room sits empty or for which a service provider is not booked represents lost revenue that cannot be recovered .
Do businesses in the industry experience variable demand for services and maintain a fixed capacity of inventory ? Most spas experience variable demand of one kind or another . For example , weekends are often busier than weekdays , and many spas — especially resort and hotel spas — experience variable demand from season to season . Demand for services is frequently even variable over the course of a given day . Spas typically have a fixed number of treatment spaces as well , meaning that their “ inventory ” ( in this case , the number of treatments that can be performed at any one time ) is constant , just like the number of seats available on a given flight .
Does the industry sell via reservation ? Though walk-ins are not unheard of in the spa industry , the large majority
Most air travelers will be familiar with pricing calendars like the one above used by Google , which allow flexible flyers a chance to book their flights at the best price . More expensive fares likely correspond to high-demand dates or flights with few remaining seats , while less expensive fares are likely the result of low demand or a high volume of available seats .
18 PULSE ■ AUGUST 2021