MANY IN THE SPA INDUSTRY are not strangers to the concept of yield management , a pricing strategy that allows spas to make the most of those times — weekends , holidays and so forth — when their services are most in demand . As with so many things , however , the COVID-19 pandemic has elevated the questions of whether to utilize the practice and how to implement it effectively to the front of spa leaders ’ minds .
In its simplest form , yield management is often described as “ selling to the right customer , at the right time , for the right price .” For spas , the practice most commonly takes the form of adjusting prices to correspond with the varying levels of demand on certain days of the week , or even at certain hours of the day . When executed effectively , yield management can have a significant impact on revenues and even increase bookings . Though the process of implementing a yield management strategy can seem daunting — especially if a spa has traditionally used a static pricing model ( where services are offered at a flat rate to guests , regardless of when the service is provided )— those interested in the approach can havesuccess if they plan carefully .
“ Sunday is kind of a big checkout day [ at the resort ],” says Bird . “ So my philosophy there is , can we keep them around longer ? Can we extend their time and get them to leave their bags at the bell desk and spend their day at the spa ? Get another lunch or dinner or whatever ? It ’ s almost less of a financial decision and more a psychological one .”
Know Thyself ( and Thy Competition )
Before deciding to enact a yield management strategy , it ’ s crucial that spas thoroughly evaluate their menus and honestly assess their place in the market . When the Spa at Four Seasons Philadelphia opened in 2019 , Senior Spa Director Verena Lasvigne-Fox was certain that she wanted to utilize the same kind of yield management approach that she had employed in previous positions “ without hesitation .”
The first step was an in-depth evaluation of the treatment prices at the spas she considered to be in direct competition with hers . “ I visited our competitors , which allowed me to understand where we stood in the market . From there , you can get a clearer vision on where you want to set yourself in terms of positioning . In Philadelphia , we saw our spa being the leader in terms of what we were going to offer product- and service-wise ,” she says .
But because Lasvigne-Fox was also aware that the local community had a reputation for loyalty to their preferred businesses , she knew that her spa ’ s prices needed to both reflect the quality of their guests ’ experience and remain competitive in the market so as not to price themselves out of their desired clientele . As a result of this evaluation , the spa ultimately elected to offer services priced within a range that started slightly above the competition — between US $ 10 and US $ 40 more per service , depending on the day of the week . That range gave the spa the flexibility to price treatments and services at the upper end of the range during their busiest days , while also offering guests the opportunity to book services for less during off-peak hours without resorting to discounts or diminishing the brand .
— SHANE BIRD
MAY 2021 ■ PULSE 33