For a spa revenue manager , open treatment rooms represent underutilized inventory .
planning . In this issue of Pulse are presented several articles meant to demystify the concepts behind revenue management , assess its potential within the spa industry and help spa leaders determine how — or whether — to apply its principles to their businesses .
Yield Management Checklist for Spas To help spa leaders consider their own revenue management strategy , here are six characteristics of yield management , along with an overview of how they fit in the spa industry : 1 Does the industry sell perishable inventory ? Massage appointments may not “ perish ” in the way a loaf of bread or a banana does , but every hour a treatment room sits empty or for which a service provider is not booked represents lost revenue that cannot be recovered .
2 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 afternoons may be busier than mornings , and many spas — especially resort and hotel spas — experience seasonally variable demand .
Spas typically have a fixed number of treatment spaces , meaning their “ inventory ”— the number of treatments that can be performed at any one time — is constant .
3 Does the industry sell via reservation ? At most spas , treatments and services are booked via reservations made days — or even weeks or months — in advance .
4 Is the industry able to price the same service differently based on certain conditions ? Spas commonly have segmented customer bases — that is , customer bases in which different types of guests are willing to pay different prices for services at different times . A resort hotel that offers local guests discounted pricing during off-peak periods is one example .
5 Does the industry have generally low variable costs ? Aside from fixed costs like initial construction and some administrative staff , a spa ’ s variable costs — including treatment staff , retail products and room cleaning and sanitization — are relatively low . This means that , if the spa can increase utilization of its available inventory of service slots — even at lower rates — the effect on overall margins can be particularly positive due to a combination of a generally high gross margin per service and those low variable costs .
OCTOBER 2023 n PULSE 17