5 solutions to counter biggest cost driver in spa businesses

Kohl & Partner have recently published their Benchmark Report 2014 for Austria in Europe. Their findings include an overview of labour costs (52% of total spa & wellness revenue) as main cost drivers.

No surprise really. Labour costs can be high and managing human resources is one of the three main areas of management:

Why people are important in the service industry?

Spa & Wellness services are provided by people to people.

Spa treatments are provider intensive and supposed to result in a unique experience for the spa guest, and to be individual and personalised.

Due to the special characteristics of services, the service provider has a direct and immediate impact on the quality perception of the spa guest.

Important KPI figures to know

Next to other key performance indicators, these two numbers are important to know for any spa manager in order to understand the spa’s performance driven by service providers:

Firstly the service provider’s occupancy, which gives an important indication on how resources are being allocated. Yet a high occupancy rate does not always relate to high productivity, so the service provider’s productivity (in terms of revenue generating) as such is important too.

5 Solutions

What action can be taken by management in order to counteract cost driver ‘labour’?

use software with sophisticated features

spa softwares assist in scheduling staff according to demand, and calculating their occupancy and productivity for better managing people, facilities and equipment:
– track what services can be offered by each of the resources
– manage resource schedules and qualifications
– manage staffing and staff check-in
– manage staff notes and payroll
– calculate staff commission i.e. by percentage, flat dollar and activities performed, and retail sold
– calculate gratuities

(c) www.tac.eu.com
Productivity can be measured in comparison to net and brut working time of a service provider, meaning the actual time available that a service provider works, including or excluding activities such as training, meetings, breaks, admin, treatment preparation, guest consultation, selling retail etc.
Let me give you two examples:
a) treatments are booked on the full hour each, you offer treatments of 50 minutes duration, allowing 10 min prep time. The revenue for the treatment is actually generated from 60 min labour, not just the 50 min.
b) a service provider is scheduled for 9 hours per shift. She is allowed a 60 min lunch break, attends morning briefing for 15 min and that day is in charge of daily inventory management which takes about 15 min. Net working time is hence 7.5 hours in which she can provide treatments and/or sell retail.
full time – part time – freelance

look into creative ways for recruiting and scheduling service providers, particularly in businesses with seasonal demand. I have recently audited a spa in which service providers had a 40 hour working week. They were scheduled 10 hours a day in a 4 day working week. Needless to say this suits the service provider greatly, however compromises accessibility, flexibility and service quality heavily. Balancing between just and reasonable and productive working hours is something every spa manager must look into seriously.
A way of avoiding overstaffing is working with not only full time, but also part time, freelanced and outsourced service providers. The Alpenrose Achensee showed how: they had outsourced management of their Sauna area.
self service

spas offer an increasingly diverse set of services with service provider intensive treatments. This makes it even more important to manage resources wisely. Due to highly fix capacities in spa businesses underused resources want to be filled up and utilised.
Other industries show how self service components work: drive through, airport self check in, online booking services etc.

some ideas for the spa

– self administered treatment elements such as a body scrub in the steam room
– new equipment for self administered services such as
the 6-senses-lounger (which I have tried during my visit at the floating studio in Vienna) or the hydro jet water massage table
– floating sessions, i.e. in an I-Sopod tank
– circuit training ideas:
the Milon circuit (5 different circuits are available) is a simple, effective and time optimised training concept electronically supported. After an initial session with an instructor, a chip inserted into each machine, the machine automatically adjusts individually, hence opportunities for mistakes that are usually made during gym workouts are eliminated, which also reduces the need for permanent supervision on floor.
– space outsourcing on a full time or hourly basis, i.e. a workout studio for ballroom dance classes of the nearby community, an underused treatment room to a visiting hair dresser or nail art technician. Empty office space to a visiting doctor.
job rotation

when pre opening a highly seasonal spa with 8 treatment rooms way back then, I was challenged to scheduling therapists adequately. Employees were on a 6-day working week with 48 working hours. Of course I could not expect massage therapists to provide first class service 6 days in a row for 8 hours a day. This is why I additionally started training the therapists on reception duties, which allowed me to place therapists one day a week at the reception desk, giving them a day off in the treatment room, yet still using their knowledge. Therapists proved very good at consulting guests when choosing treatments, and selling retail. Looking at the manning guide and manning budget, I was able to hire one receptionist less and one therapist more for the spa overall, which impacted overall spa revenue performance.
look after your people

it should go without saying… in many spa’s I visit, most of therapists and receptionists have never been able to try out the services they are selling every day, or even use the facilities on a regular basis in order to improve work-life balance.

Allow me to repeat myself: spa & wellness services are provided by people to people.
The providing part does not only need the knowledge and first hand experience in order to be able to explain and sell to the guest, but also the benefits that result from those treatments, leading to staff retention and loyalty.

Service providers are people and highly important in the spa & wellness industry. Time to come up with new ideas and approaches for balancing welfare and productivity!