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Touchy Subject: Hotel Spas Slow to Implementing
Yield Management Strategies


By Suzanne Marta, The Dallas Morning NewsMcClatchy-Tribune Business News

Apr. 7, 2007 - Bargain-minded spa customers may soon book facials and massages the same way they buy airline tickets.

Just as airlines discount seats for flights with low demand, hotel spas are beginning to offer discounts or special offers for off-peak bookings.

It's a signal that the hotel spa industry is maturing as owners look to maximize profits and keep their treatment rooms and therapists occupied.

"We thought we understood the business because we were making a profit, but as you add more spas and see more ways to do business, we realized we could dig deeper," said John Blanton director of marketing for the Four Seasons Resort & Club Dallas at Las Colinas.

Mr. Blanton's team is tracking customer patterns, trying to build up business on slow days, and developing new products to attract new customers.

That's an approach many hotel spa operators are beginning to take as they look at how to drive profits, industry watchers say.

Eva Jensch, who owns consulting firm Spa Concepts International in Sonoma, Calif., says spas were first added to hotels in the mid-1980s as an amenity rather than a revenue driver. Now they've grown into a big business.

"They've surpassed food and beverage at some properties," said Ms. Jensch, whose 27-year career in the spa industry includes developing the Four Seasons spa.

A plus

The Las Colinas spa, which opened in 1986, was the first full-service facility in a Four Seasons hotel. Back then, spas added enough cachet to drive up room rates and maybe even provided a small profit for a high-end hotel, Ms. Jensch said.

Just having a spa gave a hotel an edge over competitors, even with guests who never booked any treatments. But hotel operators were new to the spa business, and many didn't take a sophisticated look at how their spas were run.

"They weren't able to maximize their revenues because they weren't doing any yield management," Ms. Jensch said. "They'd just book their staff without looking at customer flow during the week. Now more hotel operators have gotten involved and are being driven to push more revenues."

Strong demand

Susie Ellis, president of New York-based media and marketing company Spa Finder Inc., says spas are starting to use software to track customer patterns and the revenue generated by each treatment room.

"The spa industry is still pretty young, and it's just beginning to use some of the tools to improve efficiency," Ms. Ellis said.

The Four Seasons' Mr. Blanton remembers a time when he was satisfied with "a couple million" in revenues from the spa. This year, the spa is expected to do about $4.5 million in sales, representing around 5 percent of the hotel's total revenue.

"We realized we could do this on a bigger scale," he said.

Bjorn Hanson, a principal in the Hospitality & Leisure practice at PricewaterhouseCoopers, says that resorts with both golf courses and spas almost always have more spa patrons than golfers.

But as demand goes up, hotels are trying to control bookings and encourage weekday visits.

Demand is so strong at the Gaylord Texan Resort & Convention Center on Lake Grapevine that it plans to expand the 25,000-square-foot Relâche spa to around 40,000 square feet by the end of 2008, said spa director John Catchen-Dunne.

Discounts

Previous customers get a 20 percent discount on services booked Monday through Thursday, and conventioneers who arrive early or stay late for an event get special pricing -- an approach that helps lengthen hotel stays.

At the W Dallas Victory Hotel & Residences, guests get a 20 percent discount for its Bliss Spa services and products.

Hotel Palomar promotes "blackboard" specials during slow periods at its Exhale Spa.

And at Rosewood Hotels & Resorts' Hotel Crescent Court in Uptown, the spa staff offers "express" and lunchtime services on weekdays and encourages patrons to book packages on slow days.

"Packages are already discounted, so we try to keep the weekend for a la carte services," said Linda Wan, the hotel's managing director.

To set itself apart from competitors, the Crescent is customizing services -- creating a package based on customer needs rather than what's on the menu.

"People have choices, so we're doing whatever we can to make our spa special," Ms. Wan said.

Touchy subject

Jeremy McCarthy, who heads spa development and operations for Starwood Hotels & Resorts, says the industry has been tentative about so-called yield management strategies because customers have such a negative perception of the approach as they've experienced it with airline tickets.

"Very few spas are doing it comprehensively," he said.

Even so, the hotel managers have used yield management for years to price rooms, and now they're trying to find a way to apply it in their spas without turning off customers.

For the last few months, the Four Seasons has been tracking spa customers much the same way they do hotel guests.

Customers are being analyzed by segments -- hotel guests, sports club members and local residents -- by profitability, and by which days of the week they tend to book services.

The Four Seasons says its sports club members, which account for about 20 percent of the spa's business, have gotten a 20 percent discount for years.

To encourage even more business from those 1,800 members, the hotel has begun offering promotions for appointments on slower days of the week -- for example, adding extras such as a free hydrotherapy bath ($30) when a customer books a $120 massage on a slow day.

In the works

Local residents account for an additional 40 percent of the hotel's spa business, so Mr. Blanton is building his database and plans to roll out similar specials for them in the next few months.

"We're focused on our slower days because that's our biggest opportunity," Mr. Blanton said.

For business customers, the Four Seasons is about to launch a spa menu that will come with a guest's room key at check-in.

The menu will include "express" services that might fit better with a business traveler's schedule. To expand its capacity, the hotel wants to offer spa "tapas" -- 25 minute mini-services offered poolside -- during the summer.

The Four Seasons now holds monthly yield management meetings to help the spa to keep closer tabs on where it can drive business.

"Improving spa yield is something we're committed to," Mr. Blanton said. "We're nowhere near where we're going to be six, nine, 12 months from today."

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Copyright (c) 2007, The Dallas Morning News

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