Profitable spa
Picture of Katie Howell

Katie Howell

Spa consultant

How To Build a Luxury Spa – 3

Part 3 - Is owning a spa profitable?

Turning that five star vision of your new spa into reality is an exciting adventure and one that is totally worth taking, but let’s be honest, we want it to be a profitable adventure don’t we?

If you’ve been following this series on “How to Build a Luxury Spa” then you know that we have already completed our market research and assessed our treatment and product demands and so now we can begin to outline our revenue projections.

In April, 2021 McKinsey & Company estimated the wellness industry at $1.5 trillion with an annual growth of 5 – 10% and when you consider numbers like this when opening your own luxury spa then it’s very easy to see that there is money to be made. However, the value that clientele put on the wellness sector is high and consumers want the best (at every price point) so with that in mind, let’s look over our previous market research. . .

Understanding Our Ideal Clientele

Our target demographic is within the luxury sector so when considering that let’s try and understand how much they are willing to spend each visit and how often these visits will be. Will they book sporadically or will they be regular clientele that we can rely on each month?

Diving deeper into this, we need to consider what our clientele will expect from our treatment menu. When there is an opportunity for a client to upgrade or enhance their treatment through add ons or different products, it can heighten their positive experience with the spa and this also immediately contributes to the top line sales. This is also a great way to keep the therapists incentivised and be able to impact their pay through commission earned.

Size Always Matters

Trust me on this! So, to accurately calculate the profitability of your spa we need to review our ratio of treatment rooms versus communal spaces (pool, changing rooms, sauna’s, relaxation lounge, reception etc). Then we consider how many guests we can accommodate in the venue at any one time and how this will impact our reservation ability.

Less Is More

Again, I cannot stress enough the importance of a well thought out treatment menu when looking at profit margins. Sometimes, it can be tempting to offer an array of treatments just to cover every possible whim a client may have but as the age old saying goes ‘less is more’.  This is why in phase four of my unique spa ecosystem I include treatment and product selection and we work together to create your final menu where I will be able to share the exact labour costs and profit margin of each treatment.

Designed with the retail revenue stream in mind, your treatment menu should feed directly into this and if we have allocated a prominent area within the spa for retail space then we are showing our clientele that we value their investment in our products. Savvy spas will acknowledge that clientele taking products home with them can act as a constant reminder of their time with us and when those products run low, we should be at the forefront of their mind to book another treatment with us.

Monitoring & Maximising

Maximising the bottom line of your spa is so important because like any business, it ebbs and flows. However, the beauty of the way that I work is that from the very beginning, I know exactly what we are going to achieve and when we begin to map out your vision following my ecosystem, I will deliver you a luxury spa where we can monitor your key performance indicators and evaluate your profit margins.

As I always say, if we can measure it, we can change it.

Don’t forget to come back next week where I will show you how I create your staff projections!

Share this post

Let's Jump On A Call​

If you’d like to book a FREE 30-minute discovery call, to see how KH Spa Consultancy can help your business, contact Katie now.