Spas and Salons: Reaping the Revenue of Relaxation

Here, industry experts share how spas and salons can make a great profit center for facilities post-COVID-19.

As the pandemic presses on, clubs are searching for ways to drive revenue after struggling for months. Clubs currently have two options: raise your rates or reward your members with a new profit center experience.

The Atlantic Club — with two locations in New Jersey — has had great success with its Milagro Salon and Spa as a profit center.

“Our Milagro Salon and Spa is one of the largest day spas and salons in the industry,” said Kevin McHugh, the chief operating officer of The Atlantic Club. “It is open to the public, so you do not have to be a member to enjoy our services. It is located in our main club with separate entrances for non-members as well as a special entrance for our members to utilize.”

According to McHugh, the club offers a special spa and club executive membership which is the highest level of benefits offered in membership offerings. Members who choose this package receive a monthly membership to enjoy not only a massage each month, but several other savings on Milagro products and services.

“We also offer our members Milagro Wednesdays, during which they can enjoy savings on several popular services,” said McHugh. “The Atlantic Club and Milagro Spas provide a special mind/body class each month for a fee. It is our intention to integrate Milagro Salon and Spa into our overall health and well-being positioning in the marketplace.”

Village Health Clubs & Spas — with four locations in Arizona — is another facility that has seen success with a spa and salon service as a profit center.

“Outside of membership dues, our next biggest revenue generator is our full-service spas and salons,” said Meredith DeAngelis, the chief marketing officer of Village Health Clubs & Spas. “Our spas and salons are separate environments inside our four clubs. This design was intentional to ensure we maintain a tranquil experience for our members and clients. We allow non-members to use our spas and salons, and with every service over $75 they have full use of the club facilities. Our membership department works closely with the spa director to turn these non-members into members. The gross revenues generated by our spas and salons is 10% our total revenues.”

While these facilities have seen success with spas and salons, McHugh said the spa industry is very labor and product intensive. As an operator, you need to understand the profit margins and hire, compensate, and price products and services properly to be successful.

A great way to ensure you are offering the service the right way is to ensure all team members are working together. DeAngelis said it is extremely important you don’t have an “us versus them” mentality between the spa and salon and the rest of the club.

“It is important to make sure all department managers and staff are supporting and promoting each other’s services,” said DeAngelis. “It’s necessary for the spas and salons to be integrated with the clubs to be successful. Our staff is the best way to educate members about all benefits of our spas and salons.”

Having all team members on board can not only help your spa and salon run smoothly but also drive profits. DeAngelis offered several tips for helping your spa and salon thrive:

Cross department packaging. For example, bundling personal training packages with massage.
New member gifts. Each new member at Village Health Clubs & Spas can choose either a complimentary facial or massage, and a haircut when they first join the club. This is part of a comprehensive offering for new members so they can experience all departments’ services. DeAngelis said they have found the majority of members will add on to this initial service and become repeat customers.
Monthly membership offers. A few times a year, Village Health Clubs & Spas will offer spa certificates or free massages as part of their monthly membership offer.
Cancel and freeze programs. Offer spa services to move members off freeze and to get cancelled members to rejoin. Promote the mental wellness benefits of regular spa services.
Retail. Not only does a spa and salon offer services that can bring in revenue, but retail is also a lucrative profit center. Village Health Clubs & Spas sells products and unique gifts. They work with vendors to have product demos, giveaways and trunk shows, and combine these events with wine tastings and other club activities.

While there is a plethora of reasons the spa and salon industry make a great profit center for your club, it is vital you do your research beforehand in order to be successful.

“Do not jump into this industry without the proper research and buy-in from all leadership,” explained McHugh. “The spa industry, although it has been an outstanding contributor to many clubs, has also had major negative impacts on numerous other operators. If you are going to do it, do it right.”