Jean Francois Mourier, CEO of REVPAR GURU, summarizes how to increase SPA revenue by avoiding the five worst practices
Today, most expert articles are full of advice on best practices that SPA managers can use to improve their SPA revenue. But as useful as these tips can be, it can often be even more helpful to learn what NOT to do, especially when it comes to a complicated, ever-evolving field like revenue management.
So here are five of the worst practices in revenue management (please DO NOT do them!).
Worst Practice #1
Assuming Your Customers Know About & Only Evaluate Pricing Within Your Compset SPAs
When most revenue managers analyze the rates of their competition, they typically only compare their rates with the small number of SPAs in their compset. This is a mistake, because when potential guests search online to find a SPA, they don’t consider compsets. They search through all of the hotel SPAs within a certain star rating (or two!), within a destination, as well as Day SPAs in the same price range. If customer managers don’t think like their customers and offer services accordingly, they will lose the booking to another SPA – and another customer manager – who can. Customers normally demand high-cost performance, quality products, well-designed treatments, advanced facilities, added value of products, and more.
Worst Practice #2
Using Stagnant Rates
I am a HUGE advocate for dynamic rates. Why? Because in today’s highly competitive and ever-changing marketplace, updating your treatment categories and prices on your App once a month is not nearly often enough. By consistently updating your rates in real-time, as factors within the market change, your SPA will be able to secure as many bookings as possible, at the highest rate possible. Dynamic rates (different pricing at different times) is the ONLY way to fully capitalize on the revenue-earning opportunity offered by online channels.
Worst Practice #3
Not Replenishing your Inventory Online
If you are managing a hotel SPA, the revenue of your SPA is closely related to the bookings of the hotel. So besides updating the SPA prices and treatments constantly, it is also important to ensure that the hotel is updating and replenishing their online inventory in time. Especially during the busy season, when an entire block of rooms could be booked in hours or even minutes, if not being replenished on a regular basis, not only will the hotel lose valuable revenue, but also the SPA will be affected. In this regard, SPA managers need to have good communications with hotel managers or any staff concerned for their mutual benefits, and even check the online booking inventory status themselves if necessary.
Alternatively, get a sophisticated RMS that can integrate with PMS and update the inventory across all of the channels, automatically and in real-time – without your revenue manager lifting a finger.
Worst Practice #4
Making Your Already Complicated Job Even More Complicated
I’m sure that you’ve heard the phrase K.I.S.S., which stands for Keep It Simple, Silly. As a SPA manager, because your job has so many very important responsibilities – many of which are hugely time-consuming – it’s important that you follow this rule of thumb. If you’ve ever heard the term ‘unconstrained demand’, then you know what I’m talking about!
Your goal each day should be to minimize the busy work that can come along with the job – endless reporting, meetings, etc. – so that you can focus on the activities that earn your SPA money. A good rule of thumb is to aim to spend 80% of your time on the functions that directly impact revenues and only 20% of your time on admin tasks.
Worst Practice #5
Being Afraid of Technology
Revenue management systems were designed as a tool to help revenue managers be more effective and productive in their jobs, NOT replace them altogether. SPA managers should be taking advantage of technology to manage the never-ending data analysis and automatic updating of rates and inventory in the online channel. Only by using sophisticated technology, will a SPA manager be able to be as efficient as possible, and therefore earn as much money as possible from each booking.