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Outsourcing Spa Operation

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To subcontract or to manage hotel spa operations in-house is a question that most hoteliers will ask themselves. Knowledgeable hoteliers realize that in order to be competitive their hotel must have a spa and offer spa services, but unfortunately many often look for the easy way out. For the most part, hoteliers do not fully understand spas or their management which in many cases leads to their choosing to subcontract. There are primarily two types of subcontracting for spas today. Both types will be identified and the positives and negatives outlined.

Complete outsourcing is attractive as there is very little that the hotel owner or operator need do. Owners and operators can just sit back and collect rent. That is the upside of the solution, but could there be a downside?
  1. Hoteliers for the most part do not know spas well enough to identify what would be an ideal match for their hotel.
  2. There are few experienced hotel Spa Management companies in existence.
  3. Spa services in a hotel are viewed by the clients as an intricate part of the hotel and will not understand a different style of customer service and in worse case scenarios will blame the hotel if anything goes wrong in the spa.
  4. Well designed and professionally managed spas gross profit over sales is better than any other hotel service, second only to room sales.
  5. A spa in a hotel can be used as a great marketing tool particularly to attract corporate meetings and group travelers. Spa services can be leveraged with booking groups to entice their attendees and accompanying guests, ultimately increasing the bottom line.
But now, let us assume that in spite of these negatives, the hotel management still wanted to find a subcontracting solution. What is available and what are the options available now?

There are several possibilities:
  1. A spa management company which will require a management contract similar to a hotel management contract. Usually in place for a duration of ten years or more, a flat fee and a percentage of sales and/or profits.
  2. A local day spa operator or technician interested in renting space in an area which has a captive audience, an existing client base.
  3. A cosmetic firm who have come to spa management. Many of the leading cosmetic companies have jumped on the spa bandwagon and are eagerly seeking to bring their cosmetic brands to hotels for the sole purpose of advertising their brands and selling their products through a different venue. The problem there is the "brand" might not be compatible with the mission statement of the hotel. Hoteliers are often attracted to consumer brands of quality but fail to understand the subliminal message associated which may not be geared towards the hotels demographic.
  4. The hotel identifies one of their executives in management as a candidate to supervise the spa operation and sends them to an intensive crash course in a customized "Hotel Spa Management" program developed by a recognized spa firm.
  5. The hotel seeks and finds a successful Spa Director in a similar type of hotel and lures him/her away to reproduce what has been done.
  6. The hotel goes through a head-hunter to find a qualified Spa Director.

The arguments against completely outsourcing the spa are multiple and include the loss of control: control over the service standards, level of services performed, Standard Operating Procedures (SOP's), staff guidelines, services and products, not to mention the opportunity of using the spa as a complementary marketing tool for the hotel. Often this leads to a dichotomy within the global operation, particularly at the level of service. If an hotelier chooses an outside service provider or management company to take over the spa space and manage it, they will need to find a firm which not only understands spa but also the hotel world. Even more specifically spa operators need to be harmonious with the level of service provided in the hotel. If not, there will be a great deal of difference in the way guests are handled and served. Too often the subcontractors will be pushy and more concerned with their bottom line than the satisfaction of the hotel guest. The guest will not make the distinction if something does not go well at the spa; they will blame the hotel systematically. In this type of situation the hotel management has no recourse and no way to control how the spa handles their guests.

In an ideal situation, a hotel spa would be able to immediately find and hire a top level spa director to manage the spa. But it is difficult to find a truly qualified spa director with the expertise necessary to run a successful spa. Most hoteliers assume that staff, such as front office, F&B, and Housekeeping know how to operate within their assigned positions and in most cases they are correct. Unfortunately this is not the case for spa staff. They have some background in beauty salons, day spas or other hotel spas. Most will have gone to an institution of learning, which does not have a hotel mentality and often teach techniques and treatments that are not appropriate for a hotel clientele and often passé by today's standards. If that rare pearl is found there are probably a half dozen such people in the world today, the cost of getting them would be extremely high, perhaps more than the General Manager's.

Management of a spa requires a deep knowledge of not just the business aspects but also the technical aspects. The ideal spa director would possess excellent technical knowledge, excellent marketing strategies, and be able to provide constant technical training, thereby upgrading the skills and abilities of the staff members on a consistent basis. The experienced spa director would also have a strong business management background along with a good understanding of the importance and the particularities of integrating spa management into hotel management. Since it is unlikely that such a person can be found at an acceptable cost, the ideal solution is a Management Assistance Contract.

As the name suggests, a Management Assistance Contract enlists the services of a spa management company to assist in managing until an effective spa director has been hired or trained to properly take charge. The Management Assistance Contract will allow the hotel spa to be supervised by the senior executives and technical staff, who will possess all the previously mentioned skills of a top level spa director. In addition, Management Assistance comes with other advantages especially allowing the hotel to retain control of the administrative operation of the spa. At the same time, the spa is staffed under the supervision of the management company and it is this same company that takes charge of the technical operation of the spa.

The Management Assistance Contract allows the hotel to hire an administratively competent manager such as a Food and Beverage (F&B) Manager or front office staff, who after an intensive training period will be able to become the defacto manager of the spa under the supervision of the spa management company. The Management Assistance Contract is usually drafted for a period of two to three years, during which time most of the kinks of the operation have been worked out. At that time, the owners may choose to renew the contract or take over and continue to fly on their own power.
This type of formula truly pays for itself, as the cost of such a contract is far less than a full Management Contract and permits significant savings on the often exorbitant spa director salaries. The inherent problem in spa management is in fact a Human Resource problem. The Management Assistance Contract addresses the problem directly by setting the standards of performance for all of the staff members and supervising the execution of the technical aspects of the business. It also puts at the disposal of the business a level of expertise rarely offered by the average spa director and at a much more affordable cost.

Mr Rajesh Sharma is the chief executive officer & President of Spas Worldwide Spa Management company, an international spa consulting company specializing in delivering turn key spa solutions for spa developments worldwide. Spas Worldwide Spa Management, with over fifty years of international spa experience, is one of the oldest spa consulting companies and is considered the most objective spa consulting company in the world. The most recognized spa experts has a deep understanding and knowledge of the spa, wellness and hospitality industries

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