Question

What drives profitability in the spa industry, how will a spa business venture be profitable?

Answer 1

Spa industry, being a service industry, has higher fixed costs and it is essential to have higher volume of customers availaing the services, to be profitable. Profitability of spa industry is driven by its proximity to urban centres and thus, the volume of city dwellers who want to relax and wish to de stress their bodies and minds after long work hours. Another driver of profitability is the spa's unique selling propostitons which make it different from the others, and more value creating for the customers. Overall, the spa's profitability is driven by its ability to attract more customers and its versatility to meet the specific customer needs, so that a premium can be charged for customised offerings, thereby increasing contribution per customer.

To be profitable, a spa should

(a) Be located at convenient location from the urban areas, which is the primary source of its customers, yet be able to provide them with unique outdoor and indoor experience.

(b) Do research on its target customers, their needs, aspirations, lifestyle and paying capacity, to come up with products that address those needs specifically and create value for them.

(c) Do research on the trends in wellness industry, and adopt the upcoming new techniques to stay ahead of the competition and have first mover advantage.

(d) Be able to provide value for its customers through superior service, unique experience and value for money to generate good word of mouth, referrals and repeat business.