Ease of entry into the spa industry
- Increasing competition from the medical, hospitality, beauty, and fitness industries
- Inherited beauty industry traditions
- Extensive use of independent contractors (booth rental tradition)
- Out of control compensation costs that create ever-increasing losses
- Low margins;
- Similar to restaurants, spas have traditionally low margins (2% to 7% return on investment is common, vary rarely higher than 15%)
- Poor retailing skills and high commissions on retail
- 10% commissions in the spa industry versus 2% to 3% commissions at a department store cosmetic counter
- Escalating treatment costs
- Missed opportunities of client retention
- Lack of rebooking clients before they leave the spa