Spa Business Strategies for Economic Downturn

Even though the short term outlook is uncertain, it is important to understand potential longer-term consequences of reactive decisions made during an economic downturn and review how spas may take advantage of market changes during economic downturn. For example:

Development Plans - as others around you shelve spa development or refurbishment plans, it may be advantageous to continue with the project, assuming funds are available, and take advantage of the increased availability of trades' people, advisors, trainers and suppliers you will require to continue with your project. You may be able to negotiate better pricing and timelines due to reduced workload.

Staff Retrenchment - given the shortage of qualified and experienced spa employees, it may be more cost effective in the longer term to retain staff so when the market bounces back, the business does not incur the time and cost restraints of recruitment activities.

Many spas have been too busy during the boom time to focus on improving the way their business operates, so any slowdown may provide the opportunity to make required changes. A full review of the business may seem a difficult and time consuming task, so break it down into key areas to make it easier. For example, some important activities which aim to minimise the negative effects of reduced demand, whilst establishing systems and procedures to ensure your spa runs smoothly during busier times to come, include:

Management - Map staffing levels against current and forecast demand to manage labour costs and ensure employees are productive. If you cannot, or decide not to reduce the number of staff to match reduced demand, keep idle employees productive with training and special projects and encourage them to take annual leave owing.

Review the financial reports to identify areas the spa could reduce costs and improve profitability.

Review industry benchmarks to identify areas in which the spa is performing above and below the local industry average. Initiate activities to improve the spa's weaknesses and maintain the spa's strengths.

Marketing - Modify marketing collateral to adapt to consumer sentiment, for example, emphasise spa treatments and services which aid stress-relief if it is relevant to your local community.

Raise the awareness of therapeutic services offered to encourage consumers to maintain or increase spending on therapeutic treatments whilst they may reduce discretionary spending on pampering.

Ensure treatment prices remains competitive as the local market changes. Consider adding more value to establish a competitive point of difference, rather than automatically discounting standard treatments and products.

Operations- Review and update standard operating procedures to minimise hidden costs associated with unnecessary repetition, inefficient activities, product and supplies wastage and outdated policies.

Ensure there are no gaps in procedures, particularly where staff numbers are reduced, to minimise risk to clients, employees and property which could result in legal action.

Confirm spa employees are implementing service standards correctly so guest satisfaction is maximised to retain existing customers and encourage free, positive word-of-mouth advertising to generate new clients.