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Business analysis: Change management
Lisa Starr takes a look at different types of spas which are adapting their business practices and models to succeed post-pandemic
Destination spas are among the most challenged facilities as a result of coronavirus. Typically, these are complex, sprawling properties, often located in remote areas with a large number of employees.
Additionally, many of their clients visit from a distance, including from other countries, so even moderate capacity allowances haven’t helped these businesses to rebound.
The Lapinha Wellness & Integrative Medicine Center, located 90km south-west of Curitiba, Brazil, is a prime example. Founded in 1972, Lapinha was the first medical spa in Brazil, situated on a farm with a focus on organic produce in the midst of a sub-tropical forest.
At the onset of the pandemic, Lapinha employed 160 people and the owners trimmed the ranks by putting 80 on furlough. They kept on 40 staff for maintenance and working the farm and set up a leadership team of 12 who “worked together as an intensive support community, thinking, dreaming and daring on new possibilities for Lapinha’s future,” according to owner Margareth Brepohl.
When Lapinha reopened on 21 June, it did so with a number of fresh initiatives and approaches on top of enhanced health and safety protocols.
New, flexible pricing schemes have made stays more appealing. There’s now the option for people to first choose the programmes they need (stress management or detox for example) and then pick the accommodation they can afford based on room size. There’s also a progressive discount promotion according to the length of stay, to go with a decades-old loyalty scheme which enables guests to receive up to a 40 per cent discount. To tap into this market further, it’s promoting a ‘home office’ image with its comfortable rooms and beautiful views. Some guests are now on their fourth week at Lapinha and average stay has jumped from 7.1 to 8.2 days.
The growth of domestic travel has been a welcome side effect of the pandemic. Lapinha is continuing to adapt its omnichannel communications to appeal to the home crowd, which represent a younger clientele – since the pandemic, the average age of guests has dropped from 54 to the low 40s. A group of 12 young adults that intended to have a self-knowledge and awareness journey in Bhutan, for example, visited Lapinha, just an hour away from where they live instead.
Lapinha is now launching a Spotify channel to keep front of mind for the younger guests with curated playlists focused on stretching, moments round the fire and self-reflection. In addition is has a ‘vibrant calendar’ of 42 theme weeks lined up for next year focusing on everything from ayurveda and local gastronomy to hiking and sound healing.
New markets have been opened up by partnering with a fertility clinic so couples can destress before treatment. And it’s created an extra revenue stream by launching an e-commerce site and becoming a ‘farm to table’ business, delivering same-day, fresh food to customers in Curitiba, a city with 3 million inhabitants.
With all of these initiatives in place, Lapinha estimates if it removes the three months of closure, it’s experiencing a 20 per cent increase in the number of guests this year to date and a 30 per cent rise in revenue.
In June 2020, the Texas-based floatation company Float had its most profitable month ever. The firm was set up in 2016 by ex water filtration salesman Jeremy Jacob and his wife after finding that San Antonio was the largest city in the US without a floatation centre. A year later, they had a total of six.
In February 2020, the original centre took over a 3,000sq ft store next door and added a couples massage room, infrared sauna, salt cave and additional services to its five floatation tanks. COVID forced Jacob to scrutinise financials to discover areas of efficiency and additional revenue streams.
Reopening in May, after a two-month closure, Jacob switched from using independent contractors for massages (who barely covered the costs of the room), to an employee model which has resulted in higher calibre therapists and returning clients.
To broaden Float’s appeal, he also invested in a Pandora Star – a device which projects an array of colourful LED lights on the face to stimulate different regions of the brain to promote relaxation, cognitive function and creativity. Combined with the other additional services this has enabled Float to add a number of day spa packages, provided ample inspiration for creative marketing campaigns and grow membership, which currently sits at 220. Jacob says the centre is now running at full capacity on the weekends and 60 per cent in the week.
He likens his approach to a lake with tributaries, with different cash flows feeding into it. Float now offers 12 different services and in some instances can do as many as three in one room. In September, figures were 50 per cent ahead of the same month last year, and growth continues.
Massage therapist Natasha Prybyla set up her own practice in the college town of San Luis Obispo, California in 2010, growing into a spa in 2014. The six-treatment-room day spa was busy but three years ago she ‘did the math’ and started adding treatment options that weren’t reliant on a therapist. First an infrared sauna, then a cryotherapy tank, Somadome meditation pod, dry salt therapy room and a photobiomodulation bed. When the pandemic struck, the company found itself ahead of the game when it comes to contact-free services.
Business was slow when it initially reopened in August. However, small changes Prybyla made since have had a big impact. Clients needed a lot of education on the complementary experiences and she created marketing campaigns, along with video content, to promote their cellular health benefits. “We’ve been practically twisting people’s arms for the past year to try services like cryotherapy and no one was interested, but now they’re loving it,” she says. Sloco has just added a recovery lounge featuring two NormaTec compression therapy systems which “have been booked up every day”.
By simply rebranding the facility from ‘spa’ to ‘health and wellness’ she’s capturing many more consumers via internet searches – from as far away as 100 miles. “Because most people don’t expect to find the answers to autoimmune conditions and severe chronic pain relief in spas, we were being eliminated when people were searching,” she explains.
Prybyla has also introduced a ‘self-care gym’ membership where clients can experience the modalities as often as they need to for a monthly fee of US$199 (€165, £149) to US$499 (€414, £374). Out of the 150 members, about 45 clients converted from the previous spa membership to this new plan, and were “game to try something new”. At the moment, the push is on to communicate these changes to the database of 12k clients and to continue to build membership. Revenue, which was on a 35 per cent growth rate until mid-March, is currently less than half of what it was pre-pandemic. But with the recent partnership with a chiropractor, providing guest access for referrals for therapeutic treatments, and the new model and pricing structure, Prybyla expects Sloco to be fully recovered at some point within 2021.
She concludes: “The pandemic has modified my vision for Sloco in a major way. Just a couple of months ago, we had plans to remain a peaceful spa that focuses on massages and facials while offering these unique, alternative modalities. Now, we’ve become a lively community of people trying to support each other on this wellness journey. And our projected net profit is significantly better than anything we could’ve ever dreamed with the old way of doing things.”
Lisa Starr is a contributing editor at Spa Business | [email protected]
