Spa KPI's

Before we even start talking about Spa KPI’s (Key Performance Indicators), it’s important to understand why they matter. As the old adage that says, you Manage what you Measure. So that’s why. We need to clearly identify what metrics matter to us, then set some benchmarks, then actively monitor them. If the results start to deviate from the benchmarks, then it’s time to take action.

Spa KPI’s vs Spa Metrics?

A KPI is a metric, but a metric is not necessarily a KPI. We often use these terms interchangeably, but they are not. A metric is just a number. Whereas a KPI is basically one or more statistics, or metrics, that are key (as the name suggests) to assessing the performance of your business.

To try to explain the difference between a metric and a KPI, let’s look the Average Cheque KPI. The Average Cheque is a function of the Total Revenue you generate, divided by the Number of Customers you had. If you had $1,000 in sales today and you had 10 customers for the day, your Average Cheque for the day would be $100. Total Revenue is a metric. Number of Customers is also a metric. Average Cheque is a KPI that combines both of those metrics to give you a more practical and meaningful way to measure your business.

When it comes to hotel spas, like most businesses, there are many different metrics you can consider. There are also generally accepted KPIs that tend to be standard measures throughout a given industry. Below is an explanation of what, in my experience, are the most practical Spa KPI’s for your spa business.

 

1. Capture Rate – Treatment

Expressed as a %

Calculated by Total Spa Guests / Total Hotel Guests in-house

This is really a measure of relevance. The Capture Rate – Treatment tells you how many of the guests in the hotel saw the value in coming to the spa. These hotel guest committed to taking an hour or three out of their day and come to your spa to spend money for a treatment. The higher this number, the more relevant your spa is to the hotel.

 

2. Capture Rate – Retail

Expressed as a %

Calculated by Total Retail Guests / Total Spa Guests

What we are measuring here is how many of the guests who came to the spa and had a treatment or service, also bought some retail product to take with them. It can also be considered a measure of relevance. It measures how relevant your retail offering was to your spa guests.

 

3. Average Cheque – Treatment

Expressed as a $0.00

Calculated by Total Treatment Revenue / Total Spa Guests

The pricing of the treatments on your spa menu is the key variables in this KPI. BE careful. This is not necessarily a measure of efficiency. A 1 hour treatment that sells for $100 is more efficient than a 2 hour treatment that sells for $185. If you book more of the 2 hour treatments, your Average Check will be higher, but you are actually being less efficient with your resources. As cost of treatment is not factored in here, this is also not a profitability measure.

 

4. Average Cheque – Retail

Expressed as a $0.00

Calculated by Total Retail Revenue / Total Spa Retail Guests

The retail products in your spa will most likely have a wide range of prices based on size, ingredients and quality of the various products on your shelves. Your goal here should be to either sell higher priced SKUs or multiple smaller priced items per sale. This is not a measure of either efficiency of stock or profitability.

 

5. Therapist Utilisation

Expressed as a %

Calculated by Total Treatment Hours performed / Total Hours Worked

This is a measure of how productive your spa therapists are in terms of performing treatments. For most spas, the treatments and services performed by your therapists are your primary source of revenue. Thus, this is a critical KPI.

 

6. Spa Occupancy

Expressed as a %

Calculated by Total Treatment Hours Sold / Total Treatment Hours Available

Your Spa Occupancy will tell you how close you are to operating at full capacity. This measurement should be based on total treatment beds, not just treatment rooms. This measure takes no account of how many therapists you have available.

nb: Total Treatment Hours Available is calculated by the number of treatment beds in your spa x number of operating hours of the spa.

 

7. Treatment Room Occupancy

Expressed as a %

Calculated by Total Treatment Hours Sold / Total Treatment Room Hours Available.

This KPI will tell you how busy your treatment rooms are, but not necessarily how close you are to full capacity. Becasue this measurement is based on total treatment rooms, not necessarily the actual number of treatment beds.

nb: Total Treatment Room Hours Available is calculated by the number of treatment rooms in your spa x number of operating hours of the spa.

 

8. Average Treatment Length

Expressed as Hours / Minutes

Calculated by Total Treatment Hours Sold / Total Number of Treatments Sold

This number will tell you if you are just selling your standard treatments or if you are able to sell more packages or treatment upgrades. Your target for this particular KPI is fully dependant on the length of the treatment and services on your spa menu.

 

9. Revenue per square metre / foot

Expressed as $0.00

Calculated by Total Spa Revenue / Total Size (in m2 or ft2) of the Spa

This is a measurement commonly used in the retail industry, but not so common in the spa industry. In many ways it is a reflection on an efficient design. The Total Size includes the spa’s Back of House, Public Areas and Circulation Spaces.

 

10. RevPATH

Expressed as $0.00

Calculated by Total Spa Revenue / Total Treatment Hours Available

This is a similar measurement to RevPAR in hotels. The key difference is that RevPATH is based on total treatment beds, rather the total treatment rooms. This is another good indicator of how efficient your spa is in terms of generating revenue.

nb: Total Treatment Hours Available is calculated by the number of treatment beds in your spa x number of operating hours of the spa.

 

11. GOPPATH

Expressed as $0.00

Calculated by Total Spa GOP (Gross Operating Profit) / Total Treatment Hours Available

This is the ultimate indicator of how efficient your spa business is operating overall. Not just in terms of generating revenue, but in terms of controlling expenses and ultimately generating profits.

nb: Total Treatment Hours Available is calculated by the number of treatment beds in your spa x number of operating hours of the spa.

 

12. Re-booking Percentage

Expressed as %

Calculated by Number of Spa Guests who Re-book / Total Number of Spa Guests

A re-booking is considered to a booking made immediately following the treatment. This measure if a good indication of customer satisfaction with the treatment or service they received. A guest who makes another booking sometime after their initial treatment would not be counted in this KPI. Rather, we would capture them in the Repeat Guest KPI (below).

 

13. Upsell Percentage

Expressed as %

Calculated by Number of Treatment Upgrades Sold / Total Treatments Sold

Upgrades can be sold any time after the initial booking is requested, right up until the time the treatment begins. They can also be made by any member of staff. Upsells are simply a good measure of the effectiveness of your spa team to sell.

 

14. Repeat Guest Percentage

Expressed as %

Calculated by Number of Repeat Guest / Total Spa Guests

A Repeat Guest is the ultimate measure of customer satisfaction. If a guest returns to your spa for another treatment or service, chances are they are satisfied with what the received the first time. A Repeat Guest could be a Re-booking Guest (see above) or not.

 

15. Outside Customer Percentage

Expressed as %

Calculated by Number of Non-Hotel Customers / Total Spa Customers

This is a measure of how relevant your spa is to customers who are not guests in your hotel. It can also be considered an indication of how irrelevant your spa is to the hotel guests.

 

So there’s my Top 15 Spa KPI’s, in no particular order. The reason I haven’t placed them in any specific order is that I believe it’s subjective. Depending on your spa’s specific goals and objectives, you may have a different order of priority to mine.

In addition to the several KPI’s explained above, the standard business metrics that apply to any business also apply to spas. Key indicators such as Payroll %, GOP%, NOP%, EBITDA, etc., are all just as important to a spa business as any other.

 

 

 

 

 

 

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