What's the ROI of Wet Spa Facilities?
When built using modern methods and technology as discussed in our recent article, Hydrothermal areas in wet spa facilities can involve a significant investment. This investment can provide equally significant returns; however, there are barriers to overcome with owners and operators who traditionally view these facilities as a free-use amenity type of model. We would like to offer an alternative approach to how wet spa areas can become revenue generating centers using an example based on a destination type of hydrothermal spa facility, with male and female gender segregated areas that include: Sauna, Steam room, Laconium, Igloo or ice chamber, Foot spa, Cool-down showers, Hydrotherapy pool or Relaxation lounge. This type of facility size allows 2,500 square feet per gender, 5,000 square feet total, including circulation space, but excluding locker rooms or treatment areas. How much would a facility like this cost? Using a model of 5,000 square feet, designed and installed, with all technology and the hydrothermal features built, ready to receive finishes, consider the following sums: ◾5,000 sq ft @ $400/sq ft = $2,000,000.00 ◾18,500 sq ft of finishes @ $50/sq ft = $1,000,000.00 ◾Grand Total = $3,000,000 These figures exclude any building services or infrastructure which would be necessary to support a space, whatever it is used for. How is this investment returned? 2,500 square feet of gender-segregated space will easily support 60 guests at any one time. Assume that 20 men and 20 women would be visiting the hydrothermal areas of the spa every 4 hours of a 12 hour operating day. The average charge for using such facilities at a luxury property could be $55, but for the purpose of this exercise we are going to work on a lesser model with a $40 facility fee. ◾20 men + 20 women = 40 guests x $40 = $1,600 ◾Guest turnover @ 3 times a day x $1,600 = $4,800 a day ◾Allowing 360 days a year in operation = $1,728,000 income per year ◾Payback period of 21 months! What about overheads? Staffing levels for hydrothermal facilities are very low. There are no expensive therapists to staff, just attendants keeping the facility clean. At 35% of income, overheads would reduce the payback period to 32 months. A higher overhead at 50% of income would reduce the payback period to 42 months or 3.5 years. Given an average life expectancy of at least 12 years for a well-maintained facility, a hydrothermal facility will show a significant return on the initial investment over its lifetime, even while charging a modest facility usage fee of $40 per guest. The facility usage fee will more often than not be the lowest cost item on the spa menu. This entrance fee also serves as a unique way to get new guests into the spa, providing a captive opportunity to up sell guests on other treatments, services and products. Courtesy of: Matt Williamson, Design for Leisure