Is Owning a Spa a Way To Earn a Healthy Living?

During 11 years as a broker serving wealthy South Floridians, Nicole Oden made a lot of money, endured a lot of stress and spent a lot of time in spas getting rid of both. So when she became dissatisfied with the spas in her area, she decided to open her own.

In short order, she researched the industry, prepared a business plan, secured a bank loan and in November 2004 opened Spa Eleven, an 11,100-square-foot luxury day spa in Delray Beach. Ms. Oden says the 70-person enterprise generated a modest profit on $3 million in first-year revenues, and she is investigating two more locations.

Running a spa is perhaps the ultimate feel-good business, and spa owners say helping others look better and feel more relaxed is a major benefit of their job. Earning a healthy income in the business, however, is hard work, given the challenges in employee retention and financing.

After years of rapid expansion in the field, competition is a significant factor. Most new spa owners find that the margins are slim, and marketing is challenging, according to Laurel Smoke, editor of  Salon Today, a business magazine for spa and hair salons based in Lincolnshire, Ill. “It’s definitely not an easy way to get rich,” Ms. Smoke says.

Ms. Oden estimates she logs three times the hours she did as a broker, but says she’s “one-eighth as stressed out.” One difference, she says, is that now she’s dispensing relaxation and pampering to pleasure-seekers, instead of financial advice to demanding investors. “I love the stock market and stocks and all that,” she says. “I don’t love the thanklessness of what I did.”

The International Spa Association, a professional organization in Lexington, Ky., estimates approximately 12,100 spas cater to U.S. consumers. Day spas like Ms. Oden’s, where clients come for a few hours of pampering, make up the bulk. Other types include resort and hotel spas where people stay for up to several days, cruise-ship spas, medical and weight-loss spas, and baths, often located near natural springs. Spas provide beauty and relaxation services, including massages, haircuts and facials, and also sell shampoos, bath oils and other personal-care products.

About half those who start spas are technicians from the beauty and personal-care industry, including massage therapists and hair stylists, according to Pat Corbett, president of the Erica Miller Spa School, a training facility in 108 Mile Ranch, British Columbia. Other spa owners come from a variety of fields, including a number who, like, Ms. Oden, were exposed to spas first as customers. “The industry is filled with people who have made a change of career,” Mr. Corbett says.

Some spa owners report making good livings. Ron Lawler, a former stylist and operations executive for a chain of hair salons, opened One Salon & Spa Ltd. in Oak Brook, Ill., in 2004. It started with 12 employees and now has 48. Mr. Lawler says he expects second-year net earnings from the business to equal his former corporate salary. “I thought there was money to be made here,” he says.

Mr. Lawler says he appreciates not having to travel and be away from his family and also enjoys building relationships with customers. “When a client walks out and says, ‘I just feel like butter, I could melt,’ then we have done our job,” Mr. Lawler says.

Relations with employees can be one of the field’s chief challenges, according to Mr. Lawler. Because of the industry’s growth — double-digit annual percentage increases for several years, according to the International Spa Association — stylists, massage therapists and other employees have ample job opportunities.

In an industry based on personal service, that’s a problem. “The turnover is unbelievable,” says Mr. Lawler, who cites 50% annual employee turnover as typical in the field. Mr. Lawler and others say they try to boost retention by interviewing candidates intensively, giving stylists and others ample autonomy and compensating generously, including benefits more typical of large companies.

Capital cost is another issue. Many spa owners overspend on décor and equipment, Mr. Corbett says. “There’s a race to build the best glass and brass and marble palace, and that’s created financial sustainability problems for a lot of people,” he says. Mr. Lawler says generous lease terms offered by spa-equipment vendors have helped him manage financially.

Successful spa owners research their markets to learn whether local demand for spa services is unmet, Ms. Smoke says. Analyze the community, she says. “Do they want tanning services, or massages? Do they want seaweed wraps, or just waxing and pedicures?”

Not all communities are good choices for $175 hair-color highlighting or $350 botox injections, both treatments available at Spa Eleven. Ms. Oden’s affluent customers snap them up with appetite, she says. Their appreciation, she says, is a refreshing change of pace from the brokerage business.



By Mark Henricks

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