Asandra Spa Lounge's Profitable Approach to Capacity Planning
Gene and Paul Frisco, two of the owners of the fast-growing Asandra Spa Lounge in Manhattan, New York.
At the post-recession time when many salons were walking away from the day spa business to focus their attention on the less-risky business of hair, Gene and Paul Frisco, two of the owners of Asandra Spa Lounge were embracing their spa side.
In the sections of Manhattan where they are located, ground floor rents are as high as $1,000 a square foot, but by building on the third floor they could get a rent closer to $50 a square foot. Instead of focusing on walk-by traffic to build their business, they focused on the walk-through traffic of their spa-goers to build up their salon clientele.
Since opening in 2011, Asandra has grown two locations with gross sales in excess of $5,000,000, and they've done it by studying their service inventory through a lens that's new to the world of beauty. With 22 treatment rooms and 33 chairs, the Friscos knew they had as many as 11,000 services to sell per month.
“We are still barely four years old, and our approach to revenue management follows the travel and hospitality industry,” Gene says. “Every service hour of every day is tracked for the best way to sell it at the best available price. In order to do that we built a revenue management algorithm that didn’t exist in the salon industry. Today, it’s an automated system we use to set pricing with availability in a model fully responsive to changes in demand.”
For example, Asandra’s rack rate for a standard 60-minute massage is $100. But when openings are high, prices can fluctuate, dropping as low as $49. Eight highly trained call center employees contact guests with existing appointments to suggest add-on services, while Asandra also advertises on Last Minute Appointment to fill openings. “We actively sell our capacity, instead of waiting for people to call in and request appointments,” Gene explains.
That means commissions for particular services can fluctuate for employees, but team members quickly understand that demand influences the percentage of their appointments which are sold are full price, and they take an active interest persuading their clientele to prebook.
“Our salon director in our Park Avenue store moved here from San Diego and in July, his first month, his book was 100 percent Groupon. By November he had converted many of those guests, and today 80 percent of his book were pre-booked appointments or call-in requests at full price.”
Because their view is so unique, the Friscos have been tapped by Delta Airlines to build and manage the spas in the Delta Sky Clubs. The first in JFK, Atlanta, Seattle and Miami will open in early 2017.