revenue management.docx

revenue management.docx

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revenuemanagement

RevenueManagement:

CreatingaStrategicManagementPlaninBelezaSpa

Author

Abstract:

Thespahasbeenmoreandmorepopularintherecentyears,whichhasgreatprofit.However,therearestillproblemsofthespaindustrybecauseofthecompetitionaswellasthemanagementofthespa.TheBelezaSpastudiedinthereportmeetstheproblemofalowtotalrevenueandroomoccupancyratio.ThepapertriestodefinetheprobleminBelezaSpabasedonitspreviousdataandthengivingthecorrespondingactionstosolvetheproblem.

1Introduction

Withtheeconomydevelopingrapidlyandtheimprovingstandardofliving,peoplefocusmoreonthequalityoflife.Healthwillbetheprimaryconcernofthepeople.Butinthereallife,peoplehavestrongcompetitivepressureandunhealthylifestyles,leadingtomostofthecitypeoplelivinginsub-healthstate.However,theSPAwouldhelppeoplerelaxandimprovethehealth.Thisisthebaseoftherapidgrowthoftheapsindustry.Theamountofthespahasincreasedramaticallyrecently.Moreandmorepeoplehaveknownthebenefitofthespaservicesandawonderfulfacilitytorelyon.Theincreasepopularityofthespabringsgreatinteresttotheindustry.Thus,itisimportanttocatchtheopportunity（PatrickL.2011）.

Theauthor,theManagerofBelezaSpareceivesthetaskfromtheSEGBoardofDirectorstocreateandimplementastrategytooptimizeandmaximizetheoverallrevenuestreamofthespa.Themanagerofspaalwaysknowstheimportanceofthereliablestatisticsanditscomparingperformancewithindustryaverageslevel,keepingaheadofthenewesttrendsofthespaindustryaswellasmonitoringthewholeindustry.Thedataofrevenuecangivemanageranoverviewofthespamanagementbyidentifyingtheproblems,theareaneedingimprovement,relevancetothemarket,andhowmuchtheprofitis.Moreover,thequantitativefindingsshouldbenotonlybasedonthestaticallydata,butalsotheexperienceofthemanagerbecauseitneedtotakeactionsafterdefiningtheproblem,aswellaspredicttheeffectoftheactionsandevaluatetheplan（NinaC.2010）.

Therearethreesectionofthereport.Sectiontwocollectsreliabledatafromthedailyoperationofthemanagementandthespaindustrydata.Atotalof6keymetricsofthespaindustryrelatedwithperformanceofthespaoperationisanalyzedsoastofindtheproblemofthespa.Inthenextsection,theauthormakesadetailactionplanofthespaandthetimetablebasedonthepreviousanalysisresult.Andthen,insectionfour,afurtherevaluationofthedecisionisobtainedbypredictingtheeffectoftheplanandcalculatingthepredictingrevenueofthespa.Inthefinalpart,theconclusionofthewholestudyisprovided.

2Problemdetermination

Inthispart,theauthorwillpresentthecurrentsituationofBelezaspabyusingtherevenuemanagementmethodandcriticallyanalyzingthesixmetricstoevaluatetheperformanceoftheBelezaspa.Thesemetricsareusefulforthemanagerknowingthesituationofthespaandhelpoperatethespawellsoastoincreasetheprofit.

2.1revenuemanagementanalysis

AtotalofsixmetricsarestudiedinordertounderstandthecurrentsituationofBelezaSpa,whicharethemainperformanceindicatorstocompletetheevaluation.

2.1.1AverageTreatmentRevenueperTreatmentSold

TimeFrame:

from06,Febto06,Mar

Calculation:

AverageTreatmentRevenueperTreatmentSold=TreatmentRevenue/

No.ofTreatmentsBooked

TotalTreatmentRevenue:

5500.50CHF

No.ofTreatmentBooked:

89treatments

AverageTreatmentRevenueperTreatmentSold=5500.5÷89=61.80CHF

Themetricresultshowsthatverytreatmentsoldcangetarevenueof61.80CHF.Asmostoftheproducthaveahigherpriceoftheresult,itindicatesthattheaveragetreatmentprvenuepertreatmentsoldisrelativelylow.Thereisspacetofillup.

2.1.2AverageDailyTreatmentRevenueperTreatmentRoom

TimeFrame:

from06,Febto06,Mar

Calculation:

AverageDailyTreatmentRevenueperTreatmentRoom=Treatment

Revenue/AvailableTreatmentsRooms

TotalTreatmentRevenue:

5500.50CHF

AvailableTreatmentRooms:

5rooms

WorkingDay:

18days

AverageDailyTreatmentRevenueperTreatmentRoom=5500.5/（5*18）=61.12CHF

Thismeasurementistomeasuretheprofitofaunittreatmentroommaking.Onetreatmentroomcanmakeprofitof61.12CHFperday.

2.1.3AverageDailyTreatmentRevenueGeneratedbyTherapist

TimeFrame:

from06,Febto06,Mar

Calculation:

AverageDailyTreatmentRevenueGeneratedbyTherapist=Treatment

Revenue/AvailableTherapists

Therapist:

Jeff

TotalTreatmentRevenue:

915CHF

WorkingDays:

5days

AvailableTreatmentHoursperDay:

4hours

AverageDailyTreatmentRevenueGeneratedbyTherapist=915/（5*4）=45.75CHF

Therapist:

Alex

TotalTreatmentRevenue:

350.5CHF

WorkingDays:

3days

AvailableTreatmentHoursperDay:

4hours

AverageDailyTreatmentRevenueGeneratedbyTherapist=350.5/（3*4）=29.21CHF

Therapist:

Regine

TotalTreatmentRevenue:

681CHF

WorkingDays:

6days

AvailableTreatmentHoursperDay:

4hours

AverageDailyTreatmentRevenueGeneratedbyTherapist=681/（7*4）=24.32CHF

Therapist:

Christa

TotalTreatmentRevenue:

140CHF

WorkingDays:

3days

AvailableTreatmentHoursperDay:

4hours

AverageDailyTreatmentRevenueGeneratedbyTherapist=140/（3*4）=11.67CHF

Themeasureofeffectisveryimportanttoevaluatetherevenueofthetherapistwhocanmakeandhelpthemanagertomanagethetherapist.Theseresultsshowdirectbenefitthetherapistmakesandevaluatetheefficiencyofthetherapist.

2.1.4.RevPATHRevenueperavailabletreatmenthour

TimeFrame:

from06,Febto06,Mar

Calculation:

Revenueperavailabletreatmenthour=TreatmentRevenue/Available

TreatmentRoomHours

Totaltreatmentrevenue:

5500.50CHF

Workingdays:

18days

AvailableTreatmentroom:

4rooms

AvailableTreatmentHoursperDay:

4hours

AvailableTreatmentRoomHours:

18*4*4=288hours

5500.50/288=19.10CHF

REVPATHshowstheRevenuePerAvailableTreatmentHour,itiscalculatedbythetotalrevenuedividingthethenumberoftreatmentroomhours,whichcanbealsocalculatedbytreatmentroomsmultiplyingnumbersofhoursopened.

TheREVPATHresultshelpstogetanoverviewoftrendofdayintheweekandtimeintheday.Itisusefultoenablemanagerstodevelopsuitablestrategyandmakefulluseoftheroomssoastogetapromotionofthetotalrevenueevenduringalowdemandtime.

2.1.5.Utilizationoftreatmentroom’shours（%）

TimeFrame:

from06,Febto06,Mar

Calculation:

Utilizationoftreatmentroom’shours（%）=No.ofTreatmentRooms

HoursOccupied/AvailableTreatmentRoomHours*100%

TreatmentRoom

Occupiedhours

Availablehours

Utilizationoftreatmentroom'sours（%）

Fire

17.75

72

22%

Metal

13.5

72

17%

Wood（hair）

21.42

72

27%

Wood（nail）

323.08

72

29%

Earth

3.75

72

5%

Total

79.5

360

22.08%

Theutilizationrationofthespadeterminesthetimeandspacethathavebeenused.Fromthiscouldknowthathowmuchprofitspacecanbeabletoutilizetoachievethemaximizedutilization.

2.1.6.Utilizationoftherapist’shours（%）

TimeFrame:

from06,Febto06,Mar

Calculation:

Utilizationoftherapist’shours（%）=OccupiedTherapistHours/

AvailableTherapistHours*100%

Therapist

Occupiedhours

Availablehours

Utilizationoftreatmenttherapist'sours（%）

Regina

21.08

24

87

Jeff

14.37

16

89

Alex

6.35

12

53

Crista

10.55

12

88

Total

52.35

64

82

Total（withCorali）

79.5

104

76

TheseresultsshowthatwhoisthemostpopulartherapistinBelezaSpaandwhoistheleastpopulartherapistandforthis,wecouldmakesomemeasuretohelptheleastpopulartherapisttoincreasingbusinessandalsoenhancethebusinessofthemostpopularone.

2.2Theproblems

Basedontheanalysisresults,wecanseetherearethreemainproblemsoftheBelezaSpa.

2.2.1Thelackofcustomers

Theoccupancyratiooftreatmentroomsislowduringopeninghours.Moreover,thetotalrevenueofthespaislow.Anotherkeyindex,theUtilizationoftreatmentroom’shoursalsoindicatesthattheaverageutilizationoftreatmentroomisnoly22.08%,whichstaysinaverylowlevel.Ifitcanbeincreasedto60%,thetotalrevenuewillincreasesuddenly.Theonlyreasonthatcanexplainthesceneisthelackofcustomers.AftertheTAC,itisconcludedthatthelackofcustomersisthemostseriousproblem.Tofindtheproductionoftheproblem,theauthortriestoanalyzethemarketofthespa.TheBelezaspaislocatedinLeysin,Swithzerland,whereisthewonderdestinationfortouristwholikewintersportandthenaturescene.However,thelocalmarketislimitedbecausethereisalimitationofthetotalpopulation.Moreover,theauthorfindsthatmostofthevisitorscomefromstaffs,facultyandstudentsofSHMScampus.Thegroupmaybethetargetofthemarket.

2.2.2apoorperformanceofretailsalesinBelezaSpa

ThereisfewretailsalebasedontheTAC.However,inthespaindustry,theretailsincomesaccountformorethan20%ofthetotalincome.Thus,theBelezaspaprovidesareallypoorservicefortheretailprodect.Astheresearchofthemarketofthestudentandstaff,mostofthepeoplewillbuyretailproductduringthespaserviceperiod.Thus,theproductionstructureisnotreasonable.

2.2.3ThepayrollofBelezaSpaisnotrational

ThepayrollofBelezaSpaisnotrational.Inthestudyofthesituationofthespa,itshowsthatthetherapistscouldgain80%commissionofthetreatmentwhiletheBelezaspacanonlygetthelast20%.Moreover,asthespaalwaysneedtoprovidespecialofferdiscountforthecostumers,whichmeansthespawillsuffermoreloss,finally,thespawillge