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Realize your finances
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Copyright 2020. Creative Spa Concepts Inc. All Rights Reserved.
What Everyone Should Know About Spa Development Part III
Copyright 2020. Creative Spa Concepts Inc. All Rights Reserved.
THE FINANCIAL REALITY
As presented at ISPA 2006Prepared and presented by: Mitch Jucha
Copyright 2020. Creative Spa Concepts Inc. All Rights Reserved.
How much revenue will the spa generate?
How many treatment rooms should be programmed?
THE FINANCIAL REALITY
Is the project financially feasible?
Copyright 2020. Creative Spa Concepts Inc. All Rights Reserved.
Necessary Information:
Hotel Occupancy
Guest Type
FINANCIAL PROJECTIONS
Consumer Profile
Area Foot Traffic
Local Demographics
Amount/Proximity of Competitors
Copyright 2020. Creative Spa Concepts Inc. All Rights Reserved.
Leisure Guest
Group Incentive and Non-Incentive
Business Traveler
SPA GUEST TYPES
Local Guest
Copyright 2020. Creative Spa Concepts Inc. All Rights Reserved.
Resort Hotel X
500 rooms
75% occupancy
SIMPLIFIED PROJECTION
Leisure Guests 450 (80%)Group Guests 112 (20%)
Guests per room 1.50
Copyright 2020. Creative Spa Concepts Inc. All Rights Reserved.
**Leisure Guests 10%+
Group Guests 5 -15%
Business Traveler 5 -10%
AVERAGE CAPTURE RATES*
*Many factors can impact guest capture rates. Reviewing annual industry benchmarks for your region will ensure accurate projections.
**Leisure capture rates can vary dramatically from region to region. Spa type will also have an impact. For example , Destination Spas will enjoy much higher captures than other spa types, as spa is a central focus of the guests visit.
Copyright 2020. Creative Spa Concepts Inc. All Rights Reserved.
SIMPLIFIED PROJECTION
Total Leisure Guests Available 375Total Group Guests Available 94
Expected Leisure Guest Capture Rate 20%Expected Group Guest Capture Rate 10%
Projected Leisure Guest Demand75
Projected Group Guest Demand 9
Total Spa Guest Demand 84
Copyright 2020. Creative Spa Concepts Inc. All Rights Reserved.
SIMPLIFIED PROJECTION
Guest Demand 84
X
Treatments per Guest 1.50
X
Price per Treatment $100
=
Total Revenue $12,600
Copyright 2020. Creative Spa Concepts Inc. All Rights Reserved.
SIZE MATTERS
FINANCIAL PROJECTIONS
Copyright 2020. Creative Spa Concepts Inc. All Rights Reserved.
Is the project financially feasible?
FINANCIAL FEASIBILITY
Investors expect to see a minimum of 20-25% annual rate of return and as much as 50-100%.
Copyright 2020. Creative Spa Concepts Inc. All Rights Reserved.
DEVELOPMENT COSTS
Architecture and Interior Design
Real Estate
Construction
Spa Consultant
Permits
Copyright 2020. Creative Spa Concepts Inc. All Rights Reserved.
PRE-OPENING EXPENSE
Furniture, Fixtures and Equipment (FF&E)
Marketing and Public Relations
Operational Expenses
Cash Reserves
Operating Supplies and Equipment (OS&E)
Payroll and Training
Slide Number 1THE FINANCIAL REALITYFINANCIAL PROJECTIONSSPA GUEST TYPESSIMPLIFIED PROJECTIONAVERAGE CAPTURE RATES*SIMPLIFIED PROJECTIONSIMPLIFIED PROJECTIONFINANCIAL PROJECTIONSFINANCIAL FEASIBILITYDEVELOPMENT COSTSPRE-OPENING EXPENSE