The price is right

Suzanne Holbrook, spa and wellness director at Marriott USA, explains how she makes dynamic pricing work in her spas – charging more at peak times and less during quieter slots

If spas and salons are interested in dynamic pricing, where should they start?

“I always say start with menu engineering, identifying your most beneficial treatments based on volume and profit margin. I like to name my treatments for this exercise, so I divide it into my stars, costlies, slows and lows.

“My stars are high-demand, high-profit treatments. They’re the probably the ones that are going to be dynamic priced. Then you might have a high demand but a low profit. These are costly so do you really want to sell that or do you take that off the menu? If it brings a lot of people in you may want to keep it.

“Then you have low-demand, high-profit treatments. They may be something like a $1,000 diamond facial – you might only sell five a year but if it gets you PR and social media, then keep it on there. Finally, you’ve got your slows – low demand, low profit. I’d take these off the menu – why have a big menu if it’s not selling?”

How do you communicate dynamic pricing to guests?

“Make sure it’s online. We have an online booking system that changes dynamically. A guest will go in and look at a treatment. It will say ‘starting from $x’ and when they go to book it on a certain day and time, it will tell them the price there and then.

“If you’re talking to a guest for the reservation, you’re still going to book them in through the reservation system. If you’re going to do a hard copy treatment menu, just make sure that your prices say ‘starting from’ and train your team well into how to communicate the fluctuations.”

What about guest pushback on higher prices?

“We help our teams with scripts. If the guest comes in and says, ‘my friend got it for $175 and I’m paying $250’, they say, ‘I do have the $175 price, but it’s on Monday, it’s not on a Saturday. Would you like me to book that for you?’, so it really makes you flexible.

“However, I do get feedback from our spa directors that if you’re going to increase your guest’s price, you have to increase their experience. So, you might take some of that additional profit, and add rose petals when they come in or a card for everyone. Use some of that money to put back in your experience because if you’re going to charge them a lot more, it’s got to have that value.”

Can dynamic pricing change in line with occupancy day by day?

“The way we do it is based on therapist utilisation. So, at 50% we might put the price up $10. At 70% we put the price up another $10. At 90%, it goes up another $10. It depends on the location. At some of our spas, you might end up at $100 more than base price for treatment if it’s really busy.”

Can you make dynamic pricing work with gift vouchers?

“We don’t sell gift certificates as a treatment, we only sell it as a price. So you might buy a $200 gift card. If you want to buy someone a massage, we let that guest know when buying that treatment that our starting price is $175 but depending on the date, it may go up and down so they can either add a little or we direct them towards the most appropriate date.”

Holbrook spoke about dynamic pricing as part of the World Spa & Wellness Convention in London in March.