No Spa sacrifices!

No Spa sacrifices!

As we walk through the door, a warm welcome promises inspiring moments... this could be the prelude to any spa experience!

Following a typical spa visit pattern, we introduce a cost accounting analysis through a spa-goer perspective.

 Photo credits: Raúl Rosillo extracted from https://www.youtube.com/watch?v=epJ29Rf6jcg

Talking about costs is the same as talking about sacrifices, which when related to a spa seems non-sense!

As we are escorted by the therapist, we realize this sensory experience implies significant actual costs, derived from CAPEX (namely extensive facilities), a numerous staff and a comprehensive cost budget, based on estimates.

Spa cost analysis involves defining its cost objects, which can be measured by:

Product - skin care and retail merchandising; 

Service - grouped by facials, massages, body wraps, scrubs, finishing; 

Training - for therapists' improvement;

R&D - new signature treatments; 

Activity - in-room therapies, heat/hydro experiences, fitness.

Indulging in an aromatic steam room makes the massive spa costs apparent.

Let's try to analyze these costs according to a major classification: 

i) assignment to cost objects: direct / indirect; 

ii) behavior pattern related to the activity level: variable / fixed.

A non-exhaustive reflection is reproduced below.

COSTS	Direct	Indirect
Variable	On-call therapists’ wages  In-room professional skincare products  Operating supplies	Utilities (electricity, water,…)  Pool chlorine  Aromatizer supplies
Fixed	Fixed therapists’ wages	Spa manager wage  Cleaning and maintenance wages  Rent  Insurances  Depreciation of spa equipment

However, this classification is not straightforward. For instance, does the pool chlorine and the oil to scent the facilities have substantive materiality? If the former device works 24/7 and the latter for at least 12h a day, this doubt is likely to disappear. This means that the classification of costs requires judgment and depends on the assumptions.

Aware of this, the only thing that does not seem to imply sacrifices in a spa is the deserved massage!

Photo credits: Raúl Rosillo extracted from https://www.youtube.com/watch?v=epJ29Rf6jcg