There are many challenges to profitability when operating a spa. These include:

• Ease of entry into the spa industry
  • Increasing competition from the medical, hospitality, beauty, and fitness industries

• Inherited beauty industry traditions
  • Extensive use of independent contractors (booth rental tradition)

• Out of control compensation costs that create ever-increasing losses

• Low margins;
  • Similar to restaurants, spas have traditionally low margins (2% to 7% return on investment is common, vary rarely higher than 15%)

• Poor retailing skills and high commissions on retail
  • 10% commissions in the spa industry versus 2% to 3% commissions at a department store cosmetic counter

• Escalating treatment costs

• Missed opportunities of client retention
  • Lack of rebooking clients before they leave the spa