a great offer... maybe

[Pompal 09.]

mr. mush and i have worked extremely hard to develop our mobile massage business over the last 7-8 years.
recently, a large hotel has approached us about possibly taking over some already built-out space in their property to offer massage/spa services. we believe it is 3 service rooms with reception plus a men's and women's water closet with sink (1 of each). we would also expect to offer poolside massage as well as in-room service.

if we take this opportunity, it may mean the demise of our mobile business. after all, it is a hotel in a tourist destination, and we'd be looking at a 6 day-a-week operation... possibly 7 after some other mt's are hired.
logistically speaking, we think we'd be the only mt's for the 1st month or so, but we realize that we just wouldn't have the strength or energy to service standing accounts... we think that if it really takes off, we could possibly retain some of those private clients.

we could close our mobile business.
we could reduce it somehow to service only our favorite regular clients.
we could sell it, but that may prove difficult with few actual assets.
we could hire mt's to service the business while trying to start up the fixed site location.

we certainly know that without risk, there is no reward.

our heads are full. there are so many questions...
cooperative advertising/marketing, equipment, supplies, flat rate rent vs. a peceneforum.xxxe of the gross/net, accounting, payroll, and on and on and on...

anyone have experience negotiating with a hotel for this type of thing?

 

[smartie<3 :)]

I think this is a great opportunity! I wouldn't close your current business, I would find out if there are clients that would be interested in keeping you as their therapist, and who would be interested in coming to your new location. I would not give up your client base, I wouldn't send a new therapist to your loyal clients, but I would hire new MT's to help work out the business in the hotel.

My suggestion, draft a letter to all your current clients and get some feedback as to what they will be willing to accomodate.

If this offer was brought to me, I would jump at the opportunity!!! It gives great flexability, and you can run your local practice out of the location, not just those traveling!!!

 

[WINGATE14]

I think this is a great opportunity! I wouldn't close your current business, I would find out if there are clients that would be interested in keeping you as their therapist, and who would be interested in coming to your new location. I would not give up your client base, I wouldn't send a new therapist to your loyal clients, but I would hire new MT's to help work out the business in the hotel.

I totally agree, instead of thinking along the lines of either this/or that, figure out how it would work to do both. I think it is a really exciting and potentially lucrative opportunity.

You current business doesn't even have to change much. You both will be putting a lot of extra time in, to get things up and running at the hotel, but it seems to me that it would make more sense for the 2 of you to personally massage your own long time clients, hire/contract other LMT's to service the hotel and maybe just quit taking new outcall clients since you would have to be overseeing things at the hotel. This will give you some financial stability, instead of saying goodbye to them and starting from scratch. Also, from the perspective of a client, I would not want my long time therapist saying that they've hired someone to come to my home to massage me.

Hopefully others here will help out with some advice on negotiating with the hotel.
Good luck, I'm excited for you,
Noel

 

[dapple]

MS and Mr Mush.

Best of luck on the new venture and I hope you can keep all or most of your current clients. If you need help taking up slack please feel free to contact me. Not interested in taking your clients but willing to help if needed when I am available.

Steve

 

[Krunal J]

thanks all for your replies so far.

half of our business is tourists/business travellers~ usually one-timers, but we do have "irregular regulars"... folks who have second homes here, or who time-share the same week each year.
the other half are locals~ some are one-timers, most are regulars.. once a week or twice a month or monthly cycles.

we anticipate that the new thing will be priced much higher (average $10-15 more per service), because it is a 4 star hotel. i can only think of a few existing clients who would pay that to come to the location.
it is our intention that those who would be hired to handle mobile business, would be doing those one-timers. but we wonder if that amount of business would be too small to keep an mt or 2 busy enough.

thanks vision for your kind support.

we have a preliminary meeting on monday with the hotel. we're going to ask them what do they see/want for that space, what are they willing to pay for/upgrade, and when do they think they want to do this.
we want to keep our ideas quiet, for now, and allow them to express themselves.

i think R&R may have some good insight; but i haven't seen them in a while here.

thanks for your input

 

[Linz]

That does sound like a possibility of building another great business for you two! I'll be watching to see how it all pans out for you, so please keep us posted! Good luck!!!!

 

[shaycos]

Hey Mush, how'd that hotel meeting go??

 

[chicamalika]

I work at a resort that sounds very similar to your opportunity. I am the only MT that does pool side massage one day a week. Most of the time I am totally booked until the time I leave & sometimes I turn people away. The resort converted two closets with sinks into massage rooms. They use to have a company similar to yours that managed the spa but the quality of therapist that showed up was shaky at best, with no guarantee the MT would show up. They fired that company and now use a few quality MT’s on an on call basis. All of us (MT’s) are independent contractors with our own massage businesses. We get paid 60% of all services and keep all tips. Depending on the service and tip, I have made $100+ for a single massage. That is great for working at a resort. We have a good deal and the resort is happy.

My advice to you is, review your business plan and long term goals. My plan is to someday stop massaging and just manage MT’s. Your biggest hurtle and in the future mine, is in finding high quality, dependable MT’s you can trust to be professional, trustworthy, and treat your business like it was their own.

I have a very successful mobile business, but it is just me. I stay away from leasing a space because I hate overhead. You have basically been given a property with a built in clientele. Find a way to make this work, I see big $$$. Remember, there are business owners that have jobs (work all the time), and there are business owners that have businesses. Train your employees, pay them well and find a very good manager = The American Dream

John

 

[Eclipse]

Too late to comment?

Mush,

Sounds like an interesting opportunity, but with a great many variables.

It is never advisable to erode existing business that you can - somewhat - count on. Mobile work is even more variable than spa demand, but we are sure you have found out at that the end of the month, you can pretty much count on X coming your way.

The big pitfall in getting distracted is that most of these folks are going to want it when they want it, and as soon as you are not as available as you used to be, they will quickly find another provider. So you really need to have your new hires in place before you transition out.

Staffing will be hard - really depends on your current demand. Might be better to have several people working a couple of days than trying to keep one or two folks busy 7 days a week. But then it gets more complex managing the schedules of various ICs. What do you do when one flakes out/calls in sick/has a private client of their own call after agreeing to work for you - and they will. Do you have enough business - on an average week - to guarantee every therapist they will not spend the day idle (maybe not each day, but over two weeks you can guarantee a minimum earnings per day/shift worked) Is there enough left over for the Mushes after paying the others to justify the hassle?

As for leasing the space, more fun. On the economic front, you have to decide how much risk you are willing to take on. Firstly, in terms of fixed rent vs. % rent. I go for fixed.

Then you have the costs of your operating risk. If you have a lease and hold the massage establishment license (both are advisable to prevent you from getting the boot on a whim), then you have the costs of liablity insurance for the facility (your association coverage may or may not be sufficient for the hotel ownership's desires). You will probably also have to get Worker's Comp coverage for at least you and Mr. -- even IC's are finding sympathetic juries to award WC claims. You will have to form a limited lilability entity (either LLC or S-Corp) and best to keep the new biz separate from the existing.

You need to have a written contract and pay a lawyer to review.

Then there is the risk of making this profitable. Three treatment rooms can be a huge operation, depending on the size of the hotel. How many rooms do they have? What is their ADR in and out of season (average daily rate)? Occupancy rate in and out of season? Where do the concierge currently refer guests seeking treatments? How often? What are those prices vs what you would charge?

By having their own spa, the hotel ends up cutting the concierge out of the lucrative referral business. How much do they currently get for arranging an in-room vs. spa visit? How will you keep them referring to you if the hotel now gets the $$ in the form of rent? Can you afford to give them a %?

How many appts does it take to equal your existing income - assuming it will wither away (always plan for the worst, if you can stomach that, then proceed)? How many appts = costs of receptionist, other MTs, etc.

To hammer out with the hotel:

How services will be promoted and who pays? If you are on fixed rent, then you will pay. If it is a %, then you both win so it should be shared, or some 100% on them (like the hotel's website & TV channel)

Who provides equipment / furnishings? If they provide, it makes it easier to switch vendors. It is not that you will do a bad job, but GMs change in this industry like Italy changes governments. If all you bring to the equation are your bodies and massage skills, there are plenty of other MTs in FL who will probably volunteer to do things for a better deal.

What will be done for unhappy guests/clients? (does not matter if they are full of BS, hotels always side with the guest - a $1,000+ client to them vs. $90 to you!) Count on 2% for goodwill massages, etc. Some Guests think just because they stay at the hotel they are ENTITLED to a treatment when THEY want it. And if not, look out!

The more they pay for, the more control they will want to have (like the option to cancel the agreement on 30 days, approve all promo material etc., decide your hours of operation and service level, etc)

 

[spinster wife]

R&R mentioned a good point that is easy to miss - with a big hotel, it really means a receptionist, answer machines just don't provide the level of service. If they are ringing up they want to talk to someone THEN, they at least want to be able to book an appointment straight away, tourists may not know what they are doing exactly for the rest of the day, but like to know appointment time so they can fit plans around it. If they reach an answering machine, they're likely to call the concierge for someone that answers the phone. Talk to someone THEN means between 8am and 8pm, at least, you may not have to provide services from 8am - 8pm, but you need to have the phone answered by a human for that time frame for hotel business, it's for those people that wake up in the morning and would like to make an appointment before they go off for some tour, or the ones that get back after a long day with lots of walking that would like a massage the next day. The human answering the phone doesn't have to be at the hotel, calls can be diverted, but it's got to be answered.

 

[katie h]

I wish....

Melb - I wish it were just 8am - 8pm. More like 8 - 10pm. Depending on how far south in FL Mush is, it could be worse (our SoBe clients leave us messages after midnight expecting a therapist at 9AM!)

Now that we are nationwide our call center is open 8AM - Midnight Eastern time.

 

[Pompal 09.]

all very good points. and i thank you for your input.

getting ahold of the GM, who hs been travelling, has been our biggest challenge.
today we have our first big meeting. i'll post later and let you know...

 

[Kim M]

Deep pockets...

One thing that has helped us immensely is having access to capital.

As a hotel amenity, expect the hotel to ask that guests be permitted to charge services to their room accounts. They will want to be like room service - sign and go - not a transaction with a third party. That means you need

A) A billing system
B) A bank loan with your invoices as collateral

At any given time, each of our hotel clients owe us about $4,000 just for in-room services. A three room spa should be doing closer to $20,000 per month. Until you get paid by the hotel at the end of the month, you will have to survive, pay your employees, pay your rent, pay your suppliers, etc.

If you are going to retail products, most good product lines (like Elemis, Dermalogica, etc) require an opening order of $5 - 10,000 each.

lack of capital and the associated cash flow problems are what kill most small businesses.

 

[Tiffany]

Too late to comment?

Then there is the risk of making this profitable. Three treatment rooms can be a huge operation, depending on the size of the hotel. How many rooms do they have? What is their ADR in and out of season (average daily rate)? Occupancy rate in and out of season? Where do the concierge currently refer guests seeking treatments? How often? What are those prices vs what you would charge?

By having their own spa, the hotel ends up cutting the concierge out of the lucrative referral business. How much do they currently get for arranging an in-room vs. spa visit? How will you keep them referring to you if the hotel now gets the $$ in the form of rent? Can you afford to give them a %?

How services will be promoted and who pays? If you are on fixed rent, then you will pay. If it is a %, then you both win so it should be shared, or some 100% on them (like the hotel's website & TV channel)

Who provides equipment / furnishings? If they provide, it makes it easier to switch vendors. It is not that you will do a bad job, but GMs change in this industry like Italy changes governments. If all you bring to the equation are your bodies and massage skills, there are plenty of other MTs in FL who will probably volunteer to do things for a better deal.

What will be done for unhappy guests/clients? (does not matter if they are full of BS, hotels always side with the guest - a $1,000+ client to them vs. $90 to you!) Count on 2% for goodwill massages, etc. Some Guests think just because they stay at the hotel they are ENTITLED to a treatment when THEY want it. And if not, look out!

The more they pay for, the more control they will want to have (like the option to cancel the agreement on 30 days, approve all promo material etc., decide your hours of operation and service level, etc)

so far, i can tell you that the space currently has 4 service rooms. the hotel has over 700 rooms, the largest in my town. it is the premier convention and meeting property.
our contact for the meeting yesterday didn't have occupancy rates. the resort commands about $150 per night, but ADR and such was also not available. she did say the spa space would be limited to hotel guests only. we told her that rent must be based on occupancy if that is their choice. (if the hotel is quiet and we can't draw locals, i don't see another reasonable way to handle it.) no specific numbers were discussed.
the conceirge has been using us for in-room services. i'm sure she may be using others. the referral fee market here is casual at best.
they do not want to capitalize the start-up. all licenses, rental agreement, and equipment will be in our name. i want the right to renew and sell my business if i choose. they would like to specify a minimum hours of operations, but we anticipate that isn't an issue.
their overall position is that they know they need this amenity on property. they don't know how to achieve this and the less they have to do/decide is just dandy with them. they just want to be able to say they have a 'spa' and perhaps increase their hotel star rating...
the woman told us that we should write a proposal based on the walk-through we did yesterday, where we narrated our 'vision' for the space.
we think she wants a detailed synopsis of operations, what physical changes we need (& at whose expense), and, at this point... who knows what else. t017 t102

i'm not exactly sure if it's a quasi-business plan or a casual synopsis....
any thoughts??

 

[I can haz your soul]

Deep pockets...

One thing that has helped us immensely is having access to capital.

As a hotel amenity, expect the hotel to ask that guests be permitted to charge services to their room accounts. They will want to be like room service - sign and go - not a transaction with a third party. That means you need

A) A billing system
B) A bank loan with your invoices as collateral

At any given time, each of our hotel clients owe us about $4,000 just for in-room services. A three room spa should be doing closer to $20,000 per month. Until you get paid by the hotel at the end of the month, you will have to survive, pay your employees, pay your rent, pay your suppliers, etc.

If you are going to retail products, most good product lines (like Elemis, Dermalogica, etc) require an opening order of $5 - 10,000 each.

lack of capital and the associated cash flow problems are what kill most small businesses.

we've mentioned that approx. 60% will want to room charge. she seemed to be surprised by that number....
also most of the services probably would be for in-spa, how does one control room charges by parties in the room who don't have charging privileges? mr. mush worked in a resort spa that had access to hotel charging info to verify. otherwise, they had serious issues with unauthorized users and charges being disputed. and it doesn't seem like they want us hooked up to their hotel software...

also, we've been looking into private label products. i found a great company in california who has small minimums, and a great reputation. of the 3 other competing spas, one is using pevonia, one is using dermologica, and the other is PL. i do want to look in to elemis by steiner. mr. mush want to a steiner-owned school.

 

[catnipnbones]

Billing systems

90% of our services are room charged.

If the concierge sets it up, it is up to them to provide the name to which the room is registered (without that, accounting will never find their travelling companions and you will be stuck).

When a guest calls direct, simply ask them the name the room is registered to.

 

[Mey]

Too late to comment?

700 rooms is huge, 4 treatment rooms should do just fine.

$150 is a little on the low side which will impact the price you can charge for your treatments.

The #1 thing you can do to make this successful is for the property to change its name on its website and all external communications to the "'Blah Blah Hotel & Spa"

Once the put the word Spa in their name, you won't have to worry about promoting your services to the guests - they will come looking for it!

If they average 500 occupied rooms per night, you should expect to get 15 - 20 appts per day.