The Comp at the Top: How Much Should Spa Owners and Managers Make?
This is our final post in our spa compensation series. In previous posts, we went over how we arrived at current compensation structures, discussed how to best compensate spa support staff, and looked at the different ways to compensate spa service providers. We're rounding out this series by going over how spa owners and spa managers are typically paid.
Let’s tackle spa managers first. Please understand that these are broad-brush estimates and do not take into account specifics of a location, owner, or skillset. There is a wide range of responsibilities in this role, which is reflected in the pay rates and titles. A local day spa, employing fewer than 15 people, with perhaps four treatment rooms, is not going to pay a management position in the same way as a larger, busy spa with 40+ employees.
Compensation for the spa director/manager
Hotel and resort spas
At the top of the pecking order are hotel and resort spas with 60 or more employees, and whose spa managers often oversee fitness and swimming pool areas as well as the spa. These positions are generally titled as spa directors and will have compensation packages that can range into the low six-figures, in the form of salary plus bonuses and incentives.
Spa directors are well-versed in the fiscal aspects of their operation; they are responsible for the income statement and budgets, and are held accountable for hitting their targets. They will usually have at least one assistant. In a hotel or resort, the parent property will often handle or assist with the human resources, marketing, and engineering needs of the spa, among others. These operations are also running seven days per week, and sometimes even 24 hours per day.
Mid-sized spas and wellness centers
In a mid-sized spa or wellness center, perhaps 8,000-10,000 square feet, say 25-50 employees, this lead position may be called spa director or spa operations manager. This position will be responsible for hitting revenue and expense targets, keeping the facility fully staffed with motivated and well-trained employees, and maintaining the physical plant. They may also have to contribute to marketing campaigns and concepts and be very creative with promotional ideas. This type of manager would normally be paid in the range of $48,000 to $68,000—again varying based on region and specific responsibilities.
Local day spas
The local day spa, with 12-15 employees and four to six treatment rooms, will obviously have an easier operation to manage. In these cases, there is often a spa owner involved who will handle legal, financial, and strategy issues, while the spa manager is responsible for day-to-day operations. Spa managers would be tasked with daily opening and closing, scheduling staff, managing inventory, customer service, and boosting morale. The average salary for this type of position can range from $30,000 to $45,000—again depending on location and other factors.
It is common to pay managers a salary, to offer at least some benefits, and to provide bonus potential. PTO, or paid time off, is expected in this position; at least one week off after the first year, and two weeks after three or more years. If there is a health care plan available, that is an excellent selling point with prospective managers, who often come from retail or hospitality backgrounds where benefits are expected. Bonuses are as wide-ranging as the compensation methods for service providers, but in general, should be able to be earned quarterly, should be dependent on hitting both revenue and expense targets, and should offer the opportunity to add 5% to 10% to the salaried compensation.
Having strong spa management is a key component of both guest satisfaction and employee retention, so ensuring that you structure a plan that rewards the loyalty and growth of this position is always good for the business. Note the following graphic excerpt from the landmark 2018 ISPA Workforce Study:
Compensation for the spa owner
Certainly, the owner should be able to earn a living from the spa. One thing to consider is, does the owner work IN the spa business, or ON it? Some owners still provide treatments, although on a limited schedule. If you are in this camp, you should be paying yourself the same way you would pay a service provider who would be bringing in those revenue dollars. If you are an owner that works as a manager or overseer, you deserve a salary for that also. This will be commensurate with your organizational chart; the degree of owner participation and oversight will determine the salary.
Some owners perform ALL management duties, so they should pay themselves the same market value they would pay for a manager in that position. If the business is set up correctly, hits its revenue targets, has good client retention, and is able to contribute revenue through retail sales, there will be profits at the end of the day. These profits can be kept by the owner as income, or put back into the business, or both. Much of this is dependent on the legal structure of the business, which will involve the advice of lawyers and accountants. But owners can end up receiving income through these various silos; direct compensation for providing services, for being the manager, and then control over the profit at the end of the year.
Unfortunately, many owners of day spas are struggling to meet their business income projections, usually the result of overly rosy revenue and expense forecasts, and especially true in 2020. But as the person with the original idea, and the risk, it is only fair that there be some rewards at the end of the day. Beyond personal satisfaction, of course!