Health, Wellness and Tourism: healthy tourists, healthy business ...

variable, unstable and seasonal, with high fixed costs and fixed capacity over the short term
on the supply side – as can be seen in the tourism industry in general (Vanhove 1994). Tourist
products are intangible, perishable, diverse and simultaneous to their production. This
demonstrates the need to manage a limited product and a changeable demand for it.
Yield (or revenue) management is considered a key tool for advantageously using the
resources invested in capacity-constrained firms in the tourism sector, reaching the actual and
potential demand and hence maximising profitability (Modica et al. 2009). It is particularly
seen in airlines, hotels and car rental firms, and, less frequently, in other tourism businesses.
Yield management is a strategic approach that optimises unit of inventory availability and
price, based on consumer behaviour prediction, with the objective of maximising revenues
and profitability, improving services and then customer perceived value (Cross 1997,
Donaghy et al. 1995). Kimes (2000) found evidence that yield management is often
implemented in service organisations as a tactical, rather than strategic, approach, for
example, proposing discounted rates to customers in slow periods outside a coherent strategy.
A set of strategic levers have to be adopted to improve the flow of customer demand and thus
performance, including knowledge of clientele segments, time of reservation, appropriate use
of capacity and a change in prices over time.
Some conditions that are present in the tourism service industry favour the effectiveness of
yield management. Yield management is suitable for those entities managing their constrained
capacity, their perishable products, their variable but predictable demand, their high fixed
costs and their pricing structures (Kimes et al. 1998).
This study involves the application of some aspects of yield management to the wellness
industry, specifically spa firms, and an analysis of the effectiveness of revenue management
strategies in this context. The spa industry seems to possess all the attributes to apply yield
management successfully. Spa businesses present similarities to hotels, airlines, car rental
firms, cruise lines, etc., as regards the conditions mentioned above. Spa pricing policies are
different, since spa treatment price tends to be fixed and has not yet been manipulated with
the sophistication that scientific yield management requires. Differential pricing can be
managed, gaining the opportunities that yield management can provide (Phillips 2005, Nagle
et al. 2006, Reece et al. 2000). Demand levels influence the way treatments are priced.
Moving from fixed to variable prices can permit spas to increase clientele numbers and
purchases, revenues and profits.
For the research, a case study approach was adopted, based on a day spa located in Cagliari on
the southern Sardinian coast. In the provision of spa services in Sardinia, as in many other
parts of the world (Kimes et al. 2009), revenue management techniques are not implemented
to contrast variable demand towards profitability results. To construct the case study, the
management practices of the spa were analysed, considering also occupation, treatment
duration and pricing, through semi-structured interviews with the owner/manager and key
staff members and a questionnaire. During these interviews and through the questionnaire the
current performance and the variables determining that performance were also acquired. The
case study tested the demand for a specific service and the related effects on revenues. This
was followed by a comparison with non-discriminating pricing policies practiced for the same
service and the related demand. As a result, the potential of yield management in improving
customer demand, occupation, revenues and, consequently, profits in the spa industry can be
evaluated.