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

Although day spas, including Valentino, don’t tend to segment or analyse their market data,
the historical demand data regarding time-variable and predictable demand gathered in this
case study demonstrates that segmentation is possible, therefore satisfying the necessary
criteria for applying yield management.
Pricing policies
It was discovered that day spa Valentino uses a fixed pricing policy for all of its products and
services, except for one body treatment, which is offered at a discounted rate between October
and January each year. This practice of implementing a fixed pricing policy is frequent in the
international spa wellness industry, which does not favour yield management as it requires a
variable pricing policy to enable its implementation.
Cost structure
The following pie charts show the cost structure for some treatments offered at day spa
Valentino before the test took place in February 2010.
PROFESSIONAL PRODUCTS 30.00%
SALARIES AND WAGES 13.62%
SUPPLIES 2.00%
PROFESSIONAL PRODUCTS 4.80%
SALARIES AND WAGES 21.80%
CONTRIBUTION 71.40%
Figure 1 Cost structure for facial- percentage Figure 2 Cost structure for massage -
percentage on revenue on revenue
SALARIES AND W AGES 48.47%
SUPPLIES 0.50%
CONTRIBUTION 29.80%
SUPPLIES 0.73%
CONTRIBUTION 55.80%
PROFESSIONAL PRODUCTS 21.00%
SALARIES AND WAGES 36.35%
PROFESSIONAL PRODUCTS 7.60%
CONTRIBUTION 47.30%
SUPPLIES 8.75%
Figure 3 Cost structure for manicure – percentage Figure 4 Cost structure for waxing
- percentage on revenue on revenue
The pie charts below show the cost structure for the case study product, a Damascan Rose
Scrub and Massage, at a fixed price and at the discounted price. The data shows a high
treatment contribution by each service studied. This is consistent with yield management
which is suitable for businesses with high fixed costs as the treatment contribution can be
used to cover the remaining costs.