Spa business

March 17, 2020 •

7 min reading

Hotel Spa Business: not as Relaxing as you Think

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Luxury and upscale hotel spas rarely provide hotel owners with the same level of financial returns that they receive from other hotel departments. As a result, hotel companies often outsource the management of their spas to specialized spa businesses. This is because, through their unique knowledge and experience, such firms may operate the spas more efficiently and effectively than the hotels can. Such outsourcing can range from full outsourcing to management contracts to management assistance contracts, depending on the amount of decision-making granted to the spa company.

While companies across industries often outsource their non-core services in order to reduce their costs and/or improve their products and services, outsourcing can have a negative impact on a company’s management personnel. Studies in other industries have found, for example, that it can often result in poor morale, lower productivity and higher turnover.


Outsourcing Challenges for Spa Business Managers

Researchers suspect that one reason outsourcing may lead to such challenges is that the managers who run outsourced departments must coordinate the relationship between the two organizations: the client (the outsourcer) and the contracted company (the service provider). This is a particularly difficult task for managers since organizations often have very distinct and possibly conflicting values, processes and objectives. Managers who have to bridge the gap between the two organizations may thus receive contradictory or unclear orders about what they should prioritize and coordinate. This can result in “role ambiguity” and “role conflict” which are two common causes of work-related stress.

Role ambiguity occurs when individuals do not know what is expected of them and is frequently caused by a lack of communication, not having the proper tools or information to perform the job adequately, an absence of clear policies, and nonexistent behavioral requirements. Role conflict, meanwhile, arises when an individual is faced with incompatible job commands from different stakeholders and is therefore unable to satisfy every role partner. Previous research in other industries has found that role ambiguity and conflict often also decreases job satisfaction, increases turnover, and reduces service quality and managerial performance.

Thus, while outsourcing can at first seem like a wise strategic move, the benefits may be outweighed by the human resource consequences and costs.

Higher turnover and lower job satisfaction may be especially prevalent in hotel spas, and especially those that are outsourced, due to their particularly challenging work environments. As opposed to day spas, for example, hotel spas require that managers function within the hotel’s corporate environment and follow its standard operating procedures. In addition, such spa managers must work together with the hotel’s top managers who are rarely knowledgeable about spa operations and may not acknowledge the growing importance of spas and their personnel. Furthermore, hotel spa managers face conflicting messages in terms of what is expected of them. For example, hotel general managers generally prioritize the hotel’s operating performance, marketing departments focus on using the spa to generate occupancy rather than profit, and revenue managers use spas to help boost hotel room rates. The situation may be even more complex in outsourced spas as managers must also focus on selling the spa company’s branded products which may not necessarily benefit the hotel.

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Our Study

We found no research which has studied the human resource implications of outsourcing hotel spas, despite their importance to the luxury hotel industry. We however identified a practical need for such research since, according to a study by SRI International, the difficulty in attracting and retaining qualified spa managers has been one of the spa industry’s most pressing concerns. We thus set out to investigate whether hotel spa managers who work for a third-party management company experience different (i.e., greater) levels of stress through role conflict and role ambiguity than do managers of hotel-operated spas.

We created a questionnaire tailored to the spa industry but based on well-established measures of role ambiguity, role conflict and job satisfaction. We received 166 responses from spa managers across 45 countries. Seventy percent of our respondents worked in hotel-managed spas, while 30% worked in some type of outsourced hotel spa.


Our Results

We compared our results about spa managers’ levels of role ambiguity and role conflict with that of other industries and found that they were highly similar in most cases. This confirms suspicions that the hospitality industry, and in particular the spa sector, can be a stressful one for employees.

Our results also confirm that the amounts of role ambiguity and role conflict are significantly different between hotel-managed spas and outsourced hotel spas. We controlled for job satisfaction and found that when we compared two spa managers who enjoy their jobs to a similar degree, those in charge of an outsourced hotel spa experience significantly more role ambiguity and role conflict than do the managers of hotel-operated spas.


Why the difference across spa management structures?

Role Conflict

In hotel-operated spas there is only the one internal management team with whom the manager must work. This thereby results in relatively low levels of role conflict since the manager receives less contradictory orders. The manager in the outsourced spa, however, must interact not only with executives from the spa company, but also with management personnel from the hotel property and/or hotel management company. This then places the outsourced spa manager in the difficult position of following the instructions, objectives and/or demands of superiors from two different firms, each of which probably has its own distinct priorities. The manager is therefore conflicted about objectives and thus experiences role conflict which induces stress.

Role Ambiguity

Our results also supported the hypothesis that managers of outsourced spas could experience higher degrees of role ambiguity than managers of hotel-operated spas. We found that spa managers who work with a third party were less certain about what was expected of them, their goals, objectives, and responsibilities than managers of hotel-operated spas. This appears to be due to the lack of daily, on-site assistance provided by the spa company, and the resulting decreased frequency and quality of communication, supervision and feedback. This may be because the spa manager is based at the hotel and away from the spa company’s headquarters, which are often in different countries, thus increasing the communication challenges for these spa managers.

Similarly, this could also stem from the fact that these managers often have more than one direct supervisor, which means that they may not receive enough specific guidance or clear instructions. For example, while most spa managers have a technical therapist background, and can receive clear guidance on this aspect of their job from the spa company, such managers often lack sufficient business management skills and training, and must often rely on the hotel’s management personnel for such guidance. As the outsourced spa manager works for the external organization, they seem to not receive as much support as those individuals who manage spas directly for the hotel. As such, their role ambiguity is higher.


Suggestions for Spa and Hotel Managers

Our findings suggest that spa companies should pay greater attention to the causes underlying spa managers’ role ambiguity and role conflict since these can often increase employee turnover. As this is a particularly important problem for the spa industry, firms that take steps to reduce their managers’ role ambiguity and conflict, and thus stress, have the possible means to help retain their managers for a longer time. For example, firms could improve role clarity and communication frequency as ways to decrease their managers’ role stress and ensuing job dissatisfaction.

Particular attention should be paid to the causes of role ambiguity and conflict in outsourced spas since mangers here experience significantly greater levels of related stress. For example, spa executives should ensure that the managers of outsourced spas have one supervisor rather than two, as 'unity of command' can often reduce role stress by ensuring that responsibilities are fixed and expectations are clear. It also eliminates the difficulty of trying to satisfy multiple individuals who can often have incompatible expectations and requirements.

Our findings also suggest that potential spa managers would be well-advised to consider the type of organization with which they pursue their career. That is, certain individuals may be more suited for spas that are managed by either the spa company or the hotel depending on whether they believe they have the ability to balance the needs of two organizations. Similarly, firms recruiting spa managers are advised to consider this in their selection process.

These two causes of role stress can be reduced through close supervision and greater participation in the decisions affecting the individual’s job and responsibilities. In outsourced hotel spas, however, the spa company’s executives are rarely on site and therefore may be less able to provide this level of supervision and involvement. In addition, one of the most common problems faced by spa managers is their inability to influence the job description and responsibilities. Research in other industries has shown that managers responsible for outsourced functions often do not have the skills or proper training to manage the relationship between the two firms and as a result they experience high levels of work-related stress. Spa and hotel executives are thus encouraged to provide the relevant training to the managers of outsourced spas.

This article is based on the following academic research article: Hodari, D., Waldthausen, V., & Sturman. Outsourcing and role stress: an empirical study of hotel spa managers. International Journal of Hospitality Management. Vol. 37, pp. 190-199

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Associate Professor of strategic management at EHL

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