I don't know if you have heard that SpaFinder has bought out SpaWish. They are now Spa & Salon Wish and while they are keeping the SpaFinder brand for higher end resort and destination spas, their new Spa & Salon Wish brand will focus more on mass-market desires for local day spa services.
I remember when Peggy, the owner of Preston Wynne, asked me to join her in not accepting SpaFinder gift certificates anymore. She said that Pete Ellis, the CEO of SpaFinder, had finally figured out a way to take money out of spa owners' pockets. At first, I was kind of at a loss as to what she meant. But, I think am now starting to see the light.
You see, SpaFinder has been dumping their gift certificates at Costco for some time now. You can buy a $100 SpaFinder gift certificate for $79. And you can then take that gift certificate to spas like mine and pay for $100 services. So why pay $100 per service when you can pay $79 per service? How does this hurt spas like me? Well, firstly, I don't get that $100, I get $83 when SpaFinder pays me back. So how can SpaFinder be making money if they're getting $79 but paying out $83, you ask? Well, if Costco comes up to you and says, "Here's $20 million for a bunch of Spa Finder gift certificates at $79 each," are you going to say no? Heck no. You're going to gamble and hope that you can turn the $20 million into $21,012,658 before the underlying gift certificates get redeemed...hope they can play the market.
Anyway, the dilemma is now whether to continue accepting these or not. Clearly, accepting them poses the problem I just stated above. But not accepting them is kind of like being one of the OPEC cartel and trying to fix prices...because other spas will. Clients who are stuck with SpaFinders are not going to just choose to come to our spa and pay full-price...they're going to go to other spas and use them. And then we run the risk of losing them. So either all day spa owners agree to not accept them (and we have to trust each other), or the ones who stay in the game accept them and try to take the lion's share of this market.
What to do, what to do...