Setting up a spa rental business
First, dealers must determine their objective. Is the plan to make a living solely on spa rentals, or is it an add-on to the existing business? In either case, a dealer will need to have a number of portable spa units available, and a means of delivery.
Whether the decision is to make spa rentals an extension of the existing business or a standalone enterprise, the quantity, size(s) and style of spas that will be offered is a key consideration.
Rent only business model
For the ‘rent only’ business model, it is necessary to offer a wide range of spa sizes—from two bathers up to as many as 20—to accommodate a variety of consumer needs. Further, it is important to stock a large inventory of spas, considering consumer demand tends to fall on dates of consequence (i.e. Christmas, Valentine’s Day, Super Bowl, etc.). At Christmas for example, it is unlikely for a dealer to have enough spas to accommodate the demand; however, during 35 C (95 F) weather in July, one or two spas may be more than enough.
Expanded business model
If the spa rental business is an added feature to the existing pool/spa offerings, then the quantity and variety of spas available for rent is not as critical. Renting spas will develop its own revenue stream or at least pay for itself, as the primary purpose is to capitalize on the ‘try before you buy’ factor (i.e. wet testing), which helps to encourage the consumer in purchasing a spa. This also gives dealers a leg-up on the competition.
Still within the framework of an add-on to an existing business, a spa rental program can also be a valuable tool in appeasing a client or situation that called for a spa that is back ordered or a spa repair that is waiting for parts.
Last but not least, the promotional significance of spa rental program is invaluable. For example, these spas are relatively easy to drop off at a special event, which can provide great publicity, or offered as an in-store promotional prize, where a customer can win a free weekly rental.
Show me the money
How does a rental program make money? For example, if the wholesale cost of a good portable spa is approximately $3,000, and the average weekly rental rate is set at $300 per week (low), then simple math shows the spa only needs to be rented 10 times to breakeven. On average, a single spa can be rented approximately 26 weeks. At $300 per week the per-spa revenue is $7,800 per annum.
The rental rate for a four-to-six person spa is typically $350 to $400, while the rate for larger units with specialized features can be set upwards of $800 per week/weekend. The length of the rental period also plays a factor on the rates; however, a typical rental period is one week.
Further, a quality spa will last several years without any major additional investment. In terms of maintenance, the total cost of replacing the pump, heater and top-side controller would not exceed $1,000. A durable polyethylene spa will easily have a life expectancy of six to 10 years, so profit per spa is exponential.
Other considerations
The remaining factors for consideration are staff training, cost of chemicals, transportation, service and cleaning.
Another attractive aspect of the portable spa rental business is that staff training is minimal and one employee can easily manage deliveries and pickups. The spa can be transported without difficulty using a snowmobile trailer or pickup truck and once on site, it is simply rolled into place, filled and plugged in.
The dealer can fill the spa with water or even offer the spa with hot water; however, neither is mandatory for success. In terms of chemicals, these can also be offered with the rental program as it is rare for water to go ‘off’ within a week of being filled with clean water, thus it is not necessary to supply the renter with an overabundance of water treatment products.
Finally, rental spas can also be sold. Considering the spa’s base cost is approximately $3,000, and the retail price point is approximately $4,500, it is possible to achieve additional profits over and above the rental revenues already generated.
Geoffrey Dixon is the director of sales and marketing at Rotospa Hot Tubs, a manufacturer of roto-moulded spas in Lakefield, Ont. He has 30 years of experience in media marketing and sales. He can be reached via e-mail at: sales@rotospa.com.
