A case study on Cabo San Viejo

1. CABO SAN VIEJO

2. INTRODUCTION
•1977 : Founded by Dave & Florence
Blumenthal in California to change the
unhealthy lifestyle of the people
•1982 : “Premier Total Vacation/Fitness
Resort”
•1990s & 2000s : Opened several CaboDaySpa
sites

3. OFFERINGS
One full-service overnight resort
4 CaboDaySpas
Fitness Centers Beauty Saloons
Meditation Aquatic Centers
Sun-Bathing
Sports Facilities
Areas
Healthy Spiritual
Cooking Awareness
Classes Classes

4. COMPETITORS
Category Firms Offerings
Destination Spas Miraval, Canyon Ranch, Lake Extensive Spa &
Austin, Golden Door, Rancha La exercise offerings,
Puerta General Focus on
wellness
Local day Spas & Oasis Day Spa, Le Petite Retreat Massage, Skin Care,
Saloons acupuncture, Saunas
Cruises Princess, Celebrity, Silversea, Gourmet Cuisines,
Seabourn Spas, fitness centers,
casinos
Vacation Resort Four Seasons Resort Hualalai Weight Training,
Esperanza Resort fitness classes,
aquatic facilities
High-End health The Sports Club Fitness & Personal
Clubs training, Cafes, bars,
Day care

5. MARKETING STRATEGY
 6 persons in marketing department
 6 regional sales managers
 12 reservation specialists
 2 public relations officers

6. MARKETING APPROACH
The goal was to meet specific revenues and occupancy
targets.
Challenge was not to educate consumers about Cabo San
Viejo concept but evoke “right emotions so that people are
reminded that they want to feel special”.
Spending on advertising was only a small percentile of the
gross profits.
It spent most on the brand awareness type ads. (i.e.
online, radio, print )
They send occasional bulletin to the customers to inform
about latest developments.
They did very less cross-marketing between CaboDay Spa
and Palm springs.

7. SALES STRATEGY
Cabo San Viejo was one of the few spas to maintain a sales
force.
Sales team sold group and individual packages to high end
travel agencies in US and Canada.
Goal was to keep occupancy at optimal level( i.e. 270).
Reduction of rates by about 35% in summers.
Organise receptions in major cities, introducing doctors ,
physiologists and other staff to the prospects.
The main aim was to instill correct perception about the
brand

8. CUSTOMERS
 Loyal Customers base included:
• affluent, middle aged & female
 Added 3500 customers each year
• 65-70% word of mouth
• 30% direct referrals by travel agent
• Repeat guest compromise between
50-60% of all guest nights.

9. PROBLEMS FACED BY CUSTOMERS
 Misconception in minds of the people:
1. Its only for women
2. Lack of awareness campaign
 Low customers staff ratio (3:2:1)
 Outdated computer systems and no
customer database.
 Complaints about lack of loyalty program
for their loyal customer.
 Limited clientele due to expensive rate.

10. LOYALTY PROGRAM
To build loyalty show some
loyalty
Analysis
Should Cabo San Viejo implement a rewards program?
Who should qualify? How should the “points” be
accumulated?
What should the rewards look like?
Should rewards only apply to Cabo San Viejo or should
they be redeemable at other places? If latter, then what
types of partners?

11. JUSTIFICATIONS
 Mounting competition
 Aging demographic customer base
 Important for synergies between day spas and
resort
 Customer Retention
 Indirect customer Acquisition
Not having a loyalty program would mean
“we are too good, we don’t need your business and
we’ll be fine whether you come back or not”.

12. BASIS FOR ACCUMULATION OF POINTS
 Number of Nights;
 Number of Visits;
 Dollar amount Spent.
The other question that worried them was
whether and how to reward guests who
had already shown substantial loyalty?

13. REWARDS CAN LOOK LIKE:
This could be done in the following ways:
 Enhanced Guest Recognition;
 Tangible Benefits;
 Special Guest Benefits.
 Wrigley was more inclined towards Guest
recognition.
 Others believed it to be problematic and favored
tangible rewards other than “tacky price
discounts”.

14. IN WHICH FORM
To grant certificates redeemable at potential
partners (e.g. Neiman Marcus, Tiffany’s) after a
certain patronage.
Whether it would help build loyalty for resort.
To select partners in a way that could sustain
the prestige of the program and the brand.
Their loyalty program had to be “classy &
understated”. They wanted to change person’s
behavior but didn’t want it to be “crass”.

15. CONCLUSION
Creating awareness among people towards their Health Status.
Differentiated its product from other competitors like Miraval, Canyon
Ranch.
Efficiently distinguishing its Marketing Approach and Sales Approach.
Seeking Customer’s Satisfaction and live up to their rising
expectations.
Customer Acquisition and Retention.
REWARD PROGRAM : A Curse or A Boon.