OneSpaWorld Holdings Limited (NASDAQ:OSW) Q4 2022 Earnings Call Transcript

Leonard Fluxman: So look, Max, we introduced pricing at the end of the fourth quarter because of the Christmas, New Year. We continue to see strong demand, decent spend — strong spend actually during January so far. Nothing to alarm that spend is falling off. And we introduced a bunch of new services in the medi-spa arena last year sort of in — the IV, the immunity shots, acupuncture continuing to elevate itself. We’re going to have a lot of compelling new programs in acupuncture and with attached retail spend. So we’re continuing to focus on that. Bundling services together, getting more into our pre-booking engine is certainly helping. And that window has expanded from what we saw back in 2021. So that continues to give me confidence that demand and spend will continue to move in the right direction for us.

Maksim Rakhlenko: Got it. That’s helpful. And then what about the product revenue line, what are the top opportunities there to accelerate growth, and then just your outlook for the segment, for the year, and then just any margin implications?

Leonard Fluxman: Yeah. So our number one, the guys who sell the most retail and I think we mentioned this before, is for fitness staff. They tend to do a lot of consultative work, nutrition counseling, a lot of supplements take home packages. Those continue to elevate as we’ve continued to staff better in our fitness complements. In the beginning of 2022, staffing in fitness was probably the lowest we had seen and we continue to strengthen in that arena right through the year and peaked in 2022 in the fourth quarter. And that’s certainly a focus we’re going to continue to watch, but there’s also — our biotech facials, the new ELEMIS facial continues to get a nice retail attachment and that continues to perform well. And I think when you see those kind of services continuing with the strength that we’ve seen even in the first month of 2023, it gives me real confidence that the attachment rates will continue to grow.

We’re going to continue to move a lot of our sales and revenue people around the different geographies, so we can do intensifications to continue to strengthen and motivate our staff to continue to grow retail attachment through 2023.

Maksim Rakhlenko: Got it. And just a very quick follow-up to that. Your staff levels onboard. How happy are you with those levels? Are you where you want to be or is there still more room to go, just to get more specialty of your best people onboard? Thanks a lot and best of luck.

Leonard Fluxman: Yeah. I’m very happy with staffing. I mean I think our London Wellness Academy, the recruiting and training teams have done a phenomenal job of getting our staffing levels above 90%. And we continue to look at the opportunity, where we can get closer to 100%, which historically, we’ve never actually been at 100% on all ships. But now we’re looking at the opportunities across different modalities where we can load up more staff, and we’ll continue to do that through the first and second quarters as load factors continue to climb.

Maksim Rakhlenko: Awesome. Thanks so much.

Leonard Fluxman: Yeah. You’re welcome.

Operator: The next question comes from Gregory Miller with Truist Securities. Please go ahead.

Gregory Miller: Thank you. Good morning, gentlemen. I’d like to start off asking about younger passengers, the generation Z customer that from my understanding is more focused on mental health and the read-through to how they spend their discretionary wallet on wellness. I’m curious, what you’re seeing today in terms of the generation Z customer to your facilities and what opportunities that you might see to target the mental health interests of this customer base?