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This training takes place at the spa venues where employees are to work prior to providing services to paying guests and also, in certain cases, at our dedicated training facilities. Our employees are educated with respect to all of our services and products to enable them to cross-market our services and products. We also train candidates to manage our spas. This training covers, among other things, maximization of revenues, personnel supervision, customer service and administrative matters, including interaction with cruise line and land-based venue personnel.

We train our spa employees, as well as the students participating in our schools' skin care programs, in the use of our products. Students trained at our United States massage and beauty schools may be employed by us at certain of our spas. Ideal Image recruits its employees from career websites, post-secondary schools, medical associations and through the use of local print media. Prospective licensed professional employees who will be providing Ideal Image's services are required to have obtained the requisite education and degree applicable to their respective positions.

Such employees are monitored during two weeks of additional training. Ideal Image licensed professionals also are required to undergo specified annual continuing education, in addition to the continuing education requirements applicable to their professional licensing. Ideal Image's medical directors, who are independent contractors and not employed by Ideal Image, also receive specialized training from Ideal Image. We also distribute illustrated brochures describing our services and products to cruise passenger cabins and from public areas and guestrooms at the land-based venues where we operate.

As part of our marketing efforts, we provide incentives to our employees to maximize sales of our services and products. In addition, we engage in cross-promotional activities with other ship concessionaires. We also maintain a dedicated sales desk to facilitate pre-cruise spa booking and to disseminate spa information for charters and other groups of cruise passengers. Additionally, a number of ships we serve allow internet-based pre-cruise spa booking for passengers.

We market our hotel spas through various channels at the venues we serve. These channels include video messages, displays and advertisements in guestrooms and guest service directories, referrals from guest contact personnel, distribution of marketing materials through guest contact channels, advance sales to group meeting planners and attendees, signage, lobby displays, venue and hotel newsletters and hotel websites. In addition, employees cross-market other services and products offered by us to their guests. We also market our land-based spas through public relations activities aimed at television and other media coverage and through local radio advertising, as well as through direct marketing.

We communicate promotions and promotional events through our www. We also offer gift cards and other pre-use purchases at certain of our land-based spas. We benefit from advertising by the cruise lines and land-based venues we serve, as cruise lines and land-based venues often feature their spa facilities and our services as part of their advertising campaigns.

We believe that our land-based spas have helped our product distribution as a result of the name recognition gained from those spas and the opportunities those spas have provided us to demonstrate the application and attributes of our products. We also believe that the complimentary provision of our services and Elemis products to a targeted group of British Airways travelers have exposed our Elemis product line and spa services to upscale consumers, many of whom may otherwise be unfamiliar with our products.

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Not deserving of the Red Lion Inn title. While we believe we have strong arguments, and are in the process of submitting a response to the probation and show cause order, we cannot assure you that COMTA will agree with those arguments or will not take further action against the school, including withdrawal of accreditation. We expect the DOE to continue to evaluate the financial responsibility of our schools in the same manner. The contents of our products that are sold in the United States are subject to regulation in the United States. For the price, we'll go to McGrath's down the street for a quality meal with great service.

We believe prospective students are attracted to our schools due to their reputations and program offerings. To generate interest among potential students, we engage in a broad range of marketing techniques that are targeted to our local markets. Direct response marketing techniques include e-commerce marketing, direct mail and print and broadcast outlets. In addition, among other sources, we obtain referrals on an uncompensated basis from our graduates and students. We attempt to maximize product sales through our websites through the use of search engine marketing techniques such as pay per click, search engine optimization, affiliate marketing and comparative shopping engines to direct traffic to the sites.

We also use direct mail public relations and other means to promote sales. We continually monitor the results of our marketing efforts and adjust our strategies in order to attempt to use our marketing resources in a cost-effective manner. Both our shipboard and land-based services and products face competition.

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On cruise ships we compete with providers of services and products similar to ours seeking agreements with cruise lines and with passenger activity alternatives that compete with us for passenger dollars. These activity alternatives include gambling casinos, bars and a variety of shops and are found on almost all of the ships served by us. An increasing number of those shops offer beauty products that compete with those we sell on cruise ships. Cruise ships also typically offer swimming pools and other recreational facilities and activities, as well as musical and other entertainment, all without additional charge to the passengers.

In addition, the ships call on ports which provide opportunities for additional shopping and cruise line-sponsored shore excursions, as well as other activities that compete with us for passenger dollars. One of our cruise line customers has, in the past, provided shipboard services and products similar to those we provide with its own personnel on two of its ships. Certain cruise lines we served in the past few years have engaged the services of other third party spa services providers on certain other ships they operate, including Celebrity, as of the second quarter of Cruise lines, in the future, could elect to provide these services and products themselves or through other third party providers.

While we acquired the assets of one of our competitors, Onboard, in , there are currently other entities offering services to the cruise industry similar to those provided by us, including Canyon Ranch and OceanView. Many of the land-based venues we serve, as well as any land-based venues that we may serve in the future, offer many of the recreational entertainment facilities and activities similar to those offered on cruise ships, often without additional charge to guests.

A number of the hotels we serve also offer casino gambling.

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These activities and facilities compete with us for customer time and dollars. Our land-based spas also compete with spas at locations in the vicinities of our spas, as well as with other beauty, relaxation and other therapeutic alternatives that compete for consumer dollars. These include salons that offer these services at prices significantly lower than those charged by us.

We believe, however, that the prices we charge are appropriate for the quality of the experience we provide to our guests in the respective markets we serve. In addition, we also compete, both for customers and for contracts with land-based venues, with spas and beauty salons owned or operated by companies that have offered their land-based spa services longer than we have and which may enjoy greater name recognition with customers and prospective customers than the spas we operate.

A number of these spa operators may have greater resources than we do. Further, some hotel operators provide spa services themselves, including at hotels where we formerly operated spas. We believe that the relaxing and therapeutic nature of our services, our experience, the training we provide our staff, the positive brand recognition and the quality of our services and products, are our strongest assets in competing in the shipboard and land-based spa areas of our business.

There are many competitors in the beauty products industry.

Our product sales on ships and on land compete with a variety of other brands, including those of manufacturers with greater resources than ours, and those with greater name recognition. For example, within the department stores where we sell our products, a number of competitors sell their products in close proximity to our product offerings. We believe that our positive brand recognition and the quality of our products are our strongest assets in competing in this area of our business.

The post-secondary education market is highly competitive.

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Our schools compete with national and local providers of similar education in the states in which they are located and elsewhere in the United States. Our schools face competition from, among others, traditional public and private two-year and four-year colleges and universities and other proprietary schools, including those that offer online education programs, as well as from military service and other immediate employment after secondary education. Some public institutions are able to charge lower tuition rates than our schools, due in part to government subsidies, government and foundation grants, tax deductible contributions and other financial sources not available to proprietary schools such as ours.

In addition, some of our competitors offer courses similar to ours and it is not difficult for our competitors to modify their course offerings to offer programs similar to ours. The offering of such courses increases the competition for students. A number of these other schools have greater resources than we do.

Among others, we compete for students with Everest College and Southeastern College, as well as certain single-market schools and community colleges located in the respective vicinities of our schools. We believe that the positive name recognition of our school brands, and our strong reputation in the industry, are our strongest assets in competing in this area of our business.

The cosmetic services industry is highly competitive with many competitors through the United States, including spas, physicians in single and multi-specialty practices, medical spas and independent businesses. Some of those competitors solely offer laser hair removal services including competitors who charge less for laser hair removal than we do and others offer alternative hair removal services which are less expensive than laser procedures, including waxing and electrolysis.

We believe that the quality and training of our service providers are our strongest assets in competing in this area of our business. A significant portion of our revenues are generated from our cruise ship spa operations.

Certain cruise lines, and, as a result, Steiner Leisure, have experienced varying degrees of seasonality as the demand for cruises is stronger in the Northern Hemisphere during the summer months and during holidays. Accordingly, generally, the third quarter and holiday periods result in our highest revenue yields. Our product sales are strongest in the third and fourth quarters as a result of the December holiday shopping period.

Historically, the revenues of Ideal Image have been weakest during the third quarter. Operating costs do not fluctuate as significantly on a quarterly basis. We hold or control numerous trademarks in the United States and a number of other countries. We believe that the Ideal Image trademark has strong name recognition in the areas in which that brand operates.

We believe that the use of our trademarks is important in establishing and maintaining our reputation for providing high quality spa services as well as cosmetic goods and we are committed to protecting these trademarks by all appropriate legal means. From time to time we seek to use new marks to identify our services and products. At times, marks that we have sought to use because we believed they would help promote our business have not been available for our use. We cannot assure you that marks that we may seek to use to grow our business will be available to us in the future.

We continue to apply for other trademark registrations in various countries. While a number of the trademarks we use have been registered in the United States and other countries, the registrations of other trademarks that we use are pending. Recently we have adopted the mark "The Onboard Spa by Steiner" as the trade name of our maritime spa business to reflect our position as a global provider of shipboard spa services and products.

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We license our Ideal Image trademark to 17 franchisees in the United States who offer laser hair removal services and other pre-approved cosmetic services under that brand. Spa Services and Products. The cruise industry is subject to significant United States and international regulation relating to, among other things, financial responsibility, environmental matters and passenger safety.

With respect to maritime matters, cruise lines are subject to a variety of United States federal and state and other national and local and international rules relating to the discharge of pollutants and the content of fuel. Certain environmentally sensitive destinations require cruise lines to obtain permits in order to operate in those waters.

With respect to safety, enhanced passenger safety standards adopted as part of the Safety of Life at Sea Convention by the International Maritime Organization have been phased in, including with respect to ship structural requirements. These standards have caused the retirement of certain cruise ships and otherwise could adversely affect certain of the cruise lines, including those with which we have agreements.

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From time to time, various other regulatory and legislative changes have been or may in the future be proposed or enacted that could have an adverse effect on the cruise industry, including with respect to increasing the costs of new ship construction. In addition, many of the cruise ships we serve call on United States ports and are, therefore, subject to security requirements which have increased in recent years. These requirements, as well as additional legislation or regulations that may be enacted in the future, could increase the cruise industry's cost of doing business, which could adversely affect that industry.

We are subject to applicable labor-related laws and rules based on maritime conventions and the laws of various jurisdictions which govern the ships we serve with respect to our shipboard including on one United States-based ship, which is subject to United States law and land-based staff. New rules under the Maritime Labour Convention , effective August , added requirements as to the hiring, training and hours of work and compensation of shipboard employees.

These rules have significantly increased, and, in the future, may continue to significantly increase, our expenses associated with our shipboard employees. Our land-based spa operations are subject to applicable regulations in the locations where such operations are conducted, which requires our businesses and the individuals providing the services to be licensed. These regulations could adversely affect our ability to sell, or could increase the cost of, our services and products.

Among other things, local immigration laws could impede our ability to obtain work permits needed for Steiner Leisure-trained employees at our land-based facilities.