Editor’s note: This is the first segment of a two-part series on yield management.
By Brian Schaeffer
Why is P-R-I-C-E a four-letter word for campgrounds? I believe a big part of the answer is in yield management (YM), or the lack thereof.
When I talk to park owners about pricing or YM, I get answers like: “Yeah, I bump my rates $2 on the weekends and $5 if it’s a holiday!” or that really crazy aggressive answer of, “Well, I require a 3-day booking on the big holidays!” Newsflash, this ain’t yield management – not really.
According to Wikipedia, yield management is a variable pricing strategy, based on understanding, anticipating and influencing consumer behavior in order to maximize revenue or profits from a fixed, perishable resource, such as airline seats or hotel room reservations or advertising inventory. For the love of God, can we add campsites to that definition!
The airline industry launched YM back in the mid-80s. That’s 30-plush years ago and nearly every major tourism venue has embraced the concept, except campgrounds. Why? There are several standard answers given by park operators such as:
- We’ve never done it that way.
- RVers talk and they will be really pissed if they don’t all pay the same rate.
- That’s got to be illegal or at least immoral.
- That sounds hard.
But the real answer is, fear.
YM isn’t implemented because nobody wants to be the first one to do it. Hell, most park operators don’t raise their rates without “anonymously” calling every campground within 50 miles and getting their rates. Then the goal is to be $2 below the highest one – God forbid you should be the rising tide that lifts all boats with the highest prices in the area, even if you are the highest rated!
So, what about those standard objections to YM or higher revenue per camp site? Most parks have or are experiencing a change in clientele. RVers are getting younger and, regardless of age, have different priorities than a decade ago. The idea of them walking campsite to campsite to inquire about fees paid is ludicrous.
As to legality and morality, we are not in the housing industry. Technically, we provide ‘service hook-ups’ of water, sewer and electric. We are not defacto mobile home or trailer parks. Consequently, price fixing should not be a part of your vocabulary.
Could there be other reasons why many parks do not use YM? Absolutely. A big one is, “Hey, I’m full and have been for the last two years and the wait-list just keeps growing.” OMG, how much money are you really leaving on the table?
The other big objection is, “If I raise my rates, everybody will leave.” OK, YM isn’t about raising rates – please re-read the definition above and then let’s look at some specific examples.
It’s easy to recognize potential YM situations such as sold-out holiday weekends, over-booked high seasonal months, big area projects driving monthly clientele, such as oil and gas discoveries. These could obviously fall under the “make hay while the sun shines” YM and the kind of park operator reactions I described in the very first paragraph.
That’s not YM. Yield management is a variable pricing strategy, based on understanding, anticipating and influencing consumer behavior in order to maximize revenue or profits.
What about when you have open campsites? Surely, YM doesn’t apply then, right? Wrong. One could argue that you need YM the most when you have open sites. Furthermore, YM could lead to open sites. Uh-oh, that does it! This crazy YM stuff is going to lower occupancy and run me out of business.
Did you read the words, maximize revenue or profits? In part two, we will examine all these scenarios in detail and, if you will read carefully and keep an open mind, you will benefit in the long and short run.