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Editor’s note: This is the first of a tw0-part series on yield management. The first part focuses on what yield management is about, and the second part focuses on how it can impact the outdoor hospitality industry.
By Brian Schaeffer
“Yield management? I think I already do that,” is a common response I get when I talk to park owners about yield management.
“Yeah, I bump my rates $2 on the weekends and $5 if it’s a holiday,” campground owners tell me. Or they explain, “I require a three-day booking on the big holidays.”
These ‘adjustments’ are great, but they are not yield management.
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 you to really get the concept of yield management, you have to consider your RV sites to be a perishable commodity.
Here is some history. The airline industry — which is involved in tourism just like you are — launched yield management back in the mid-80’s. That’s 35 years ago and nearly every major tourism venue has embraced the concept, except campgrounds. Why?
Standard answers from park operators include:
- We’ve never done it that way.
- RVers talk, so we have to charge them all the same rate.
- Yield management has to be illegal.
- I don’t want to mess with it.
The real answer, is fear.
Yield management isn’t implemented because nobody wants to be the first one to do it. Most park operators won’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!
Why not be the rising tide that lifts all boats with the highest prices in the area? Technically, yield management is easier and more effective. It provides higher revenue per campsite, mostly due to a changing clientele.
RVers are getting younger and regardless of age, they have different priorities than a decade ago. We have to change with them. They don’t walk campsite to campsite and inquire about fees paid.
Airlines, hotels and rental car agencies are thriving after 35 years of yield management and online reservations. We are not in the housing industry. We are in the service industry. We provide a service of hook-ups for water, sewer and electric.
There are those who don’t want to “mess with it.” However, the next segment on yield management will answer the question, “Is it really for the campground industry?”
You can answer that question for yourself after you learn about the $1,000 a night RV site experience, thanks to yield management.