Why P-R-I-C-E is a four-letter word for campgrounds – Part II

Editor’s note: This is the second segment of a two-part series on yield management.

By Brian Schaeffer
President, AGS

In Part One of this topic, we reviewed what is and what isn’t yield management (YM). But, as we now talk about how to implement some interesting YM tactics, it is worth it to keep the definition front of mind.

YM 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 or campsites.

The first step to getting great results from YM is management – of your numbers. Do you really know your numbers? Have you analyzed your numbers? It’s not enough to say, “We’re making money,” or “We’re full!” or “I just raised my rates and I’m still full.”

Every tourism industry knows what their inventory is worth, what they want or need to get for it and what it is actually bringing. Do you?

There are wonderful front office / reservation systems that will pay for themselves many times over by providing this info and deploying solid YM tactics. The key is forecasting demand and controlling your inventory, thus maximizing revenue.

Specifically, if you know what you need to produce out of every type of site – daily, weekly, extended guest – then on your shoulder or soft times you may be able to actually lower rates and achieve some income (not to dip below your minimum accepted level) rather than letting the sites sit empty.

On the other hand, when you suspect your demand is going to be high, you should have a higher rate range – at least 10 percent higher and on super peak periods it may increase 25 percent or more. I’m hearing the groans from the crowd.

Consider this for a moment. If you are like Texas and the summers are a tad hot and you draw down excessive amounts of power in your park, you get hit with a demand charge and it doesn’t go away for a year! In severe cold snaps when you need extra heating oil – that isn’t sold at the discount rate. On holidays, why is gasoline always higher? When you need that last minute flight it’s at least 50 percent higher, especially if you got the last seat. Why are we the last industry to deploy effective YM?

Are we afraid of the public relations (PR) of YM? Assuming you are committed to YM you have a couple of PR options. Either explain to guests that the holiday weekend in question is going to be sold out and therefore the price is the price. You can’t be apologizing for fair demand rates (be sure your front desk people need to get that memo). Or, you can also think outside the box and establish various ‘levels’ of sites within the park based upon location, amenities, packages, etc., and charge accordingly.

What are some other YM techniques? How about limiting the number of extended stay sites in your park? Then if an extended stay guest needs a site, they pay the weekly rate until you have an extended stay site available. You might say, I already do that! Good, convert more sites to transient and get more of the weekly rate than the extended stay rate.

Why do I keep saying extended stay rather than monthly? We’ll get into this in depth in my next series, but our industry still deals with the stigma of being in the “trailer park” (defacto mobile home) business rather that the RV park or resort (transient) business. And now, with new HUD rules looming, why not try to line up more with our lodging brethren?

Many state laws indicate that hotel stays over 28 days are extended stays, which affects many rules of occupancy and taxation. Regarding YM, what if you had no more monthly rate? Don’t panic! Instead, have a weekly rate for short term stays under 4 weeks that is charged weekly, and a weekly rate for extended stay guests staying over 4 weeks that is equal to your current monthly rate, charged every four weeks.

For easy figuring, a current $400 monthly rate becomes $100 a week over four weeks. That’s $14.29 a day ($400 divided by 28 days) instead of $13.15 a day ($400 x 12 months divided by 365 days) or a 9 percent increase.

How much money are we talking about if your extended stay money just went up 9 percent on a basic accounting procedure? You didn’t even have to get into that whole tiered-site things – though you should. Or studying your numbers – though you should.

In closing, are there other benefits to really knowing your numbers and maximizing the yield based on demand? YES! How about offering discounts? Much easier when the rates are higher during demand periods. How about group discounts or extended stay discounts? Much easier when the rates are higher. How about treating your loyal customers to a giveaway item or a meal discount or store discount? Much easier when you know what your inventory is worth and you get it!

Better yet, how about a nice vacation that you deserve because you are on fire with YM? Think about it.


Guest Blogger

Guest Blogger

RV Daily Report welcomes opinion pieces and feature stories submitted by people interested in the RV industry and the RV lifestyle. To submit something for publication, send it to editor@rvdailyreport.com.

Leave a Comment

  • Captn John says:

    Recently YM may have been more important to CG owners bottom line. With 450,000 new units coming on this year setting new records and campsites in decline supply and demand will see prices rise. I’m used to paying a premium no matter a few days, weeks, or months IF a FHU pull through site is available. Provide what I want I’ll pay, if not I’ll stay at road side rests or about anywhere else.

  • Wesley Barager says:

    WHY $ 35 Dollars at least When I Pull in From 4 to 6 and leave before 8 And I Don’t even HOOK up ?
    How Do you justify that cost ? All I need is a place to park ? JUST an empty space ! I don’t need a heated Swimming Pool , Clean Bath rooms or a rec. hall !

    So I will be Staying At rest stop’s Even if I have to Pull in Early and Leave Earlier

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