At Campspot, we often highlight the benefits we generate for our partners through our smart software. We understand that when the words “revenue management” are mentioned, they tend to conjure up a maze of financial figures that often end up in the hands of the park’s accountant. Don’t leave! In practice, revenue management is essential for campgrounds and can make a big difference to your campground’s profitability. Let’s break down what revenue management really is by summarizing it in two simple rules:
Pay attention to how much money you are making. Then, do what you can to maximize that amount by selling the right site to the right customer at the right time.
Although it is often confused with dynamic pricing (learn more about that here), revenue management is a mindset that some reservations are better for your business than others. This mindset allows park owners and managers to make informed decisions based on data, rather than guesswork, in order to maximize their revenue. While this concept can go far beyond individual strategies or reservation revenue, these are the areas we will focus on.
4 reasons why parks need to carefully consider their revenue
- In the hospitality industry, inventory is perishable. Your greatest asset as a campground is the number of nights available for booking. This figure is perishable, meaning that if you don’t sell a night on a site, you will never have the opportunity to recover that money. The more unsold nights there are, the more losses you create on what should be your main source of revenue.
- Variable costs are generally low. While fixed costs (insurance, mortgages, property taxes) can be high for campgrounds, there are relatively few costs associated with renting a tent or RV site compared to other types of accommodation. While hotels have to pay for their buildings, regular maintenance, expensive HVAC equipment, and large housekeeping teams, many parks only pay for the utility costs of a temporary tent or RV site rental. In other words, campground owners are more likely to cover their costs and generate revenue by offering a discount to fill a site with confidence rather than keeping it vacant while waiting for a full-price reservation.
- Not all reservations are equal. Take, for example, the common practice of requiring a minimum three-night stay during a holiday weekend. This three-night stay, if booked six months in advance, could prevent another customer from booking for a week or more. Because this park did not offer the site to the right customer at the right time, this campground lost four additional booking days (or more).
- Ancillary revenue can be your best ally. Do you have other ways to generate revenue outside of your bookings? If so, how much money are your customers spending during their stay? Track this closely and look for opportunities to encourage secondary purchases, such as firewood or ice cream. While you may not be able to cover all your costs on your booked sites, you could make a significant profit on the additional items your customers purchase, thus making it profitable to rent some sites at reduced prices.
How to put revenue management tactics into practice The simple methods of pricing, welcoming guests, operating and interacting with customers are no longer the same as they were five to ten years ago. Your policies and revenue management strategies must also evolve over time. By reevaluating strict rules, you can expand opportunities for both customers and your bottom line.
Seize growth opportunities with Campspot There is no one-size-fits-all solution for campground revenue management. Your revenue management strategy is an evolving ladder that improves based on the effort you put into it.
