Yield Optimization for RV parks and Campgrounds

PeterK — Mon, 21 Apr 2008 18:40:41 +0000

Hi folks,I thought I would post my thoughts today on the very popular hot topic in our industry- yield optimization. For those of you who aren’t clear on what I mean by this, I am referring to the automatic adjustment of rates at the park based on the occupancy. So as your park reaches certain occupancy thresholds the system automatically applies a algorithm to the rate structure to increase the rates. In other words as occupancy goes up so do the rates. The classic model of supply versus demand. As we are in the software business we get asked about this a lot. Previously I have posted my thoughts on this subject in the ARVC report. No less than Dave Gorin responded in the next monthly report refuting my thoughts and taking the opposite side of the debate. (Which is healthy and OK with me). It looks like now we will be building this feature into the next major rewrite of Campground Manager Software® however philosophically we are against it. I know hotel programs work this way and airlines work this way but rv parks and campgrounds are a different animal. In a RV park and campground there is a basic level of trust between the customers and the park business owners/staff. We own a park (Jellystone Niagara) and we are on the front line every day to see the social interaction. Once the camper sets up his RV the first thing he does is meet his neighbors. The discussion starts with the RV hardware and then the talk invariably turns to how much they paid for that evening for the site. By charging different rates for different people based on the time of day they called or arrived at the park you are risking breaking the bond of trust between you the business owner and the customer. Plus you cannot post rates in with any sense of confidence. Once you break that trust with your customer he will either take a round out of your park staff or worse, keep quiet and go somewhere else. Is that worth the extra 5% or more you might get for that night’s rate? It will cost you many times more than that to get the customer back. (If you ever do). Hotels are different. You check into a hotel you don’t go next door to ask the people in the next room what they paid. Everyone also knows that with front desk people at hotels, if you stand their long enough, will reduce the rate. Do you want that at the front desk of your park? In the current version of Campground Manager Software® we already have yield management albeit in a different version. You can have off season and on season rates. You can have long weekend premium rates. You can have a different rate for every day of the week if you want. In my opinion that is the way that you maximize revenue without breaking the trust of the customer. Besides why are we patterning ourselves after the airline industry? In the same week that two more airlines have declared Chapter 11(Aloha and ATA airlines ) in the US, why would we want to follow that model? As Warren Buffet says “I will no longer invest in the airline business. The airline business as not made money as a sector since flight was invented.” I would be interested in your thoughts. Peter

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Yield Optimization for RV parks and Campgrounds