What is Revenue Management for Campgrounds?

Here at Campspot, we frequently mention the revenue we drive for our partners through our smart software. However, we understand that when the words ‘revenue management’ are said out loud, they tend to conjure up a maze of financial figures that usually end up in the lap of the park’s accountant.

Don’t tune out! Because in practice, revenue management can make an enormous difference for the profitability of your campground. So, let’s decode what revenue management actually is by reducing the term to two simple rules:
First, pay attention to how much money you’re making. Second, do what you can to maximize that amount by selling the right campsite to the right guest at the right time.

Although it’s sometimes confused for dynamic pricing (learn more about that here), revenue management is the mindset that some reservations are better for your business than others. This mindset allows park owners and managers to make smart decisions based on data, rather than assumptions, to maximize their incoming revenue. While this concept can stretch far beyond individual tactics or reservation revenue, those are the areas where we will focus our attention.

4 Reasons Why Parks Should Carefully Consider Revenue

1. In the hospitality industry, inventory is perishable.

Your biggest asset as a campground is the number of nights you have available for booking. This number is perishable, meaning that if you don’t sell a site night, you’ll never get the opportunity to make that money back. The more site nights that go unbooked, the more waste you’re creating in what should be your main revenue stream.

2. Variable costs are generally low.

While fixed costs (insurance, mortgages, property taxes) may be high for campgrounds, there are relatively few costs associated with renting out a tent or RV site in comparison to other forms of lodging. Whereas hotels have to pay for their buildings, routine maintenance, expensive HVAC equipment, and large housekeeping teams, many parks are solely paying for the utility costs of a short term rental for an RV or tent space. Simply put, campground owners are more likely to cover their costs and create profit by offering a discount to confidently fill a site rather than keeping it open and waiting for the possibility of a full price booking.

3. Not every reservation is equal.

As an example, let’s take the common practice of setting a three-night minimum over a holiday weekend. That three-night stay, if booked six months in advance, might be preventing a different guest’s stay who would have booked for a week or more. Because that park didn’t sell the spot to the right guest at the right time, this campground lost an extra 4+ days of a reservation.

4. Ancillary revenue can be your best friend.

Do you have other ways of driving revenue outside of your reservations? If so, how much money are your guests spending while they’re on your property? Carefully track this and look for opportunities to encourage ancillary purchases, such as firewood or ice cream. While you may not recoup all of your costs on your booked sites, you could make a considerable profit on the additional goods your guests purchase; thereby making it worthwhile to fill some sites at lower prices.


How to Put Revenue Management Tactics Into Practice

The standard ways of pricing, hosting, operating, and interacting with guests are not the same as they were five to ten years ago. Your policies and revenue management strategies should also change with the times. For instance, the three-night minimum stay strategy we mentioned above could be improved by tiering your minimum night stay rules. Start 6+ months out in advance with a one-week minimum; and as the date of stay approaches, shorten that minimum to bring in the reservations needed to fill your grid. Additionally, you may consider other novel ways to drive income, such as charging more for better amenities, finding cost-effective utilities, or investing in add-on rentals like hammocks and golf carts. By rethinking absolute rules, you can expand the possibilities for guests and your bottom line.

Take Advantage of Growth Opportunities with Campspot

Unfortunately, there isn’t a one-size-fits-all solution for campground revenue management. Your park has unique advantages and challenges to explore. Your revenue management strategy is a sliding scale that improves with the amount of effort you put into it. Therefore, if you mentally prioritize revenue management and use the tools available to you, you’re starting off strong.
Our Campspot software is a great place to start because it includes dynamic pricing, site locking, automatic grid optimization, custom rules for booking online, easy package and promo code creation, variable minimum night stays, heat map and forecast reporting, and much more.

Heat map reporting within Campspot

If you’re interested in learning more about any of these integrated features or have more questions about revenue management, email sales@campspot.com — we’d love to help!