In the complex world of revenue management, expert guidance is invaluable. Jeff Hoffman, a distinguished figure in the camping industry with nearly five decades of experience and a history of owning 13 campgrounds, recently shared his wealth of knowledge with the CampLife team. His insights aim to assist campground owners in refining their rate management strategies.
One of the first things Jeff emphasizes is that pricing in the campground industry should not be a set-it-and-forget-it type of approach. It requires ongoing attention.
“Pricing is a living, breathing thing,” Jeff shared. “You have to manage it more than just looking at it at the beginning of the year. You have to keep looking at it all the way through the season to make sure you’re maximizing your revenues and also maximizing your occupancy. They both run hand in hand.”
This approach allows campground owners to respond to market changes and customer demand in real time—and utilizing effective technology makes that job a lot easier.
“Reservation systems, like CampLife, have the tools to help owners increase their revenue without really trying; tools like Dynamic Pricing,” Jeff explained.
While some within the industry use terms such as revenue management and Dynamic Pricing almost synonymously, Jeff differentiates between the two. He describes revenue management as static, which involves setting different rates for weekdays, weekends, and holidays based on market analysis. In contrast, Dynamic Pricing adjusts rates based on occupancy levels and demand patterns.
Complementing this viewpoint, Kristine Daniels, Owner/Manager of Normandy Farms Campground, shares her positive experience with Dynamic Pricing: “We have been using Dynamic Pricing for several years and feel that it’s a beneficial tool to reward guests for booking early. It’s simple to use and can be adjusted at any time to reflect changes in occupancy. We have established various tiers based upon the popularity of the site type that are automatically adjusted for demand. Utilizing this method encourages early reservations and generates increased cash flow.”
“That’s the beauty of dynamic pricing,” said Tyler Duffy, CampLife’s President. “You can keep the pricing low for the early bookers, and as your occupancy increases, the system can bump up the rates to meet demand. By starting with lower prices and bumping up, you entice the early and faithful guests.”
And it’s those faithful guests Jeff believes park owners should be working to reach.
Jeff highlights a concerning trend in 2023, where many campgrounds saw a slight decline in revenue and a significant drop in camper nights.
In light of this trend, Jeff cautions park owners against over-reliance on rate increases.
“What scares me is that we’re driving away the market with all the big pricing,” Jeff warned. “It’s no longer a scenario where we can open the gate, and we’re 100% full—which it was during COVID and the last two or three years. I think we need to start concentrating on bringing people back.”
Jeff proposes creative pricing strategies over straightforward rate hikes or discounts—specifically pricing strategies focused on increasing camper nights. For instance, he suggests offering a discount on the third night’s stay while maintaining full rates for the first two nights.
“Would you rather sit at 30% occupancy with your great rate?” Jeff asked. “Or would you rather figure out a formula where a little bit lesser rate gets you more occupancy, more sales, and more amenity sales?”
Jeff points out that those extra sales really add up, and focusing on the dollars campers spend should definitely factor into a campground’s revenue management formula.
“I know that every family that comes into my park will probably spend $15 between ice, wood, and the store,” Jeff said. “However, at $60 a night, I’m not going to get that. But if I drop my price to $52 a night and gain 15 more people, they’re all going to be spending $15 in my store. At that point, I’m going to be quite a bit ahead.”
Jeff stresses that there is no universal solution in pricing and revenue management. Strategies should be tailored to each campground’s specific market, customer base, and reasons for visitor stays.
However, he does have some tried and true pointers to help park owners get the most out of each site without breaking through the rate ceiling for their parks.
“One of the reasons I still own a park is I experiment with it,” Jeff admitted. “I try things before I recommend them. And one of the great upgrades we did is called pet pens. It’s an actual dog run on your site.”
This accommodation appeals to pet owners and brings in additional income because guests pay for a pet site. According to Jeff, the cost to install a pet pen is minimal, and it quickly pays for itself.
Jeff adds, “Owners also have to look at the overall structure and mix of product, which would be back-ins, pull-throughs, seasonal sites, and lodging. When we do studies, we find that a pull-through outperforms a back-in almost two to one. But if a back-in is all you have, add a patio in, and that’s going to outperform a regular back-in.”
Jeff suggests taking the time to see which sites are making money, which sites are losing money, and determine which sites will generate more profit with some small adjustments.
In this evolving landscape, successful revenue management extends beyond mere rate adjustments. Tyler echoes Jeff’s sentiments saying, “The rush of COVID is starting to settle down. But revenue management doesn’t mean you have to hike up prices and drive people away. A balanced approach that combines smart pricing strategies with efforts to attract and retain campers is key.”
This balance entails leveraging technology effectively, implementing creative pricing strategies, and reimagining your campground’s offerings—from introducing pet-friendly amenities to reconfiguring site layouts for better profitability. It’s about creating an inviting atmosphere that not only draws guests in but also encourages them to stay longer and return frequently.
For campground owners seeking to dive deeper into these strategies, Jeff Hoffman’s expertise is a valuable resource. Visit CampStrategy.com for a list of services tailored to maximize your campground’s potential.
If you’re looking to implement these strategies efficiently, CampLife’s reservation software offers the necessary tools to support your campground’s growth. Contact the CampLife team today. Let’s collaborate to chart a course toward a profitable future.
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