Passport America

GoPackGo wrote:

westernrvparkowner wrote:

accsys wrote:

LittleRed586 wrote:
I'm a trucker with a recently minted accounting degree so the math on this subject is fascinating!

Then you should know what variable and fixed costs are. As long as the site is rented for more than the variable costs (the actual costs of the hookups - electric, water and sewer), any part of the fees over the variable costs helps cover the fixed costs and increase net income.

Less opportunity costs. Some guests in the park who would pay the full price instead get the Passport rate. If the park doesn't get substantially more guests who would only stay at the PPA rate than guests who opt for the lower only because it is available, the park actually loses revenue and income.
Simple example, park is $40 and there are 10 guests. That's $400 gross revenue. If 2 of those guests are also PPA members who would get that discount should the park be a PPA park, the park would need three additional guests (a 30 percent increase in business) to show an increase in revenue (8 full price and 5 PPA guests for $420.00). Now the park has 30 percent higher utility costs and increased labor costs all to generate $20 in gross revenues. Take out the increased utilities and the park is making almost nothing for 30 percent more work. Get less than a 30 percent increase in business, the park will lose revenue and income.
From personal experience, I highly doubt that being a PPA park can actually generate 30 percent more guests. There just aren't that many people roaming around who would only stay at a PPA park and the vast majority of the country is only served by two or three local parks. Even without PPA, most parks have a one third or better chance of capturing the local business anyway simple due to the fact that people have to stay somewhere.

It seems like the PPA parks are using the program to fill what would be empty sites. Campers go to the PPA park instead of the other 2 (your example).

So, in your example, are you saying you would rather have ONLY the 8 guests ($320) ?

Wouldn't you rather have 2 more PPA guests ($40) ? Are you saying that the additional DAILY fees wouldn't pay for the additional DAILY variable costs ?

I am saying it is not a zero sum game. If it was that simple, all the PPA parks would be overflowing with guests, and the other parks empty. I give Good Sam, AARP, returning guest and Military discounts. But you know what, if I didn't, the VAST majority of those customers will still stay with me. Price is not driving the vast majority of RVers.
Most purchases are not driven by price. As a matter of fact, low price can often dissuade customers. The lowest price hotel in town generally is struggling, while the higher priced chains are doing fine. Yugo cars died a quick death, even though they were thousands less than any other new car. If a deal sounds too good to be true, an extremely large segment of the population avoids that deal. Perception is often reality.
Dollar stores are another good example. There are deals there, to be sure, but there are also a whole lot of items for a dollar that are cheaper everywhere else. Just because PPA gives you 50% off their list price doesn't mean they are either the best deal in town, or that they are swooping in and taking all the business.
And in final answer to your question, there is a threshold for marginal profit I need to make before I am willing to take on the work, risk and responsibility of another guest. That threshold is well above $10 or $15 dollars.