westernrvparkowner wrote:
monkey44 wrote:
WRVPO Quote: "Actually, I get no more customers. My old restrooms had very high ratings, but they were dated. We sell out every day in the season."
I think my point is, keep he facilities maintained, you keep customers, let it run down and you'll eventually lose customers. So, the fact that you stay full means you continue upkeep, at least it's a factor.
And regardless of how anyone utilizes the "cost factors", I'd bet you'd rather keep full at a lower rate than have empty sites at a higher rate. Doesn't take many empty sites to drop the revenue below a profit margin, as the overhead stays the same no matter how many sites are full or empty (of course, full sites W/E change it a little, but not a lot).
At $30 per night rate at a $5 margin, if you have one empty site, it takes six full sites to break even for that one empty site. SO keeping sites full is better than raising rates and losing customers, although I'm 'guessing' at the margin here.
I would much rather have empty sites at a higher price. With 100 Sites, 80% occupancy at $50.00 is much more profitable than 100% occupancy at $40.00. Revenue is the same, and expenses are 20% less. When you lower prices, that pricing cut goes against all the sites. If I were to lower the price $5.00 when I have 80% occupancy and 100 sites, I would need to sell $400.00 worth of sites, just to get the revenue back to what it was at the higher rate. Then I would have to sell more sites to generate any additional profit. So you would be looking at a situation where a $5.00 price cut would need to increase occupancy by a minimum of 15% (80 rented sites at higher rate, so a 15% increase in occupancy will be 12 additional customers. It took 10 to get the revenue to break even, now we have the revenue of the two additional sites to cover the costs of 12 additional guests). We MIGHT be at a break even figure now revenue-wise, but I now have 15% more people to check in, a 15% increase in the usage of facilities, 15% more trash, 15% more sites to clean etc. This either means we all work harder, for no extra money, which doesn't make a whole lot of sense. Or we will have to hire additional staff, pushing that revenue and income equation further out of whack.
And if that price increase didn't generate a 15% increase in business, which is the most likely situation, we are losing money. And none of this takes into consideration what might be the most important consideration of all, what changes to our guest's demographics will lower prices create. The fact of the matter is, the low price product attracts the low price consumer. The store sales will suffer, and the client mix may very well go down hill.
That makes sense only if you consider gross and not net ... if you divide the overhead (which means mortgage, power, pool maintenance, etc) buy 80% instead of 100%, your making 80 people pay 100% the overhead, so the net per site is less. So, it's not really apples and apples in this case. But unless we know the exact cost per site to operate, we can't really tell.
But, I'm not sure whether you get a different class of people based solely on price either. A lot of very classy people go to national parks and state parks and COE too - and it's based on what that campground offers it's customers, not price. I know, private is different, but my opinion, you won't change the class of campers with $40 vs $50, you'll get that kind of change more like $20 vs $40 or $50, because $40 is not all that inexpensive.
And at times, I've seen some pretty junky CG's that charge $40, and sometimes get away with it for short-term ... but not for long because ti doesn't build a returning client base, nor does it keep clients for more than a one-night mistake. And based on your earlier post, I'll bet you better have pretty upgraded and clean restrooms for $50 a night. Even if some RV'ers don't use the restrooms and showers (as some have stated), the cleanliness of that facility makes a statement about the entire operation.
Besides, it's not always price that makes a RV or camper choose a CG, it's location, sights, and the adjoining attractions more than price and clean, price and clean are only two of the variables.
