Florida State Park feeding frenzy

Matt_Colie wrote:
I have read though this thread and while we rarely use crampgrounds, if you understand how businesses work, you will appreciate all the more what the "paid in advance" does for the typically cash strapped parks system in any state or any private crampground for that matter.

Things always need something. If you don't have it or can't grow it, you need to buy it.....
If you need to buy it, you need money. If you don't have money, you have to borrow money and that costs money.

So, when you pay a reservation fee, that money does not sit in a drawer waiting. It will be used to defray the costs of acquiring needed materials and services without incurring additional cost.

In short, paying a reservation in advance actually saves us all money on the site rental side. My only problem is that our travel these days is so irregular that predicting where we will be is just not possible.

Matt

At my parks, deposits do pretty much sit in a drawer. That money is not mine, it is not yet "earned". For every dollar of deposit money, I have an offsetting liability, that reservation that has basically pre-paid the deposit amount. I do not actually earn that deposit money until the site is used and the deposit is applied to the guest's stay. Using deposits to create cash flow is just robbing Peter to pay Paul.
Like I have said previously, if there was a way to not take deposits and still insure that all the reservations would be honored by the person making them, I would be money ahead. I wouldn't have to have an expensive online reservation system that has to pass the credit card processor's muster every year. I wouldn't have to have the extensive accounting to keep up with each deposit. I wouldn't have to pay three percent plus a transaction fee on the deposit and wouldn't have to pay another three percent and another transaction fee if someone cancels and I have to refund their deposit. If you can guarantee me the return of my deposit money when the guests arrive I will gladly loan you those deposit monies at the cost of the fees I incurred. I doubt, however that you will be making any great profit paying me nearly three and one half percent for six months use of the money. That equates to a 7 percent annual rate of return, and if you have insight as to where people can earn that rate of return safely you should be running your own brokerage or hedge fund.