Over the last year, we have expanded into a new and very exciting segment of the tourism industry. We have taken on the revenue management for a camping site and holiday park in the UK. We have adapted our methodology to the specific requirements of this lodging type, and the results are incredible. We would like to take you with us through our journey of the last few months implementing yield and dynamic pricing at Lady’s Mile in Devon, United Kingdom.
We were approached to take on revenue management for this camping site and holiday park, and were very energized to learn a new area of our industry and apply our knowledge and expertise. We were motivated by the true entrepreneurial mindset and business vision at Lady’s Mile, and eagerly took on this very exciting challenge.
Just as with hotels and youth hostels, camping sites and holiday parks offer a perishable product, which is lies at the base of revenue management strategies. The theory of selling the right product, at the right time at the right time at the right price applies perfectly, hence dynamic pricing should be applied to maximize your financial results. But where to start?
The step to take was to analyzing the configuration of the management systems in place and reviewing existing data reports. Based on this we quickly concluded we needed to establish KPI unique to camping sites to allow for objective measurement and analysis of results. Below you will find a step by case study on how we implemented revenue management for this camping and holiday park.
Key Performance Indicators
Below you will find a sample the ‘new’ KPI we have implemented for Camping Revenue Management.
- UN – Unit Nights: number of units (Static or Touring) that were occupied during a night
- AUR – Average Unit Rate
- REVPAU – Revenue per Available Unit
After implementing these basic changes in our reporting structure, we went on to review the accommodation / lodging offer.
Here a key difference exists from the traditional ‘hotel’ accommodation structure. Holiday Parks and Camping Sites are in fact a hybrid business model with segments, in this case lodging types, that truly have a completely different behavior in terms of seasonal demand curves, booking lead-time, length of stay, pax occupancy levels, etc.
In this case, we have differentiated 2 lodging types:
- Static – fixed accommodation types, provided by the business. They include: caravan-homes, camping pods, lodges, cabins, huts, self-catering apartments. etc.
- Touring – pitches for lodging in units which the guest brings with them. These include: camper-van, caravan and tents.
Touring we have separated into 2 sub-segments:
- Seasonal – including rental for a couple of months or the entire season / year.
- Transient – including stays anywhere from 1 night to a couple of weeks.
The distribution landscape for holiday parks and camping sites differs a lot from hotels. There are of course OTA (online travel agencies) specialized in this field. To name a few: Pitchup.com, UKcampsite.co.uk, Caravansitefinder.co.uk, campsites.co.uk, haven.com, hoseasons.co.uk, etc.
We have noticed as well that the major OTA which have been mainly focused on hotels traditionally, are also open to selling camping sites and holiday park lodging. We have added Lady’s Mile to websites like Booking.com, Expedia.
We are also actively looking at other alternative channels to create more exposure and increase the online reach of Lady’s Mile. Our strategies are aimed at driving both occupancy and average rate.
Segmentation is also an important component to revenue management. We have used the following set-up to allow for proper data analysis supporting our decision-making needs:
- Third Party
Groups will be something we start looking into over the course of this year.
The holy grail of revenue management is, of course, dynamic pricing. Stepping away from traditional seasonal published rates to a supply and demand-driven yield structure, we have set the basis for maximizing top and bottom line revenue results.
Based on the historical performance of Lady’s Mile we have developed a demand calendar, with an initial rate structure. Just as with hotels we are measuring booking pace and demand curves based on which we forecast future occupancy levels. However, as mentioned before we are dealing with a hybrid business model, including Static and Touring lodging types so this is done separately, as well as for the sub-segments Transient and Seasonal within Touring.
Based on our forecast pricing is yielded for each individual lodging unit independently, optimizing the total lodging revenue.
We have developed an extensive pricing grid, with different strategies, taking many factors into consideration:
- seasonal rate patterns (low, mid, high and peak season levels)
- supplements per unit type
- length of stay, arrival and departure patterns
- short stays, 1 or 2 days
- weekend vs. midweek
- 3, 4 day rates and full week pricing
Such a ‘complex’ or rather comprehensive rate structure gives us the tools we need to yield effectively and maximize revenues.
A note for the skeptics, out there, we have experienced no resistance with consumers towards dynamic pricing. Consumers have been educated over the years by industries like airlines, car-rentals, hotels, etc. that prices vary over time.
Demand Calendar & Forecasting
To finish the job, we built our customary demand calendar, showing all relevant and required data in one single report. This includes data as on the books statistics, pick-up pace, competitive market bench-marking information and price comparisons. This allows us to make well informed decisions and forecast accurately.
We have also been working closely with the operations team on property, to enhance procedures to upgrade the service experience and perception. Their input has also been instrumental to rapidly gain a better understanding of the unique factors of their business and market. Team work remains essential to build success of course.
Additionally, have we assisted them in launching a new website. The goal is to position the property as a market leader, and differentiate it from other providers. The new site is much more structured than before, with intuitive navigation. It has a fresh modern look and feel and clearly outlines the type of product, facilities and services being offered. Improved search engine ranking and conversion will lead to growth in direct sales. Take a look: www.ladysmile.co.uk
In Q1 of 2017, the most challenging season for this kind of business, we have generated GBP 136.000 in additional lodging revenue compared to last year, which represents a 90% revenue growth.
The outlook for the rest of 2017 is quite exciting as well. We are already at 88% of the revenue generated in 2016. This because we have been able to grow average rate substantially. The AUR is up 41% for the whole year. Of course, this is slightly inflated as Static, with a higher AUR, has a much longer lead-time than Touring Transient. But both are up: Static AUR +24% over last year, and Touring AUR is +10% over last year, and we foresee this to continue to increase.
2017 will be an amazing record year at Lady’s Mile Holiday Park.
More Miles to Make
We have just implemented a new PMS, so we are now looking to explore new opportunities with this enhanced system in terms of yield, inventory management and distribution.
Additionally, we are working on displacement calculations between Lodging Units, calculating profitability per unit type. In a camping or holiday park revenues and bottom line can be optimized by having the right product or unit mix. So, we are advising the owners on investments and ROI of each unit type.
And many more ideas up our sleeves, to keep us busy for quite a while ….
We are really enjoying having ventured into this new field of the tourism and lodging industry and look forward to work with more camping’s and holiday parks.