My company builds websites for the campground industry. A few years ago I reached out to the manager of a campground in a Northern state whose website would appear to be in desperate need of replacement. Its 14 year old website (nearly a century in either website or dog years!) was not mobile-friendly, had zero in terms of SEO (search engine optimization), was not ADA compliant (really an unknown issue at that time), had nothing but a phone number to call for reservations, did not even list the campground’s address, and had not been updated since it was built (still promoting that the park was the “newest” in its area.) After being asked to quote on a new website, the manager responded that my company’s services were “to rich” (sic) for his campground that was only open for a 5 month season.
I explained that most campgrounds in the Northern states were only open from late spring through early fall, hardly an operating calendar that was unique to his park. Based upon the weekly rates that are published on his website, if a new professionally designed website brought in only 15 new campers who would not have otherwise chosen to stay at his campground, he would have fully recovered his investment during a single season. That investment recovery would not even include the additional income generated by those guests’ purchases in his store, laundromat, game room, or fee-based added services. I went on to ask if his park was at full occupancy throughout its 5 month season, pointing out how the satellite image on Google Earth showed that his park had 48 sites – 35 pull-thrus and 13 back-ins – only 16 of which were occupied at the moment when that most recent image was captured.
I am referencing this campground’s website as simply an example of short-sighted thinking. The campground manager could have been dismissing the cost of Wi-Fi service, reservation software, upgraded electrical service, energy efficiency upgrades, a new line of store merchandise, a new dumping station or honey wagon, new rental boats, cabin or park model rentals, yurts or teepees, branded apparel, or replacements for the worn out and inefficient washers and dryers in his laundromat. Translated from the original Latin, the adage that “you have to spend money to make money” is nothing new, originally credited to the Roman playwright Titus Maccius Plautus a little over two millennia ago.
I can understand a short season factoring into a decision to purchase a motorcycle, snowmobile, speedboat, convertible automobile, or any other consumer good that represents an emotional want rather than a physical need. Those decisions all involve the purchase of personal goods, whereas an entirely different set of standards should apply when making well-informed business decisions.
I have always found it useful to make business decisions based upon the measurement of projected return on investment. This can apply to almost any purchase. Let me use Wi-Fi as an example, along with a few rounded numbers to simplify calculations. Let’s presume that you run a campground with 100 sites, that your average nightly site fee is $50.00, that the average guest stays two nights, you have an average occupancy rate of 50%, your season runs 150 days, and that 50% of your prospective campers demand Wi-Fi and will not stay at a park that does not offer high-speed Internet at sites. Let’s also presume that the cost of a new Wi-Fi installation at this small- to medium-sized park would be $7,500.00 (admittedly on the high side.) Although some parks charge for the service, and others offer tiered service levels, let’s presume that your park is going to treat Wi-Fi service as a utility that will be provided to its guests at no added charge as part of its overnight fee.
If the added service increases occupancy from 50% to just 60%, that means filling 10 otherwise empty campsites at $50.00 per night. Over the course of a 150 day season, this represents $7,500.00 in income, fully recovering the investment in the new Wi-Fi system, or an investment that is recouped in a single season. If your park is in a competitive market that allows it to charge for Wi-Fi service, the payback period may be even shorter. The same sort of calculations can be applied to an investment in upgraded electrical services, when your prospective guests are seeking out reliable 50-amp service when most of your sites are providing 20- or 30-amp service through rusty power pedestals with circuit breakers that trip open on a regular basis. In fact, when it comes to park utilities, problems with Wi-Fi, electrical service, roadways, water pressure and sewerage are just as likely to lead to an abbreviated stay as an obnoxious camper or barking dog on an adjacent site. The same claim may be made for restrooms or playgrounds in dire need of upgrades, a store with too many empty shelves, or a game room with too many “out of order” signs. Weaknesses in these areas can actually be driving away business, as well as inflicting harm on review sites.
When it comes to less tangible services such as a park’s website, reservation software, planned activities and advertising, it is still quite easy to calculate return on investment and to make informed decisions. In fact, these represent some of the best ways to spread the word about that new Wi-Fi or electrical service, essentially speeding the return on investment on those infrastructural improvements. Think twice – and perform some calculations – prior to dismissing a business investment out of hand. That “too costly” investment may be both easily recovered and the key to running your business more profitably than ever.
This post was written by Peter Pelland