Pelland Blog

More Lessons from the Airline Industry

May 19th, 2016

It is not breaking news that I often turn toward the airline industry for examples of both good business practices and reprehensible business behavior. Particularly since I am writing primarily for the outdoor recreation and travel industry – and the family campground industry in particular – the airline industry is something akin to that relative from the wealthy side of the family who rarely stays in touch.

It is no secret that there is a generally low level of consumer satisfaction with the airline industry. Seats are getting smaller, fees are increasing, and fares seem to be unresponsive to lower fuel costs. When the price of crude oil fluctuates, as has been the case with recent drops, consumer prices at the pump tend to either rise like a rocket or fall like a feather. In the case of the airlines, even the feather analogy appears to be absent.


Unless you are flying out of or into a hub airport, plan on multiple flights and sometimes lengthy layovers. I just checked rates for a round-trip flight about 5 weeks in advance from Syracuse, New York to Sacramento, California. The fares ranged from $518.00 for a 14-hour flight with two stops to $1,540.00 for a 15-hour flight also with two stops. In either case, while booking through two different airlines (American vs. Alaska Airlines), the actual flights are operated by American Eagle. It almost makes no sense. If I return to the booking engine in a few days, the rates are likely to be entirely different. Without online booking and price comparisons, as well as online airfare watchdog services, non-business airline travel would probably be out of reach for most people.

In the old days prior to the airline deregulation of the 1990s, flights were booked through travel agents who earned base commissions of 10%, with bonuses for add-ons. When that was deemed to be contrary to the interests of consumers – concurrently with the onset of the Internet – companies like Expedia, Travelocity (since acquired by Expedia) and Priceline have filled the void and earn commissions on their services, which typically involve bundling flights with hotels and car rentals.

Whether booking through one of these giant online travel agencies or directly through an airline, the fees only begin with the actual airfare. When you book a flight, you are urged to upgrade to business class, pay extra to choose your assigned seating, pay extra for priority boarding, pay for checked baggage, and of course use or earn frequent flyer miles via your airline credit card. The airlines actually sell passengers “miles” that are later used for free or discounted flights. I guess when you come right down to it, buying miles is not that much different than buying a gift card at a discount – something that is most advantageous to the companies that are using consumers’ money between the time of purchase and redemption.

The question for the owners of small travel-related businesses like campgrounds becomes how to determine what can be taken from the business model of the airlines and then successfully applied on a smaller scale. The key is to choose the profit sources that will not infuriate your customer base. For example, nobody likes the ever-shrinking leg room – what the airline industry refers to as “seat pitch”, the distance between the back of one seat and the back of the seat in the previous row. Imagine the reaction if a campground consistently reconfigured its sites to become smaller and smaller, jamming one campsite as close as possible to the next.

On the other hand, there are add-on services that are likely to be broadly accepted. Campers have long accepted the fact that a larger, full hook-up, pull-thru site is going to cost more than a tent site with no hookups, and that there will be a wide range of prices in between. They also expect to pay a premium for weekends, holidays, and your prime season. Fee-based options such as private restrooms, cottage linen service, fee-based wi-fi, higher caliber arts and crafts, and late check-outs only apply to people who choose to use those premium services, and they represents opportunities for added profits.

The fee-based airline innovation that is likely to do the most for the campground industry from this point forward is be dynamic pricing. The least expensive days to fly are not coincidentally the least popular air travel days: Tuesdays, Wednesdays and Saturdays. The best day and time to buy air travel tickets is generally Tuesday at around 3:00 PM, Eastern Time, and the best time to buy domestic fares is 30-90 days prior to departure. Notice how most flights are generally booked to capacity. Dynamic pricing will provide your guests with an incentive to book early – and ensure your highest possible occupancy rates – while maximizing your income from people who wait until the last minute. Quite likely, those dynamically priced reservations will be booked through one of a variety of online booking services.

Embrace innovations that will help you to run your business more profitably, and never fear emulating successful business practices from other industries, in this case the airlines.

This post was written by Peter Pelland

Delegate Responsibilities by Partnering Locally

February 13th, 2014

Any business owner who is destined to succeed soon discovers the importance of delegating responsibilities. First and foremost, this means hiring and assembling a team of employees who can be trusted to not only carry your philosophy forward but to bring it to the next level through independent thinking. You simply cannot do everything yourself, nor can your staff do everything itself. There are only so many hours in a day, and there is a limit to the number of hats that any one person can wear. For this reason, there will be instances when it will make sense to delegate responsibilities beyond your staff itself, subcontracting to other businesses for your mutual advantage.

When you give it some thought, you are probably already engaged in this sort of partnering without being fully aware of the process. For example, it may make more sense to buy attractively packaged, bundled firewood that is delivered to your door and that you can sell at a healthy profit margin in your store than it is to delegate staff members to thin trees or remove dead timber from your park, then cut it to fireplace length, split it, and store it for sale. If you have a game room, it may make more sense to lease the latest and most popular arcade games from a local distributor than it is to purchase and maintain games yourself, soon finding yourself with a roomful of obsolete machines – many with “Out of Order” signs – that nobody wants to play.

On a recent business trip to Florida, we stayed at the Vista Cay Resort, in Orlando. Much to my initial surprise, the concierge desk was not manned by a resort employee. Rather, it was being operated by the Local Expert division of Expedia. Currently, Expedia Local Expert is operating concierge desks at leading hotels and resorts in Hawaii, Mexico, Orlando, Las Vegas, and New York City. The properties avoid hiring a concierge staff, actually lease out the desk space, and Expedia earns commissions from the restaurants, tour operators and attractions that are on their list of preferred referrals. The Expedia employees are friendly, well-trained, and knowledgeable about the local area, allowing them to provide accurate information about driving directions and transportation services.

According to an article in the Wall Street Journal, Expedia is far from the only player in the concierge industry, with others including New York Guest and Travelocity. Some of these outsourced concierge services pay as much as $10,000 per month for the privilege of occupying lobby desk space in a leading hotel, and the hotels save as much as $50,000 per year in salary that would be paid to an in-house employee. Many, if not most, major hotel chains are converting, or at least experimenting, with this arrangement. At the same time, most consumers are unaware of the transition, since the outsourced staff members typically wear hotel uniforms and have the outward appearance of being hotel employees.

Another example of a business partnership that would be unheard of until recently involves America’s public libraries and Redbox. If you have visited a public library in recent years, you know that things have dramatically changed since you were a child. More and more people are visiting public libraries for Internet access and to check out movies and games on DVD, rather than borrowing books. Although rapidly declining, due to the rising popularity of streaming content, at least 25% of patrons identify their public library as their primary source of movie rentals. According to an online report in The Digital Shift, “dollar for dollar, DVDs are the highest circulating category of items in the New York Public Library system”.

With those statistics in mind, the familiar Redbox rental boxes are appearing outside of more and more public libraries, adding an expanded service for the library (even though not contributing to circulation) and offering patrons 24-hour access to these materials. Beyond that starting point, Redbox has also introduced a pilot program called “Outside the Box”, partnering with the Online Computer Library Center, to launch library-based community entertainment resources in Billings (MT), Chicago, Columbia (SC), Columbus (GA), and Cuyahoga County (OH). Yes, this defines the concept of “outside the box” thinking. Looking back, did it make sense to you, years ago, when McDonald’s introduced its first “PlayPlace” in its fast-food restaurants?

As a campground owner, I would like you to think of new ideas that will allow you to run your business more efficiently, professionally, and cost-effectively, particularly when it comes to special events and theme weekends. Whether you generally do things yourself, pay staff members, or rely upon volunteers (typically your seasonal campers), there are advantages to subcontracting certain services. By doing so, your will ensure that things are done right, that positive impressions will be created in the eyes of your guests, and that an event will generate return business in subsequent years.

You are probably already hiring professional bands, DJs and entertainers. What about caterers for food-based events, particularly if you are already charging a fee? There are mobile barbecue services that can be found just about anywhere, run by people who know what they are doing and who would be happy to cater your event. Thinking about a wine tasting? There are local wineries in all 50 states, and many would be happy to run your event. Do you celebrate Christmas in July? How about hiring a professional Santa, instead of having somebody wearing a fake beard and a cheap suit that doesn’t fit? There is little demand for Santas outside of December, and you might be surprised at how little this might cost. Your guests will appreciate the difference, and happy guests translate into return visits!

Start thinking of ways that you can delegate responsibilities like these to local businesses. You will benefit, they will benefit, and – together – you might discover additional ways in which both of your businesses may benefit.

This post was written by Peter Pelland