Profit Points or Pressure Points?
July 7th, 2023
When I was a child in the 1950s and 60s, before the microwave oven became a staple in almost every kitchen (remember the Amana Radarange, the first microwave oven intended for home use, introduced in 1967?), my mother cooked almost everything in a Presto pressure cooker. It cooked food quickly, but there were risks involved. After turning on the stove’s heating element, you had to wait for the air to escape, then install a valve (known as a “jiggler”) on top of the steam release vent. This monitored the internal pressure and warned you to lower the heat. If you failed to do so, there was also an emergency relief valve that would shoot your meal onto the ceiling rather than having the cooker explode under pressure. Despite the risks of microwave radiation, most people decided that microwave ovens were safer and easier to use.
I have been advocating for all-inclusive pricing in the outdoor hospitality industry for quite some time now, but many park owners legitimately want to know where to draw the line (or when to reduce the heat) when it comes to what to include and what should be considered a fee-based option. Like that jiggler, your customers will often provide the necessary feedback (perhaps on social media and review websites and apps). If you go too far, that emergency relief valve will essentially send your customers, not to the ceiling, but to another campground down the road. Beyond customer feedback, the decisions regarding what to include in your free amenities versus add-on services for which most reasonable people would expect to pay extra, often come down to basic common sense or putting yourself into the shoes of your customers.
Three Categories
I like to think that campground amenities fall into one of three categories:
- Always included in the basic fee. Nobody in their right mind would ever expect to have to pay a fee for their children to use your playground, nor would they expect to pay extra to use basic campsite features such as a picnic table or fire ring. They would also never expect to have to pay to use your restrooms. Other amenities that clearly fall into this category include the use of your swimming pool, hot tubs, recreational fields, basketball or volleyball courts, horseshoe pits, and shuffleboard courts. In most instances, planned activities also fall into this category.
- Always expected to be fee-based. This includes propane fills, EV charging, the washers and dryers in your laundry, store merchandise, visitor fees, premium food events (such as a pig roast or lobster roast), and concerts that involve ticket sales to the general public. Some campgrounds might also offer rentals of golf carts, motorboats, scooters, or electric bicycles. Generally speaking, these all involve consumables, dedicated staff, significant maintenance costs or higher insurance premiums.
- The gray area in between. This is the broad category of diverse amenities, many recreation-based, where discretion is necessary. The all-inclusive concept involves moving as many of these as possible into the first (free) category, whereas moving too many of these into the second (fee-based) category will “nickel and dime” people into finding another place to camp. The challenge is to honestly determine which of these amenities incur actual operational costs, as opposed to investments that have long ago been written off and incur little or no current costs. There is a difference between a new fleet of kayaks and beat up old rowboats. Ask yourself if you would be happy paying $25.00 to rent a creaky old rowboat for an hour. Wherever possible, try to expand your base of free amenities, building them into your basic site fees.
Let’s spend more time looking into this “gray area” to determine what truly belongs in the free category.
Recreational amenities: Beyond the basic recreational amenities that always fall into the first category, some parks offer attractions such as waterslides, spray parks, go-kart tracks, personal watercraft rentals, laser tag, paintball courses, miniature golf, disc golf, fishing, and dog parks. Some parks deal with this category of amenities by selling recreational wristbands, which help to soften the blow and are somewhat all-inclusive. Wristbands also help to make the elderly couple on site 87, who will never use any of these amenities, not feel like they are subsidizing the “younger crowd”. In each instance, you need to be objective in determining which features might be moved into the free category. For example, if you have a spectacular miniature golf course that is open to the public, maybe you could include one free round for every member of a camping family, then charge a fee. On the other hand, if you have a weather-beaten mini golf course that was built 25 years ago, and you are not paying an attendant to be on-duty, use of this course should never incur a fee. The same goes with tennis courts, which are not as popular as they were years ago. If your courts have broken pavement, torn nets, and a growth of weeds, you are better off either converting them to new pickleball courts or removing them from your list of amenities.
Utilities: You may already be well aware that WiFi is the new utility. Charging a fee for this service or access to cable TV channels, particularly if the services are limited, is an invitation to customer dissatisfaction. Your campers should also not have to pay to use your dump station, and despite water conservation arguments in drought areas, nobody wants to feed quarters into a shower meter. Metered electricity, on the other hand, might increasingly become a necessity in order to discourage wasteful excess usage.
Store: Your campground store (along with a snack bar and video arcade) clearly represents an opportunity for add-on purchases and added income. Your campers expect to pay for ice, firewood, prepared food and groceries. That said, sometimes it makes sense to think outside the box. For example, free coffee between certain hours each morning will draw customers into your store, where they may purchase additional items – including a one pound bag of that special coffee blend. If there are items gathering dust on the shelves (everyone makes an occasional buying mistake), put them in a bargain bin so you can make room for in-demand merchandise that will sell at full markup. Most campgrounds limit out-of-state firewood in order to curtail insect pest infestations; however, if you have a pile of firewood that is the result of cleanup from storm damage, offer it to your campers at no charge rather than letting it rot on the ground. They will appreciate little extras like that!
In summary, adjust your rates and any add-on fees to reflect your operational costs and necessary profits, but try your best to package your services in a manner that offers you an edge over your competition and represents true value in the eyes of your campers.
This post was written by Peter Pelland
Tags: all-inclusive, resort fees Posted in Marketing Strategies |
All-Inclusive vs Resort Fees
January 25th, 2023
Several years ago I encouraged campground owners to consider the “all-inclusive” approach to guest fees, and that argument continues to make more sense than ever. I mentioned at the time how I had recently opened a box of breakfast cereal, only to find that the inner bag of contents reached about half the height of the packaging. It was a classic example of the disclaimer that warns us that “contents are sold by weight, not volume”. If the packaging properly matched the size of its contents, it would have been half the size, have far less visibility on the supermarket shelf, and I probably would have passed on a purchase that did not appear to represent a very good value. You might say that I was deceived into making the purchase. Even though I liked the cereal, I am unlikely to purchase it again. Economists have even coined a new word for this package downsizing: Shrinkflation.
Respect Your Guests’ Intelligence
People who feel that they have been somehow deceived into making a buying decision are almost never going to be return customers. When it comes to the outdoor hospitality industry, one of the biggest complaints is when guests feel like they are being “nickeled and dimed” during their stay. Although it is far preferable to avoid the imposition of add-on fees for incidentals like showers, Wi-Fi, or your planned activities, it is very important that any such fees be fully disclosed at the time of reservation. Just as offensive is the imposition of so-called “convenience fees” when making an online reservation, as well as the recently introduced concept of the “site lock” fee. In the latter instance, campers must pay a premium at the time of reservation in order to be assured of being assigned any particular site. The logic from a management perspective is that the airlines have generally been getting away with this for several years now, allowing passengers to choose an available seat rather than settling for a randomly assigned seat (often a center seat and/or in the back of the economy class section of the cabin), and there are almost always premium fees involved. These ancillary fees, which for airline seating range anywhere from $20.00 to $90.00 (according to a 2022 report by CBS News) are pure profit. There is little of no cost involved in providing this alleged service.
My best advice is to bundle as much as possible into your basic fees, promote that value within your rate structure, and stop presuming that people are comparison shopping for price without reading the fine print. Would you rather cater to guests who will complain about spending anything over $25.00 for a night of camping or guests who are more than willing to spend $250.00 for their camping experience?
Consider the All-Inclusive Approach
I suggest trying to avoid the growing practice of hotels to tack so-called “resort fees” onto their room rates. Across the hotel industry, even low-end properties have started imposing mandatory added fees for everything from poolside towels to room safes to fitness centers to on-site parking – even if a guest uses none of those services. To the contrary, I suggest offering your guests as much as possible as part of your service offerings. I believe the answer could be the all-inclusive concept, where guests are willing to pay a premium for the privilege of avoiding add-on fees. The all-inclusive concept originated with Club Med way back in 1950. It is the rule rather than the exception in some vacation destinations, and the concept has been embraced by many resort operators, cruise lines, travel agencies and online booking companies, major airlines, hotel chains, and wholesale buying clubs like Costco.
With all-inclusive pricing, as the name implies, guests willingly pay a premium fee for the privilege of vacationing without having to pull out their wallets throughout the course of their stay or when settling their tab. All-inclusive pricing is most popular with destination resorts and highly competitive, saturated tourism markets. Probably the best known and most broadly marketed of these practitioners is Sandals Resorts International, which promotes the tagline of “more quality inclusions than any other resorts on the planet”. Their all-inclusive stays include accommodations, dining, wine and spirits, golf, water sports, scuba diving, land sports, and entertainment. Even here, there are fee-based options such as spa treatments, premium wines, and scuba certification, as well as some restrictions on golf that vary from one resort or level of accommodations to another. The bottom line is that guests feel that they are being offered far more than they would otherwise expect.
Another relatively new company in the travel and tourism industry is Scenic Luxury Cruises. The company takes the all-inclusive concept to its pinnacle, where there is virtually nothing that you can pay for beyond your basic fare, unless you insist upon purchasing rare bottles of vintage wine while dining. Everything from gourmet meals, unlimited beverages, stateroom mini-bars (replenished daily), shore excursions (some of which must be reserved in advance on an availability basis), electric bicycles, onboard entertainment, laundry service, butler service, transfers and gratuities is all included.
Before you think that what applies to a luxury cruise line or luxury resort cannot possibly translate into the camping experience, think again. When I first wrote on this topic, a Google search for “all-inclusive glamping resorts” came up dry. Today, there are many compilations of luxury glamping vacations on sites such as GlampingHub, RVshare, and TripAdvisor. There are also individual campgrounds such as Camp Aramoni, in Illinois, which seem to have perfectly embraced the concept.
I have no connection whatsoever with the business other than my admiration, but I encourage readers to visit the Camp Aramoni website to discover how things can be done right. This is certainly a very viable segment within an ever-expanding outdoor hospitality industry. With the growing popularity of “glamping”, it is time to ditch extra fees for activities and recreational amenities such as mini golf, jumping pillows, canoes and kayaks, splash pads, showers, Wi-Fi, and online reservations. Then consider offering amenities and experiences that you may have never associated with traditional camping, such as the glamping tents at Camp Aramoni that feature luxury linens, central air conditioning and heat, USB charging stations, firewood bundles, and en-suite restrooms that include towels, hair dryers, and toiletries. Their basic fees also include a breakfast buffet, nightly gourmet s’mores, and dinner ordered from an extensive chef-inspired menu. In addition to the restaurant, the property includes an event space for weddings and other special events … all in a reclaimed former industrial property. The impossible has suddenly become possible. The key to growth in the family camping industry has always been to draw in a new wave of guests who do not currently consider themselves campers. To reach them, offer them the unexpected and create the perception of overwhelming value that they have come to appreciate elsewhere. An all-inclusive approach to pricing may prove to be an idea whose time has come.
This post was written by Peter Pelland
Tags: all-inclusive, resort fees Posted in Marketing Strategies |
Give Your Guests More of What They Want
February 24th, 2018
I opened a box of breakfast cereal recently, and the inner bag of contents reached about half the height of the packaging. It was a classic example of the disclaimer that warns us that “contents are sold by weight, not volume”. If the packaging properly matched the size of its contents, it would have been half the size, have far less visibility on the supermarket shelf, and I probably would have passed on a purchase that did not appear to represent a very good value. You might say that I was deceived into making the purchase. Even though I liked the cereal, I am unlikely to purchase it again.
There are so many instances where corporate marketing decision-makers seem to underestimate the ability of their customers to make informed buying decisions and to alternately choose substitute products. Then there are instances that border on collusion, where companies follow the lead of a competitor who trail-blazes a reduction in product size without a corresponding reduction in price. For example, it only took one orange juice company to shrink its half-gallon container down to 59 ounces before every other company quickly followed suit. The same thing happened with ice cream, where the half-gallon container somehow evolved into a quart and a half. Perhaps the greatest offenses to consumer intelligence are meaningless comparison claims. I recently purchased a 50 ounce container of liquid laundry detergent where the label prominently stated “25% more ounces” (in a 36 pt. bold font) “vs. 40 fluid ounces” (in a 6 pt. light font). Needless to say, that claim did not influence my purchase.
Respect Your Guests’ Intelligence
People who feel that they have been somehow deceived into making a buying decision are almost never going to be return customers. When it comes to the outdoor hospitality industry, one of the biggest complaints is when guests feel like they are being “nickeled and dimed” during their stay. Although it is far preferable to avoid the imposition of add-on fees for incidentals like showers, Wi-Fi, or your planned activities, it is very important that any such fees be fully disclosed at the time of reservation. (One of my pet peeves is the imposition of so-called “convenience fees” for the making of reservations themselves!)
My best advice is to bundle as much as possible into your basic fees, promote the value within your rate structure, and stop presuming that people are comparison shopping for price without reading the fine print. One trend that I hope does not make inroads with the outdoor hospitality industry is the growing practice of hotels to impose so-called “resort fees”. This practice is so deceptive that it has generated lawsuits filed on behalf of consumers by 47 state attorneys general, who had recently negotiated an agreement with the Federal Trade Commission, until the Trump administration ordered the FTC to back off, siding with the hotel industry rather than the interests of consumers. Nonetheless, guests have little or no tolerance for deceptive rate embellishments.
Consider the All-Inclusive Approach
A far better – and opposite – approach is the all-inclusive concept, where guests are willing to pay a premium for the privilege of avoiding add-on fees. The all-inclusive concept originated with Club Med way back in 1950. It is the rule rather than the exception in some vacation destinations such as Mexico and the Caribbean. The concept has since been embraced by resort operators, cruise lines, travel agencies and online booking companies, several major airlines (including United, JetBlue, and Southwest), hotel chains (including Marriott and Hilton), and even wholesale buying clubs like Costco.
With all-inclusive pricing, as the name implies, guests willingly pay a premium fee for the privilege of vacationing without having to pull out their wallets throughout the course of their stay. All-inclusive pricing is most popular with destination resorts and highly competitive, saturated tourism markets. Probably the best known and most broadly marketed of these practitioners is Sandals Resorts International, which now promotes the tagline of “more quality inclusions than any other resorts on the planet”. Their all-inclusive stays include accommodations, dining, wine and spirits, golf, water sports, scuba diving, land sports, and entertainment. Even here, there are fee-based options such as spa treatments, premium wines, and scuba certification, as well as some restrictions on golf that vary from one resort or level of accommodations to another. The bottom line is that guests feel that they are being offered far more than they would otherwise expect.
Unfortunately, when I perform a Google search for the terms “all-inclusive campgrounds” or “all-inclusive camping resorts”, the results are pretty limited. I am more likely to find dude ranches, cabin resorts, and family resorts that do not fit the definition of a campground. Nonetheless, it seems that there is a small but growing list of campgrounds, ownership groups, and franchises that are discovering and beginning to capitalize upon the “all-inclusive” buzz words.
When I clicked through to the website of a campground in Michigan that calls itself “all-inclusive”, I found that it did not charge extra fees for most of its planned activities (something that is not all that uncommon); however, it charges extra fees for bike rentals, boat rentals, boat launching, and a few other “add-ons”. Another park in Wisconsin is promoting its all-inclusive pricing but is also charging for a short list of optional services that include boat and golf cart rentals, its laundry, and honey wagon service. Finally, a Jellystone Park in Texas is really promoting an all-inclusive pricing concept that includes full use of a wide range of recreational amenities – from miniature golf to a jumping pillow to a splash park. In each instance, the point of emphasis is not the list of fee-based options but the list of what is included at no additional charge.
The key to growth in the family camping industry has always been to draw in a new wave of guests who do not currently consider themselves campers. To reach them, offer them the unexpected and create the perception of overwhelming value that they have come to appreciate elsewhere. An all-inclusive approach to pricing may prove to be an idea whose time has come.
This post was written by Peter Pelland
Tags: all-inclusive, campground industry, campground marketing, Club Med, resort fees, vacation packages Posted in Consumer Trends, Marketing Strategies |
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