September 25, 2019
What’s the best occupancy percentage that you should aim for at your park? I hear this question a lot and most of the off the cuff answers going to be, well of course 100%. I’m here to tell you that’s wrong. 100% occupancy means you have nothing left to sell. You have no opportunity available once you reach a hundred percent occupancy, and I’ll tell you what it means in the big picture, your price is too low.
We’ve all heard of basic economics, supply and demand. Supply and demand mean the more supply there is, the lower the price or the less supply there is, the higher the price should go to balance that demand. So in your park, you truly want to aim for about 75 to 85% occupancy at the most. Once your occupancy goes over that you need to raise prices. This is where dynamic pricing comes into play.
I know a lot of people in the campground industry resist this. There’s no need to resist. Hop on board and do it! Dynamic pricing means the rules of supply and demand are going to apply. Should a dead weekend and April be the same price for me to come stay at your park on Labor Day weekend? No, supply and demand dictate that it shouldn’t be and I know that as a camper I’m willing to pay more on a holiday. I have to be willing to, and if I’m not, I should go down the road and go somewhere else who is not smart enough to charge me a higher price. I can go shop out the cheap guys. Your park is built to be an investment. So take good care of that and look at dynamic pricing. Make sure that your occupancy is not too high, being too high is almost as bad as being too low.
If your pricing is too low, you will find high occupancy rates. Look at April, say on that slow week, yeah, maybe you do decrease prices there, but you offset it by the increase that happens on those higher occupancy weeks.
So take a look at your occupancy expectations. Don’t ever want to be at 100% we want to have room for growth and opportunity. If your park is only at 60% occupancy, that also means you have lower costs. You have lower electrical water costs, lower staffing costs, lower cleanup costs. So it’s not necessarily a bad thing to be less than 100%. It’s actually a good thing and where you should be striving. So look for 75% to 85% and try your best to get there.
Donna Bordeaux, CPA with CampgroundAccounting.com
What happens when you send two CPAs out into the relaxing outdoors to camp? You get CampgroundAccounting.com. Donna and Chad have over 50 years of combined experience as entrepreneurial CPAs. They’ve owned businesses and helped business owners exceed their wildest dreams. They camp and travel across the country every chance they get, so it’s just a natural fit that they focus their CPA skills on helping campground owners throughout the USA grow their businesses and minimize the impact of taxes. They understand the key performance indicators and specialized issued that face RV park owners every day.