The great outdoors is getting more expensive, huh?
Welcome, fellow outdoor enthusiasts and budget-savvy adventurers! Let’s talk about something that’s as essential to camping as a trusty tent or a cozy sleeping bag: the economics of our beloved campgrounds.
You know the drill. You're buzzing with excitement, ready to hit the road, and immerse yourself in nature's embrace. But before you can claim your slice of outdoor paradise, there's that one crucial step – booking your campsite. In a perfect world, this would be as simple and straightforward as roasting marshmallows on an open fire. But, as we've all come to realize, the world of campsite bookings is more like trying to navigate a dense forest... at night... without a flashlight.
In recent years, the camping industry has seen a wave of changes, especially with digital platforms like Campspot joining the party. These platforms, while convenient, bring their own set of quirks – mainly, the costs that seem to play a game of hide-and-seek with our wallets. We're talking about those pesky booking fees that pop up at checkout, and the mysterious hidden charges that have the uncanny ability to turn what was advertised as a budget-friendly opportunity into a financial puzzle. Or my personal nemesis, the advent of the "lock fee".
But why is this happening? Are we just encountering the unavoidable realities of modern, tech-driven convenience, or is there more to this story? This post aims to unravel the tangled threads of campsite economics, shedding light on how these digital platforms influence the costs of camping, and what that means for us, the happy campers.
From dissecting the extra fees that sneak into our bookings, to understanding the broader trends that shape campground pricing, we're diving deep into the world of camping costs. And, because we're all about solutions here, we're not just going to highlight the challenges – we're also exploring ways to ensure that rate increases deliver comparable, if not disproprtionally higher perceived value to campers and adventurers.
So, grab your virtual marshmallow stick, and let's get toasting – it’s time to explore the financial landscape of our cherished camping adventures!
A crash course in campground economics and the metrics that matter to operators
Let's start with an overview on campground economics and the key performance indicators and metrics that are critical to their ongoing success and continued profitability in an increasingly volatile economy. This (along with many other things for sure) is what's on the mind of every campground operator in the industry. If it's on the mind of operators, than it's also on the mind of reservation and management software providers as well.
Regardless of how we as consumers feel about any particular stay or the industry as a whole, without these metrics moving in the right direction - the industry as we know it cannot sustain itself.
Occupancy Rate
A measure of how many campsites (or units) are booked, compared to the total amount available to book. High occupancy means more revenue, but extreme high occupancy might mean that expansion might be needed and/or an adjustment in pricing strategy (i.e., higher nightly rates). Low occupancy may signal issues with pricing (too high), marketing, or camper satisfaction.
Seasonal Variability
If Occupancy Rate is the heartbeat of a campground, then Seasonal Variability is the campground's nervous system. Seasonal variability refers to the deviation in demand that a campground experiences month-to-month or season-to-season. Said in a less academic and data dork way (I wear the latter as a badge of honor), we're talking about how demand for spots at the campground change over the course of the year. A campground in Bar Harbor, ME may have extreme demand in Spring and Summer, then have substantially lower demand at the end of Fall, before finally having next to no demand in Winter due to extreme cold weather restricting travel. On the flipside, a campground in the Florida Keys may have very low variability, as they see demand year round. The more variability a campground experiences, the more its Occupancy Rate will fluctuate, and the more its occupancy fluctuates, the more volatile it's revenue stream can become.
Average Revenue per Reservation (ARR)
Measures the average amount of revenue generated per unit/site. This metric helps campgrounds understand how much value each camper or reservation generates. Campgrounds can use this to understand how much they can or should spend on efforts to attract a camper or secure a reservation, while still generating a profit. ARR is driven by two metrics: Length of Stay and Price per Night.
Length of Stay (LOS)
A huge driver of Average Renue per Reservation, this measures how many nights each reservation is for (on average). If a campground has an average length of stay of 1-2 nights, they may have a higher margin rate (less discounts given on weekly rates), but they also have a lot more turnover and are more susceptible to low occupancy or higher marketing costs due to the need to constantly secure new reservations to replace the outbound campers. If a campground has an average stay of 7+ days, they may have a lower margin rate (more weekly/monthly discounts given) but their turnover is lower and their need to attract new reservations to replace expiring reservations is less frequent. They also have a longer runway to please and impress a guest, making it a bit easier to develop a long-term relationship with a guest and their wallet.
Price per Night
If Length of Stay is the peanut butter, then Price per Night is the jelly in the proverbial Average Revenue per Reservation sandwich. Price per night is the revenue per night that the campground receives for the duration of a reservation. If a reservation is for 5 nights and the total revenue is $250, the price per night averages out to $25. Campgrounds (if they're ahead of the curve) are constantly re-evaluating their pricing strategy by looking at how elastic their nightly rates are. At what price point does a camper say, nah too expensive? Is it $25, $30, $35, or $50? Knowing how elastic your nightly rate is helps an operator understand how much headroom they have for revenue, as well as how much they can afford to increase rates before occupancy rates start to fall from shorter lengths of stays, or reduced reservations.
Margin Rate
Measures how profitable a reservation is for the campground. Ultimately, the margin rate determines how much cash the campground operator actually gets to send to their bank account to use as capital for improvements, marketing, etc., in the future. Let's say a reservation generates $250 in revenue, if the site's margin rate is only 10%, the operator is only sending $25 to the bank after covering all other expenses required to make that reservation possible.
There are a lot more metrics that matter, but these represent those that some might argue at the most critical to monitor as a campground operator. They're also applicable to the broader hospitality industry. Now that you have a crash course in campground economics, we can proceed in an informed and empathetic manner to the challenges that face some of our favorite campgrounds and their operators.
If we're going to focus on where our campgrounds and the broader industry is failing us, let's do it in as informed and constructive a manner possible.
The rise of reservation and management software
Remember the old days of driving to a campground to check for a spot? Or the initial leap to online request forms? Now, we've moved to the ease of discovering and booking campsites through a few clicks on apps and websites. This evolution marks a significant shift to a more convenient, digital-first approach in the outdoor hospitality industry. While this technological transformation has greatly simplified the reservation process, it hasn't come without its drawbacks, affecting campers and the industry in various unexpected ways.
Fees, fees, and oh... more fees
As we delve into campground economics, we begin to understand the importance of maximizing revenue for operators. However, the increasing reliance on fees at checkout is a concern. It’s not just the existence of fees like resort fees or lock fees but their often late-stage disclosure that jolts our budget planning.
Studies show that crows and ravens have a remarkable ability to remember human faces. They can memorize faces associated with danger for years, and will even warn their peers about these individuals. They will even avoid them for a month or longer.
When you surprise a consumer at checkout with a subtotal that's 20% higher than expected, they're going to react like a crow. They will remember your brand (face), they will share their displeasure with your potential customers (peers), and they will avoid your brand for months or years.
This practice, while successfully boosting Price per Night, often leaves campers with a sour taste. The real question is: who's responsible? While campgrounds set these fees, they're often influenced by larger industry trends and the software platforms they use.
One notable company even celebrated generating $12.7M from lock fees alone over the course of the year. But let's ponder this, what's the opportunity cost of this accomplishment? Could this money have been better spent enhancing the camping experience itself by patronizing a local business or going on a local excursion? To me, celebrating and enabling these fees is the equivalent of biting your nose to spite your face.
If we assume an average price per night of $50, that $12.7M could have been used to allow those exact same consumers to spend a total of 254,000 more nights out enjoying the great outdoors and patronizing local restaurants and businesses. Instead, it was imposed and consumed at the last touchpoint in the reservation process to prey on a camper's fear of missing out on a specific site.
Generating incremental revenue through FOMO isn't innovative. It's predatory, unimaginative, and wreaks of unoriginal thinking and a complete scarcity of brainpower. The true disappointment for me comes from the fact that some of the biggest perpetrators of this practice are the very same organizations that have done such an exceptional job of introducing new genuine innovation to the outdoor hospitality industry. Some way along their journey, they lost their way and succumbed to doing the easy thing, versus doing the right thing - for both their clients, and the consumers that their clients serve.
The bottom line? Transparency is key. We as consumers understand the need for rates to include specific fee line-items, but let’s have them upfront in your advertised rate. This way, campers can make informed decisions without feeling nickel-and-dimed, and campground operators can maintain trust and long-term loyalty.
The challenge I issue here, and contribute an idea at the end of this article, is to generate incremental revenue through low-to-no-cost enhancements to camper experience, not by creating a new fee, or toggling an existing one up to make up for lack of innovation or compelling experiential marketing.
So who are we truly upset at?
While it's easy to direct frustration at campgrounds for opaque pricing, the real issue is more systemic. It involves the reservation platforms enabling these practices and the lack of regulatory oversight.
The Federal Trade Commission (FTC) and Congress have a role in this. Although the FTC warned hotels against hidden resort fees in 2012, there's been little enforcement in the camping sector. Legislation like the Hotel Advertising Transparency Act of 2019 sought to address this, but it's stalled in committee.
Ultimately, the responsibility lies with multiple parties: the campgrounds for their pricing strategies, the software providers for their platform designs, and regulatory bodies for their oversight. A collective shift towards transparency and fair pricing is essential for the industry's sustainable growth.
Congress and more directly, technology companies that provide campground and reservation systems are directly enabling predatory practices that are not good for the long-term relationship between campgrounds and campers, as well as being detrimental to the industry as a whole. Sure, you secured an additional $12.7M for clients, but to the detriment of consumers traveling more and patronizing local businesses surrounding the campgrounds they stay at.
Generating incremental revenue without incremental fees
I said at the beginning of this post that we were going to focus on being constructive, empathetic, and part of the solution. So let's do just that.
Campground operators want to increase occupancy and raise revenue per reservation. We as campers and consumers want to maximize our time and budget when we travel. We'll (mostly) gladly exchange some dollars from our pocket for core memories and experiences we can take back home with us.
It's those same memories and experiences that will drive us to return back to said campground (increased retention for them), as well as share our positive experiences with others (free marketing and brand ambassadorship). So rather than seek to generate incremental revenue from yet another line-item ending with the word "fee", and rather than introducing another feature in your software to give operators a way to deploy dynamic pricing based on 25 different factors... maybe we focus on telling a story to the consumer?
Tell a story, generate incremental revenue
Here's an elegant and symbiotic way to extract more dollars from a consumer's wallet, while also delivering a proportionally elevated experience for them.
Invest the time to show prospective (and current) campers ways to make core memories while they're with you. No one knows the area around your campground better than you. No one knows the local and semi-local hidden gems better than you. No one knows where the best coffee or hiking trails are, better than you. This wisdom carries no overhead cost to you, and has a highly elastic perceived value to your consumers.
The main problem I see is that campground operators think they're in the hospitality business. They are in some ways, but that's where they're neglecting to see the forest through the trees. The campgrounds that are or will be the most successful in the long-term are the ones that acknowledge that they're in the experience business.
Advertise and communicate agendas, off-the-beaten path activities, and hidden gems. Build custom itineraries for campers and deliver true experience concierge services, and you can charge more per night without leaving a negative taste in your camper's mouth. (Hint: OTAs and reservation system managers... include an input in your checkout to ask a camper what they want to do, see, or experience during their reservation).
Show itineraries and agendas that span days, weeks, or even months and you'll inspire campers to stay longer. Use their fear of missing out on an experience to create mutual value instead of using their FOMO on a less than perfect campsite to extract an extra $50 per reservation. Software providers, give your clients the capabilities to build and showcase their own custom adventure agendas as part of the reservation process. We're more likely to add multiple nights to a reservation if we see that there's 5 days worth of adventure to be had. Otherwise we're more than content to be transient and pass through in 1 or 2 nights as we absorb your resort fees, pet fees, lock fees, and whatever else you can conjure up and throw at us.
Learn from new experience-centric entrants
One brand that has truly embraced the experiential side of camping, traveling, and exploration is Harvest Hosts. They recognized the opportunity for an extraordinary win-win when others didn't. They found a way to convert thousands of small businesses across the country into safe, secure, fun, and memorable places for travelers to experience and stay - while also driving profitable new business to each of these locations.
It's a winning formula and in the coming years, I predict that the outdoor hospitality industry is going to lose a meaningful share of wallet to disruptors and innovators like Harvest Hosts. The best part of their business model, it can actually be used to also help campground operators acquire new customers (for free). Set aside a small off-grid site for Harvest Host members and I can almost guarantee you'll get incremental business in the long run, if not even an extended paid reservation shortly thereafter from them. It's the perfect gateway to your brand.
There's a lot to unpack here around their business model and vision - we'll save that for another article on another day.
I've hit a little hard, maybe?
I've taken a firm stance, but it's important to acknowledge the strides made in the camping industry. Progress doesn't have to come at the cost of consumer trust. While campground operators and software providers are innovating, there's room for growth beyond fee-based strategies.
Let's champion a model where value is added both to campers' experiences and campground revenues in a transparent, mutually beneficial way. By focusing on enriching the camping experience rather than just the bottom line, the industry can foster long-term relationships built on trust and satisfaction.
Add value to our journey and we'll add value to your bottom line. It's a tried and true formula.
If you're developing or managing a reservation or campground management software, service, or platform - my call to action is to give your operators and clients new and improved ways to market the unique experiences available to campers, all within striking distance of where they're sleeping for the night. We're not going to stay an extra night because you have 50-amp service, but we might if we know that we're leaving too many unique experiences on the table if we roll out too quickly!
Bridging the gap in outdoor adventures
To truly enable a transformative and meaningful shift in the way that campgrounds and outdoor hospitality brands market themselves and their properties - they need a way to quickly and easily build out experience agendas for their guests (both personalized and generic).
My new venture I'm launching aims to be that resource to brands, operators, and travelers alike... but more on that another day!
