Setting prices can be one of the more challenging aspects of business ownership or management. You want your prices to be attractive to your campers or boaters, but you also want to increase your revenue.
Revenue management is the analysis of data to forecast the demand at your campground or marina. Once demand is predicted, pricing is set or adjusted to optimal levels to increase revenue and profit.
There are different ways to set your rates depending on your revenue strategy. Here, we discuss fixed pricing and dynamic pricing.
Maintaining constant prices without adjustments for variables like occupancy rates, seasons, or holidays is known as fixed pricing.
Fixed pricing offers two benefits. First, it delivers consistency for your campers or boaters. They will have the same rates every time they visit, so they don’t have any surprises. Second, your financial forecasting will be much simpler since you know ahead of time how much the rate at each campsite will be regardless of other factors.
On the other hand, fixed pricing limits your revenue. During times of high demand, such as holiday weekends or the summer vacation season, your rates will be the same even though campers or boaters might be willing to pay more.
Outdoor property owners know how quickly customer preferences and demand for travel can change. Successful hospitality businesses are those that can adapt quickly and adjust their rates to capture as many bookings as possible. Quickly adjusting your rates based on current market changes allows you to capitalize on the laws of supply and demand in real time.
That strategy is known as dynamic pricing and is a powerful revenue management strategy. Dynamic pricing reacts to changes in demand and can also be used proactively to stimulate such demand.
There are myths around dynamic pricing but there are also significant benefits.
Raising your rates during high-demand periods or lowering prices to stimulate demand maximizes your revenue. Here are two examples of how dynamic pricing in the hospitality industry works.
Raise rates. Suppose there is an unexpected announcement of a major sporting event in your area, causing an unexpected influx of visitors that may strain local accommodations. You may sell out all of your sites at your original rates, but at much lower prices than people would have been willing to pay. Increasing rates when you hear the news increases your revenue for that period.
Lower rates. Reducing rates during the off-season or for single “orphan” days can stimulate new demand or encourage a camper to extend their stay or a boater to spend more time on the water.
Implement Minimum Stay Restrictions. Dynamic pricing is not restricted to raising or lowering nightly rates. Your outdoor property can also increase revenue from longer stays by utilizing dynamic minimum stay pricing. For instance, “work from home” employees are increasingly using campgrounds and RV parks as long-term worksites. To attract more of these digital nomads, setting a minimum length of stay with a dynamic pricing tool can enable you to offer incentives for longer bookings, both increasing revenue and occupancy rates.
The thought of frequently changing rates may sound daunting, but with a robust dynamic pricing tool, you can schedule automated rates based on pre-defined rules. This can include data fluctuations for changes in occupancy, promotions, season, or holidays. This technology speeds up the entire process of creating rate tables, reducing the time you or your management spend on pricing adjustments.
Travelers today are planning bigger trips with higher spending. Consumers understand the practice of increasing or decreasing prices based on demand, and your boaters or campers expect to see rate fluctuations when they book with you.
A dynamic pricing strategy aligns with marketplace trends; however, you need to ensure that current rates are accurate at any given time and displayed consistently. With the right reservation management solution that provides both a Dynamic Pricing Tool and Channel Manager, you can maintain up-to-date pricing across all OTAs and your own website.
Fortunately, you can have the best of both worlds with the right reservation management system.
A reservation management system that includes a robust Dynamic Pricing Tool can provide your property with all the benefits of dynamic pricing, while still allowing you to apply fixed rates when it makes sense.
The wrong platform can hinder your growth, but the best all-in-one solution can open the door to streamlined operations, maximized revenue, and a great camper or boater experience.
For key insights into how to choose the right software, download our Ultimate Guide to All-In-One Reservation Management Software.