Wednesday, August 4, 2021
Wednesday, August 4, 2021

Part 1: The New Dynamics of Pricing Your Next Campsite

EDITOR’S NOTE: This is Part One of a two-part series on Dynamic Pricing in the Camping Industry. Part Two will be included in tomorrow’s Sunday, June 27 edition of the RVtravel.com Newsletter.

Jump to where you left off reading this in the newsletter.

How much are you willing to pay to camp?

Dynamic pricing is quickly sweeping through the camping industry as more park owners struggle to find the perfect formula to deal with record high occupancy while maximizing profits, and yet still end up with happy (or at least happy enough) campers.

If you’ve ever shopped with Amazon.com, ridden in an Uber, or booked an airline ticket, you’ve already experienced the receiving end of the dynamic pricing model. It’s the modern means of compiling everything you know about a potential customer and – using artificial intelligence and complex algorithms – using that data to squeeze the highest possible rate based on your available product inventory.

This shot from a Campspot marketing video illustrates a park’s revenue growth potential using dynamic pricing software.

Dynamic Pricing 101

Dynamic pricing goes by several different names, including demand pricing, surge pricing, and time-based pricing. In its most simple form, it’s an automated price reaction to changes in competition, supply and demand, and other market forces. For the RV consumer, it’s important to understand dynamic pricing, why it’s growing, and why it’s likely here to stay.

In the example of the Uber ride share service, dynamic (surge) pricing is used to quickly raise the cost of a ride when demand surges after a large event or at large airports. The rise in rates lures more Uber drivers, which in turn cuts down the wait time for riders willing to pay the additional cost.

It gets much more complex in other industries. When you fly with a commercial airline, it’s likely the fellow next to you paid a vastly different amount for his ticket than what’s showing on your e-ticket stub. That’s because airlines pull in data about the demand for available seats along with all the info they have on an individual’s flying history in order to offer up a rate that the flyer will likely accept. Business flyers, for instance, pay less attention to the cost than vacation flyers and are therefore ripe for paying higher prices.

Shopping behemoth Amazon goes even further. They know your complete shopping history, where you live, your likely income status, usual shopping times, product return history and, well, more than you can ever imagine. All that data gets automatically dumped into an extremely complex algorithm that again serves up a price it thinks you will tolerate.

At its core, dynamic pricing is a blazing-fast automated pricing response to real-time demand. In camping, the more people who want the same campsite, the higher the price.

Camping is behind the curve on Dynamic Pricing

Campgrounds have been using a very basic form of dynamic pricing for decades. Any campground that has differing rates for holidays, shoulder seasons or weekends is, in fact, practicing a rudimentary form of dynamic pricing.

Dynamic pricing serves up ever-changing pricing to consumer’s devices based on supply, demand and other market forces.

What’s new to the camping industry is the ability to automate the process using extremely complex algorithms that factor in things such as your camping history, you RV’s specs, your age, number of people camping, your pets, and even your ZIP code (to help estimate your likely income). Next comes everything the algorithm knows about the campground’s current site supply as well as the likely future demand for a particular site type at the time of the requested reservation.

The dynamic pricing algorithm is even able to access the campground booking chart, playing a lightning-fast game of Tetris as it adjusts camper reservations and available sites to maximize occupancy as well as potential revenue. This all happens in the nanosecond after you request your reservation, and the price you see quoted is the end result.

Campspot is one of the leaders in providing dynamic pricing reservation tools and operating systems to campgrounds. In its online marketing materials, Campspot says that dynamic pricing simply “ensures that you (the campground owner) are getting the most value out of each and every site you offer.”

Campers at Kampgrounds of America locations will be affected by dynamic pricing in the future.

THE CAMPSPOT STORY is a good example of the explosive growth in campground interest in dynamic pricing. The parent company (Northgate Resorts) didn’t create Campspot until 2015. It’s grown to now include a network of 1,300 campgrounds. The company has 80 employees in three offices in the U.S. and serves campground owners in 49 states and all Canadian provinces.

Campspot is also used by marinas, breweries, racetracks, event venues and glamping resorts. But it’s the reservation management of more than 100,000 total campsites in the U.S. and Canada that is its main selling point.

“Dynamic pricing is the norm in many tangential industries to ours, such as airline and hotels,” said Campspot Marketing Manager Haley Dalian. “Outdoor hospitality has been slower to adapt.”

“When we bought our RV resort, we added Campspot,” said Mike Tuma, owner of the Lakewood RV Resort in North Carolina on Campspot’s marketing website. “Sure enough, in June, July, August and September, revenue was up 50%, just like that.”

More “Dynamics” on the way at KOA

Kampgrounds of America Inc. is also on the verge of adding some level of automatic dynamic pricing to its 520 North American campgrounds, according to Senior Vice President of Information Services Andy Metroka.

“We are still in the process of defining the business rules for dynamic pricing at KOA,” Metroka said. “It’s been on the radar for a while, but it isn’t as simple as it is in the hotel industry. There are a lot of variables, and we don’t know what it will look like yet for KOA.”

KOA owners have been able to manage their rate plans based on occupancy for several years, but it’s been a manual process up to now.

“Our vision is to look at site demand and either handle the rates automatically or prompt the owner when site availability is going down and demand is still going up,” Metroka said. “And there’s also the factor of how close you are to the arrival date. We want to drive rates with data instead of by the seat of the pants. We can really do data-driven pricing now.”

When KOA does add dynamic pricing, it will be offered to all 520 of its parks. Add that to Campspot’s 1,300 potential locations that could use dynamic pricing (about 250 Campspot parks currently are) and you’ll have more than 1,800 campgrounds that could use dynamic pricing via just those two major vendors alone.

Before you write off Dynamic Pricing as just another example of corporate greed in America, consider that supply and demand has always dictated what you pay for any product. Dynamic pricing just makes it happen extremely fast using tools that owners have never had before.

Campground owners, like any other business, have every right to make a fair profit driven by what the market will allow. They in all likelihood will take a large portion of their profits and put it back into their campgrounds, investing in the advanced WiFi, patio sites, new roads and all of the other amenities campers want.

Dynamic Pricing does precisely what it’s intended to do – maximize a campground’s profits and occupancy by adjusting prices quickly in response to supply, demand and buyer-cost tolerance. Dynamic pricing will be the new normal in camping as long as there are campers willing to pay the “going rate.”

In Part 2, we’ll take an in-depth look at what’s going on behind the curtain when a campground uses Dynamic Pricing, and what you can do to ensure you get the best rate possible when it’s time to book. Read Part Two now.

##RVT1006

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Lisa
1 month ago

We almost never stay at KOA now – I guess we will stay even less – maybe a KOA once or twice a year. We’ve always thought they were too high for what they offer.

Montgomery Bonner
1 month ago

First, you can shop campgrounds in an area. Second, you can just go someplace else, because the rates are too high. Third, you can try state and government places if openings are to be had, or like me, I have a set amount I am going to pay, if those CG’s raise prices too much, I won’t pay it, eventually, enough people won’t pay it, then they either lower their prices, or go out of business. I doubt they will go out, but, older folks have limits, and standards, and if they are low, and to expensive, we wont pay. I already turned down one campground because they wanted 50% more for the same thing at another place. They did not get my business. Did they suffer, don’t know, but we enjoyed the place we stayed.

Zoom
1 month ago

We read everyday about planning commissions turning down request for new campgrounds and how it is near impossible to find a site as we are traveling. Campgrounds are in demand and can charge whatever they want in many locations. You have a choice to pay or boondock for free or almost free. It is my choice what to do and to feel like campgrounds owe us something is absurd! They create a business plan and model and will price accordingly. The good ole days are gone forever and no amount of complaining will bring them back.

Seann Fox
1 month ago

Just another reason I boondock 99.99% of the time. I didn’t buy an RV to be packed like sardines in a campground. You notice when the rvia shows ads for rving they show an idyllic setting where you’re the only camper around for Miles by a lake it’s just so beautiful how many people have ever done that?

Mike Sherman
1 month ago

Based on my 30 years of RVing, I see few park owners pumping any profit into improvements. Even routine maintenance is ignored. I have returned to several year after year and most continue to go downhill. It’s easy to spot improvements, even on a first visit. So I’ll return again and again, especially in the off-season when they need the business.

rvgrandma
1 month ago

When I do stop at an RV park I don’t want the ‘resort’ benefits. I don’t use pools or hot tubs or even the clubhouse. I may use laundry and showers. Otherwise, I just want a spot to park for the night to dump my tanks, fill fresh water, and get a good night sleep. Maybe pick up mail at the local post office that was sent general delivery.

We stayed at a park in Quartzsite in 2010 – price went up in January because of the RV show but then went back down. The wi-fi was terrific, had a nice laundry room, propane. Was walking distance to the show and store. Nothing fancy. At time we had satellite so did not miss not having cable.

Prospector 1950
1 month ago

Sorry Folks, I’m not a “pay-for-camping” person. My wife and I prefer to boondock for free. The reasons why are that we are retired and have to subsist upon a monthly fixed-low-income. Also the “Pay-To-Camp” campgrounds are “over-priced” for our monthly fixed-low-income (prices keep going up due to inflation but not the monthly fixed income), not to mention that most of them are filled to the brim with noisy obnoxious people, and their spoiled unruly children of whom have no consideration for others and most of them now have a Stupid Ridiculous Rule pertaining to refusing to allow people with RV’s older than 10 years old into the campground, which needs to be abolished. There are an awful lot of older RV’s out there that people have spent many long hours in both money and labor along with Tender-Loving-Care to restore of which they are extremely proud of as well as generally looking and performing better than most of the new, or newer RV’s built in the past 10 years or less.

Paul
1 month ago

So Campspot does the pricing for 1300 campgrounds. That’s 1300 campgrounds that won’t have me as a customer. And Campspot has 80 employees? That’s 80 people who, if I could identify, I would refuse service. If they walked into a store and saw that management tripled the price of eggs because, ‘Well there’s only 2 dozen left’ they would call it “GOUGING”.

Firefly
1 month ago

I wish you had not used the term “dynamic” pricing. Demand-based pricing would have been more informative for the layperson. The pricing is based on estimates of demand from personal characteristics and characteristic of the product (a holiday campsite with a water view). Prices are always dynamic and that’s a good thing because it reduces the severity of shortages when demand spikes. So for example, if two people need lumber and there is a shortage this may induce the individual who wants a new deck to postpone construction and allow the individual who needs a new roof to obtain the needed lumber. It may come at a higher price, but what’s the alternative? A lumber czar to evaluate how worthy your construction project is? I guess campgrounds could evaluate how worthy your vacation is and allocate limited campsites that way. Is that the preference? It’s hypocritical to complain about crowded campgrounds and also complain about a means to reduce crowding and spur campground construction.

Brad
1 month ago
Reply to  Firefly

Spot on! In a free market economy, ALL PRICING is “dynamic” pricing. The law of supply and demand determine the price of everything we buy. When demand goes up with limited supply, prices go up too. When demand drops and/or supply is plentiful, prices drop. That’s how a free market economy works. Not sure why this is a mystery to folks.

Greg
1 month ago

I feel there’s more negativity towards demand pricing than warranted. Not once did you mention that campers, especially during off season, may end up paying LESS in order to fill up the facility. Especially if that facility has ways to make money other than rentals (e.g., restaurant, camp store, water park…). The balance of supply & demand. It’s a wonderful thing!

Andy
1 month ago
Reply to  Greg

Paying less than what? Than the highest rate? Or less than some mythical baseline rate? I think you’re kidding yourself if you think that you’ll come out ahead in this numbers game.

Andy
1 month ago

Unfortunately, it’s also true that all these efforts to limit predatory pricing have been eroding over the past several decades. These looser standards are defended by the kind of rationale that is summarized in this article, that “supply and demand” should be the final arbiter of costs. A proper response to such simplistic rationalizing would take more space than is available here, but suffice to say that this sort of unchecked approach creates a more dog-eat-dog economic environment that features wider economic disparities, greater public anger and a diminished sense of joy.

Want to know what this portends for the RV camping experience? Take a look at the airline industry that is touted as an early adopter of “dynamic pricing”–they’re now putting flight attendants through self-defense classes because passenger tensions have ratcheted so high. That dynamic enough for everyone?

Andy
1 month ago

A couple of points, one minor and one less so.

First of all (and as I’ve written before), having different rates for weekends or in-season vs off-season is not dynamic pricing, rudimentary or otherwise. It’s static. The rate for any particular date does not change from day to day. You can create a rate sheet and anyone can look at it and know what the cost of a site will be at any particular moment, which is not true of a true algorithm-based system that changes the price from moment to moment.

Second, it is not true that supply and demand “have always dictated” what something costs. As a society we traditionally agreed that there should be limits on how exploitative our economic system can be. We have laws against price gouging when a natural disaster drives up demand for gasoline or plywood or drinking water. We have usury laws that prohibit excessive interest charges on loans. We legislate against ticket scalping.

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