EDITOR’S NOTE: Welcome to Part Two of RVtravel.com’s look at the effects of Dynamic Pricing models on the prices you pay for campsites. If you missed Part One of this series, CLICK HERE.
By Mike Gast
Theoretically, dynamic pricing isn’t always a bad thing.
Campspot, a current industry leader providing reservation software to more than 1,300 parks, is quick to tell campground owners that dynamic pricing doesn’t always lead to an increase in price to the customer.
“Dynamic pricing is simply an attempt to match your rate with the demand coming from your customers – whether increasing or decreasing,” Campspot’s information to campground owners says.
“Your overall goal as a business is to drive revenue. If you’re in the off-season and an upcoming weekend is looking sparse, would you rather charge your normal off-season rate and get one or two more last-minute reservations?” says Campspot marketing information. “Or, could you drop your price by five dollars last minute and encourage a few extra bookings that you wouldn’t have otherwise? Demand for what you offer can go up or down on a whim. To generate the most revenue possible, your rates should fluctuate, too.”
Campspot Marketing Manager Haley Dalian claims dynamic pricing brings benefits for both park owners and RVers. “It’s a common misconception that dynamic pricing always involves an increase in rates,” she said. “Dynamic rates can also be used to lower prices during slower seasons and mid-weekdays to increase occupancy.”
That sounds good, in theory. But the recent explosion of interest in camping isn’t likely to lead to many downward adjustments, at least for the foreseeable future. But eventually, Dalian said, campers should be able to take advantage of price breaks as well as have more site inventory to choose from when “prices may be too high for others.” If you are willing to pay the price.
Dynamic Pricing in the here and now
Campspot quotes a scenario whereby a campground sells out on its holiday weekend two months in advance while charging $50 per night for water/electric sites. In their example, the campground owner is missing out on two months of people looking for availability at their property who would have potentially paid $70 a night or more given the demand. Therefore, the people who have placed a higher value on the experience of staying at that campground are missing the opportunity, while the park also loses out on a significant amount of revenue.
There’s still a lot of uncontrollable variables when it comes to setting campground rates. You can’t control the weather, gas prices or a lot of other small things that impact demand. But the Campspot example is a good one when it comes to explaining the motivations of park owners.
In the past year, you’ve likely run into the “sold out” campground. According to dynamic pricing, being sold out early means you as a park owner aren’t charging enough. Dynamic pricing is based on the ability to quickly identify what a camper is willing to pay for what a park offers. It’s the age-old value equation. Parks that sell out at the “last minute” have played the dynamic pricing game to perfection.
The good news, if you can call it that, is that parks using dynamic pricing correctly might just have that “last minute” site available for you – but, again, only if you’re willing to pay the price.
To illustrate, let’s take a look at another Campspot model:
- Campground ‘A’ with Static Pricing: For an upcoming 4-night holiday weekend, they sell out 100% a month in advance. Total revenue = $20,000
- Campground ‘B’ with Dynamic Pricing: After achieving 50% occupancy for an upcoming 4-night holiday weekend, they increase their rate for every additional 10% of sites occupied and end up at 95% occupancy. Total revenue = $21,500
In this case, the campground using dynamic pricing (Campground B) has made $1,500 more despite not selling out. They also still have the opportunity to fill their remaining spaces for last-minute campers at a premium price. Repeat this example over the course of an entire camping season and you can see how campgrounds can realize a dramatic increase in revenue.
Dynamic pricing isn’t always a hammer swung haphazardly at your wallet. Park owners are well aware that they will eventually live and die by the number of satisfied guests they generate. They don’t want to lose too many customers due to higher pricing. They want to find that “sweet spot” balance of what a camper is willing to pay for the experience provided, and still leave the campground happy.
That is a hard balance to attain right now, when there are 10 campers eager to reserve a site at the higher price for every one disgruntled RVer ready to throw in the towel.
What’s an RVer to do?
You already know how much planning your camping trips has changed. Gone forever are the days of pulling in at 4 p.m. without a reservation and finding your next site waiting. Also in the rearview mirror are set site rates that vary little throughout the season. Dynamic pricing is here to stay.
No doubt we’ll see an increasing number of third-party services rising up to help RVers find the best site prices at the best times. Services like Kayak already attempt to do this “comparison shopping” for the air travel consumer.
RVers need to be sure that they are taking advantage of every tool available to find a site where and when they want it. That means continuing to book as early as possible. But there are a few other tools to consider:
- If a campground or camping chain has a loyalty program, join it. They often offer special discounts and deals.
- Check reservation sites for ”hot deals” or coupon offers for special weekends or events.
- Get your name on site waiting lists when they are available. Sometimes waiting lists are part of the automated process, but it’s OK to call the campground and ask.
- Be kind to the front desk workers. Unless it’s the owner, the park worker had nothing to do with setting your rate, moving your site, or fixing the parameters of the dynamic pricing algorithm.
- If you do get the perfect site you were looking for, you might want to ask about any available “site lock” fees. Campspot says 95% of campers want to be able to choose their exact site and are willing to pay for a guaranteed spot. In 2020, nearly half of the campers at Campspot parks paid a site lock fee ranging from $5 to $100. One park owner said he made an additional $6,000 in site lock fees in their first year.
One final tip. Accept the inevitable and be patient. Dynamic pricing works well for owners. Campspot is so confident in its product that it gives park owners a “more revenue or it is free” guarantee.
Campground owners certainly want to increase their profits each year, but they also closely monitor their camper satisfaction scores. They are in the business for the long haul, and that means they’ll always need satisfied returning guests. Over time, we can all hope owners see the wisdom of investing in improving the camping experience with many more sites, more and better facilities and amenities, and higher levels of service.
As campsite inventories eventually grow and the meteoric growth in campers subsides, dynamic pricing may even bring a few great deals for campers in the know.
But it’s going to be a while before the demand curve swings back in favor of the RVer.
DID YOU MISS PART ONE OF THIS SERIES? CLICK HERE.