Saturday, November 27, 2021

MENU

Will RV parks nix fixed prices and charge based on demand?

By Andy Zipser
Andy and his family are the owners and operators of the Walnut Hills Campground and RV Park in Staunton, Virginia.

One of the hardest questions we get, as campground owners, is the deceptively simple query, “What’s it cost to camp at your park?”

You’d think the response would be pretty straightforward. You ask a grocer how much a pound of chopped beef costs and you get an uncomplicated answer. A lot of products have prices stamped right on them, movie theaters list ticket prices over the register and a magazine subscription costs a precise amount, even after all the alleged discounting that shows how much you’ve “saved” over the newsstand price. Unlike bazaar economies, in which prices are fluid and haggling is a consumer sport, for the most part we’re used to having fixed prices for fixed goods.

Yet more than most other commodities, campground sites are not all equal — at least not in an RV park like ours, which is hardly a cookie-cutter operation. Our rate sheet has 20 different horizontal RV categories, divided by six vertical time columns — and that’s a simplification from the 15 columns we inherited six years ago when we bought the park.

Do you want just water and electric, or do you need full hook-up? 30 amp okay, or do you need 50? Pull-through or back-in? Are you reserving during our “summer” season (which now runs into mid-November, but that’s another story) or winter, and will you be staying on a weekday or a weekend night? And on and on.

Experienced campers know all this, but it’s not unusual for new owners — or RVers more used to newer parks, in which every site is pretty much like every other — to heave a sigh of frustration when we answer their question with, “Well, it depends.” I’ve learned to blunt the vagueness by replying, “Our prices range between $34 and $68, depending on what you want,” but even that can be off-putting for those who want a definitive answer.

SO HERE’S THE BAD NEWS: What I’ve just described is going to get worse. Attend any get-together of RV park owners, like the recent national conventions held by ARVC and KOA or one of the numerous state association meetings, and you’re bound to hear the phrase “demand-pricing” (or “dynamic pricing”). All the computerized reservations systems that now pervade the industry have algorithms that make it possible, numerous workshops explain why it’s time for campgrounds to get rid of their fixed-price sheets, and demand-pricing advocates hammer at the fact that those of us running campgrounds are 20 years behind the times. Get with it!

Indeed, demand-pricing is far more prevalent than many people may realize. Consider airlines and hotels, whose customers have come to accept that prices will vary according to supply and demand. Plan far ahead and you’ll get one price. Wait too long, and the price will be higher because supply is more limited. Make a last-minute decision and possibly score a great deal, as the seller tries to move excess inventory — or find there’s nothing to be had, at any price. On the plus side, the upshot is more bookings and more cash flow to the seller. The flip side? That guy in the aisle seat next to you may have paid a fraction of what you coughed up for the exact same service.

But demand-pricing is also evident in ticket scalping, at one extreme, and in the way Amazon undercuts competitors at the other. Scalping is generally regarded as predatory, even though no one is forced to buy a ticket at exorbitant prices. Amazon, meanwhile, which adjusts its prices non-stop, has created the perception that it has the lowest prices on the web. The reality, according to an analysis by Boomerang Commerce, a dynamic pricing company, is that Amazon’s “consistently low prices on the highest viewed and best-selling items drive a perception among consumers that Amazon has the best prices overall.” Which, we should note, it does not — so is it any less predatory than the scalpers?

Is that “fair”? Is it good customer relations? Does it matter?

Walnut Hills Campground and RV Park

The reality is that demand-pricing, assisted by the wizardry of computerized algorithms, simply is a more sophisticated approach to finding the highest price that consumers are willing to pay. We already do that on a more primitive level with our complicated pricing grid, increasing our rates a couple of bucks on the weekends, and a couple more on holidays — and even then we’ll sell out on Labor Day or the Fourth of July, raising the question of whether we should have increased them even more.

Dynamic pricing can be viewed as simply a smarter approach to what we — and most of the campground industry — are already doing. And yet. . . .

And yet, there has been a lot of resistance among most campground owners against embracing this kind of pricing scheme. It does not, in fact, seem “fair.” Holding up the airline industry as an exemplar of how it works is hardly convincing to many of us, given the dread with which most people contemplate the hassles of flying. Unlike airlines or hotels, most campgrounds have had a more personal relationship with their customers and frequently enjoy repeat business because of it. Dynamic pricing may be okay for high-volume travel or hospitality industries, but RV camping historically has been more rooted in value-based pricing, in which the price campers pay should make them feel they’re getting a lot for their money.

That may sound like good news from an RVer’s perspective, but the reality also is that this resistance is fading. It’s hard to ignore the lure of higher revenues that demand-pricing promises to generate. The ongoing flood of new RVs — a recent slowdown notwithstanding— means increasing demand for a supply of campground sites that is growing only slowly, if at all. The greater spread of demand pricing throughout the economy, helped along by the same forces that gave rise to Uber and teleworking, means growing (if grudging) acceptance by the consuming public.

So here’s my prediction: Demand pricing is coming. Maybe not right away and not everywhere, but soon and ever more widely. And that means asking “What’s it cost to camp at your park?” will become as meaningless as asking “What’s it cost to book a seat on one of your airplanes?”

Comments

Subscribe
Notify of

This site uses Akismet to reduce spam. Learn how your comment data is processed.

55 Comments
Newest
Oldest
Inline Feedbacks
View all comments
Bob
1 year ago

I would hope and encourage that anyone who runs into this tactic completely reject it and take their business elsewhere.

Daniel Pankiewicz
1 year ago

I have no problem with CG’s getting a fair return on their investment. However I draw the line when greed enters the equation when for instance a plumber charges say $400 plus an hour only because he’s the only guy in town. (no disrespect to the plumber profession they are due a fair wage also)

Bob P
1 year ago

I can understand their situation, but can they understand their customers? I worked at several GM plants in my 30 years and made a good living and I’m enjoying my retirement. In all those years my annual pay raise was approximately 3%, I think if customers can get by on a 3%pay increase maybe campgrounds should think about what their customers get. A camp site that rented for $35 last year has no leg to stand on charging $45 this year. As far as improvements go I thought that was what tax deductions did. You are spending money to improve your business so it should be tax deductible.

Matt C
1 year ago

Both the owners and the RVing public have to understand that while profit is a motive, if that is all the owner is concerned with reviews will catch up with him. As once a business owner (retired) I understand the reason for varying the slip rates for both access and accoutrements. I was more than a little annoyed with a campground that advertised all about its pool and spa only to find out that we arrived a couple of days after it closed those and there was no break in the fee. I am also not surprised when there are special rates for 50 amp and drive though slips. There is also one place we used to frequent that had a special rate increase during the time of a local music festival. They were very open about this and to me that makes sense. They have a very nice place but not much special to offer for a lot of the short season. I personally really do not care where an owner sets the rate as long as they make the choices clear and open.

Lisa Adcox
1 year ago

As a former Hotel Manager I feel RV Parks may start pricing the same way. We use to look at what we made a year ago and price the rooms to try to beat that cost. If we were down to only a couple of rooms that just were sitting there and we had already beat last years total for the night,those rooms may be negotiable. It was always a game of numbers and profit.
Hotels will negotiate to keep people from walking when it comes close to selling out for the night.
RV parks that have kept park up and doing major renovations almost always has to have rate increase to pay for upkeep. Unfortunately many are barely mowing the lawn and other minor upkeep and they are still rising in cost. It may be due to water and power increases but it will make us pay more.

Bob
1 year ago

We have been staying at the same campground in upstate NY for almost 30 years for the week of Americade. It was clean, well managed and basically taken care of. When the owner retired, the new owners started massive updates. All three bath houses remodeled, with new walls, floors and showers.
I can only imagine what this cost. They also updated all the power in the park, added wi-fi and paved most of the roads. Of course the prices went up, but the improvements justified the increase. This campground is located near Lake George and there are numerous other campgrounds in the area, most with higher rates. Mostly because of the amenities they offer.
This campground does increase rates for special events and holidays. Then again, there is much more maintenance during these times since they are full and need to hire temporary people to help out.
Then there are the ones that are run down and not taken care of that charge the same rates, because they can since they take the overflow.

Tom
1 year ago

Just finished a 5 day stay at RV park in Florida. Park must have been beautiful at one time, but that was eons ago. Still maintaining the high price without maintaining the property. About 50% filled with park models or modified travel trailers leading to the appearance of an aluminum slum.
Not going there again.

Bill T
1 year ago

It is an interesting article but common sense needs to prevail when it comes to pricing and amenities. Most people expect and believe in “getting what they pay for”. It’s a roll of the dice when looking up a campgrounds website and see that a full hookup site is $65/night, with pictures of family fun on manicured lawns and when you arrive, you see that the campground hasn’t done any upgrades since built in the 70’s. It turns out to be an un-level mud hole with poor electricity and the neighbors sewer hose next to you ratty old picnic table. (Not to point fingers but this has happened at a lot of KOA’s) High volume weekend or not, it’s robbery plain and simple to increase or create on-demand pricing for the same 50 year old crap owners haven’t put a dime in to since opening.

Donald N Wright
1 year ago

Setting prices would be difficult, so many different types of RV’s, thirty amp or fifty amp or the folks have solar/battery. I would probably charge by the square footage of the trailer.

Paul Terry
2 years ago

Considering the size of some of the newer RVs along with what they often tow, it should be no surprise if parks start charging on length of rigs. Larger rigs mean fewer units over which to spread cost.

BO
2 years ago

There is a campground in our area who prices by the length of your camper! Not sure what model that is, but I assume they figure the larger the rig, the more utilities are consumed?

Rory
2 years ago

Many parks have been doing something similar for years. For example in Fl., If you go in season (Dec thru Mar) there is is one set of prices to pay. If you go during the summer the prices are less. The idea explained in the article is a far more radical extension of that. But since it is dependent on supply and demand, RV’ers themselves can simply cut the demand, by boondocking, taking advantage of clubs I.E. Boondockers Welcome & Harvest Hosts and the like.

Steven C
2 years ago

All kinds of “good” comments – some pro- some con, but the bottom line is we are consumers and we have control with our dollars. But with the explosion of new RV’ers in the last few years, there are not enough sites for the number of campers and weekend warriors fill up the cg’s. But I don’t begrudge CG owners from bumping prices, but they need to update the properties also. So make your feelings known. We will pay a fair price for decent sites.

Now as far as demand pricing, I think it will bite owners sooner or later. There is no way the current glut of new campers can continue every year. The next Gen’ers are not campers like the current baby-boomer gen. Things will change, but as long as we are willing to pay to play, we will have to deal with the process. The ship will right itself someday.

Herbert Lillibridge
2 years ago

This is the stupidest idea yet. We experienced this this past summer at Sun RV Resorts, Seaport RV Resort, Mystic, CT. We have been going there 2-3 times a summer and after we experienced this we only went the once last summer. We will not be going back until this stupid idea goes away. We spoke to many others there and our friends that go there and Sun will be losing many long time customers.

Steve
2 years ago

If they gain other customers who ARE willing to pay the higher prices, demand pricing has done its job……

Bull
1 year ago

Maybe just maybe these campground owners Want To Lose their Old Grumpy Customers who don’t want to spend a Dollar extra on anything?

Their new younger customers are flush with enthusiasm, {bleeped}, vinegar and most importantly CASH!

The Boomer’s don’t have all the money anymore but one thing Boomer’s are really good at is complaining about change they don’t like!

Change happens with or without you. Adapt or become irrelevant which is what is happening in many a business that previously catered to the Boomer. Boomer’s and their money are becoming less and less important to many business’s.

Change it’s a happening!

Boomer’s are no longer the cash cow or the primary focus for many business’s today. Hard “Pill” to swallow for you old folks who have been catered to for so many years.

Welcome to the “New World”!!!

Russ
2 years ago

Good discussions. Campground owners just have to realize that a lot of us rate/review your parks. Those reviews are what I use when planning an extended trip. If you call your park a resort and you’re not or your prices are high when not necessary, I will look elsewhere.

Jon Katin
2 years ago

KOA has been following this “model” for a long time. It is the primary reason I avoid their campgrounds. Many of us have determined that KOA stands for “Keep On Adding”. It is frustrating to have a base price and then kids, pets, 50 Amp, length, etc are additional charges. Their next step can easily be also pay to use the pool, restrooms, WiFi, cable, your “toad”, etc. Fortunately many campgrounds have a set price, that allows us to decide if we want to pay $35 or gamble that when we pull in, tired and need a overnight stop, that $35 became $55.

Lee Ann Stephenson
2 years ago

Well, this was an interesting article, as a small seasonal campground owner, this is an issue we struggle with…mostly because we are full most every night in the summer and we’ve wondered whether it’s because our prices are too low. I can tell you, though, when we are traveling in our 5th wheel as campground customers, we HATE being charged a huge increase for holidays or events for the same spot. It’s one of our biggest turn offs and we would not frequent that park again on a ‘lower rate’ time just ’cause the charged us a much higher price for the same site during an ‘event weekend’. Call us old fashion, but we have vowed not to do it in our park. The folks who stay with us on the big weekends and don’t pay a ‘demand price’, appreciate it and are much more apt to return. Happy returning guests are better advertising than I could ever buy.
I will say, however, as a park owner, delivery of all the increasing demand of services is much more difficult on a seasonal basis and in an extremely rural setting. There is no cable company, so TV and WiFi become expensive utilities. The cost of trash disposal is very high in rural communities. Our costs keep rising each year, and it’s harder and harder to keep prices affordable. Being an owner is not a great way to make a living, but the lifestyle is the largest benefit.

Steve
2 years ago

If you are full every night in the summer, it means your prices ARE too low. Most of us who are still working would like to earn as much as possible at our jobs–I don’t know of a lot of people who are willing to turn down a raise. The same applies for you.

If you raise your base pricing, you can always run specials. One thing that is EXTREMELY useful in the RV industry is to offer a returning guest discount–and perhaps even a referral discount if your returning guests bring friends. Builds loyalty and increases your customer base.

If your base pricing is high enough, that enables you to do things like offer specials. It also means that if you have a lot of sites still available on any given night, you can empower your front desk people to offer last minute discounts.

If it looks like you have priced yourself too high, you can always offer a discount. If you price yourself too low, you are losing money–and that is money that can go to help pay for the improvements you would like to make.

BO
2 years ago
Reply to  Steve

Lee Ann, I would love to come and visit your campground! Sounds like you are the kind of owners with whom we love to do business. These tactics mentioned still don’t overcome the “fairness” issue. Why should someone who made their plans at the last minute get a site cheaper than the one who committed to the campground to be there when they said they would? Walmart does fine with their low price mentality because they create a loyal customer base. Variable pricing for anything other than additional amenities (get what you pay for) creates competition among campers and is not the type of environment I choose for my relaxing holiday.

BuzzElectric
2 years ago

To long of an article. All I know is the more you stiefel me the less chance I coming to your parking lot. The more I get for my money the better chance I’ll head your way as there are roads that lead to others.

Kevin
2 years ago

I’m fine with demand pricing as long the campground discloses what I will get and start making noticeable improvements in the campground. Reduction of the tight turns. Smooth roads. Level (I mean truly level) sites. A picnic table that looks clean and in good repair. A fire pit that has been cleaned and is far enough away from my rig that I won’t smoke out the rig (usually). Clearly defined sites. If not full hook-ups then a dump station that has the right (passenger side) of the pad elevated slightly to assist in draining. Things like stable 50 amp power. Reasonable water pressure, testing of the water if not a municipal system (and posting the results). Bath and shower facilities that are up to date and clean. Trash receptacles that are clearly marked and have been cleaned (not dumped) to reduce some of the odors. A realistic recycling program. Some knowledge of local sites and recommendations. If satellite should be available how about a designated spot (I’m sure Dish and Direct TV local reps would help with the sighting. Yes I know it is a long list of demands, but if you are going to flex the price, I will raise my voice.

Bill
2 years ago
Reply to  Kevin

You hit the nail on the head Kevin. If they raise the price at will, they need to raise the bar of the quality of their service. We are about due for some disruptive models in the RV park world. Reinvigorate Escapees park development or 10 buck Chuck’s with pay as you go a la carte offerings. The right model will float to the top. We are the consumers and have the power to drive the change.

Charlotte Lloyd
2 years ago

When Best Western bought the RV park in Prosser, they started pricing it just like their hotel across the street. Price was based on day of the week, what was going on at the time, the size of your RV, what site you wanted, etc. I worked two summers there and when I go by except for big weekend events in the town, the park is not as full as when it was a set price.

Steve
2 years ago

But…..is their REVENUE the same or higher? There can be some advantages to running at a slightly lower occupancy at higher rates. Less wear and tear on the infrastructure, room to move people if there is an issue with one of the sites, etc.

If their revenue is the same or higher, it doesn’t matter if they have empty sites–except that it opens up the possibility of running things like last minute specials to fill those sites.