How Do You Set Your Rates?

Once you understand your position within the marketplace in which you operate, set your rates objectively to maximize the value and the cash flow of your business.  Use the following steps to eliminate the emotional turmoil often involved in setting your rates each year.

Step One:
Obtain a marketplace rate analysis for your state or region on our Reports Page.  Obtain a table as shown in Figure 2 which indicates the variation in rates for each level of Woodall’s® rated parks.  This information tells you where the market leaders are, as well as the lowest rates in each peer group.

Step Two:
Using the Latitude vs. Occupancy Map, which indicates the maximum site nights per year per site which are achievable in different latitudes, and an analysis of the occupancies in your own park, determine how much, if at all, you might reasonably expect to grow the number of nights on your existing sites.

Step Three:
Now that you know the rate structure in your marketplace, and your own park’s occupancy compared to your potential, use elements of the following principles to establish your rate objectives.

  • Because I am near or at the maximum site nights per year that is attainable, I am going to be one of the market leaders and set my rates well above my peer group.
  • Because I have substantial under-utilized capacity, I will stay at rates just above (or equal to) (or just below) my peer group.
  • In addition to the above, my park is located in a premium (or difficult to find or very rural location) and I should adjust my peer group rate upward (or downward) by about ten percent.
  • Because I am improving my park or adding a major amenity, I anticipate that my Woodall’s rating will increase and therefore will consider my peer group to be one level higher than it is now.
  • I am already one of the market leaders and have also reached my occupancy potential.  I will continue to maintain rates at the top of my peer group.

If your site nights per year have not been increasing for several years and you are at or near the maximum occupancy range in Figure 3, you cannot expect to grow the number of customers very much.  Occupancy levels that are at this level mean that you are turning a substantial number of customers away. In that situation, your rates should be well above the average of your peer group and you should be among the market leaders.    If you have substantial ability to grow your customer base on your existing sites, having the highest rate in your market area would probably not be wise.  There is very little reason to be the lowest rate in your peer group.  You are offering a unique experience available only on your property.  Your customer's decision to visit your park is based on many things.  For very few people is the rate you charge the most important thing.

Step Four:
After understanding your marketplace and your own park’s occupancy potential, if your rates are in line with your new philosophy, raise rates annually in a fashion that is consistent with the rate increases occurring in the marketplace.  Continue to monitor the marketplace rates and your own occupancies.  If your rates are below where you believe they should be, raise your rates aggressively (ten to twenty percent per year) until you get to the level consistent with your marketplace and your philosophy.  Again, continue to monitor what is occurring in the marketplace and your own occupancies.  Setting rates based on the marketplace and your own occupancies, in accordance with the above steps, allows you to set a rate structure without emotion to maximize the revenue and cash flow of your business.

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