Donna Bordeaux shows campground owners the real cost of free reservation systems. A 100-site campground keeping a $3.50 reservation fee in-house instead of using a free platform gains about $64,000 annually and could add $320,000 to its sale price.
Talking with a prospective customer who was looking at setting up a reservation system for the campground. They were really excited because they'd found one that was free to them. The reservation platform just charged their guests the reservation fee directly upon making that reservation. And I asked a little more about that to find out. Nothing would really work. And I've done some math behind the scenes. I want to share with you to show you the picture of why free is super costly in this perspective. So let's assume for a moment. We have Suzy's campground, and Susie has 100 sites in her campground throughout the entire year. The Overall occupancy is 50%. And Suzy charges $50 a night for all her sites. They're all the same all year long. The price doesn't change. Susie is not using any dynamic pricing. So let's look at some revenue numbers. That revenue at 50% occupancy for the entire year on average is. Is $912,000 per year. So let's say that smart Susie decides, no, I'm going to get my own reservation platform and I'm going to change the price of the reservation to $53.50 instead. So same price to the customer as the other scenario of free reservations. Now, Susie makes her calculation for the end of the year, same scenario, 100 sites, 50% occupied all throughout the year. And she charges $53.50 for her reservation now. So her nightly rate has now brought her revenues of $976,000 instead of $912,000. So we've had an increase in revenue of nearly $64,000 because we took that reservation via $3.50 and we moved it into the campgrounds bank account instead of letting a reservation provider collect that for us. So if we go back and we say as a reservation platform, you want to buy, and they said the price is $64,000 for the year, would you buy that reservation platform? I've never heard of anybody paying that much for a reservation platform for their campground. And I doubt you would. But yet that's how much you're ultimately putting on the table. Now, I understand for a smaller campground, it may not be that big of a number. But my point is this has a cost. You think it's free. It's not. It still has a cost. Let's take one step further. Let's say that Susie's going to sell her campground. When we sell, we sell based on multipliers of the net operating income. Or we can look at it from a revenue perspective. If we're looking at it from a revenue perspective, it's about four and a half, five times. Anywhere from three to five and a half, somewhere in that range. So let's just assess for a moment and say that the selling price, for simplified calculation, is five times the revenue of the campground. Now, Susie, who had the revenue from that reservation system, the 5350 Susie, is now going to have a selling price higher by $320,000 almost. So how we got that math? Check my math. $64,000 difference in revenue that we talked about before times five is 319,000 dol. So and some change. So I rounded off $320,000. So we've gone from taking a $3.50 mutuscule little charge to our guest that we decided was insignificant enough that we would just pass it along. And instead if we brought that money in house and paid for a reservation platform that met our needs and we sold, we are now selling for $320,000 more. So I've showed you how to take $3.50 and make $320,000. I know I'm oversimplifying that, but use your example and figure this out, folks. Free is not at all free when it comes to a reservation system. Now, I have nothing against Firefly or against any reservation platform that offers that option to you. I think in small situations or the micro campground, that may work out just fine. It's pretty easy and, and not a lot of overhead. But when you talk about the growth of your campground and what you're going to do long term, do some math and figure out for yourself how much free costs you. I'm Donna Bordeaux with campgroundaccounting.com and I'd love to help you navigate these types of questions and help you head it off of the past before you make mistakes. Check us out and subscribe below. Thanks, Sam.
