Skip to 0 minutes and 23 secondsWe're not really camping right here.
Skip to 0 minutes and 28 secondsWe know that many sectors of the industry, use revenue management and that many others like e-business, mobile game developer, or even online retailing, could use revenue management techniques. But the camping industry may come as a surprise.
Skip to 0 minutes and 44 secondsIs there a reason why the camping industry would be interested in revenue management? Is there a lot to improve in the camping industry?
Skip to 0 minutes and 55 secondsAs millions of French people, I loved to sleep in the tent as a kid. In 2012, I met my first camping manager. And really, I thought that there was a huge trend coming. Of course it was internet and a big change for this industry. So, today, large platforms, tour operators, distribute the inventory of all campings. So, customers can make a choice and compare the prices. The second trend concerns the raise for
Skip to 1 minute and 42 secondsequipment: swimming pools, several swimming pools in the same camp site, restaurants, and of course more and more comfortable more mobile homes and cottages. Campers love that. I love that too. And these raise for equipment induces of course capital, investment and consolidation and now big actors in Europe gathers 300 or more campsites.
Skip to 2 minutes and 16 secondsSo, everything was put in place for launching revenue management programs. There are some characteristics that explained this. You've got typically short high peak season, in August, or in a few weeks in August to be precise. Long booking curves. So you can book your campsite one year in advance. Just you leave the campsite and your book it for the next year. It's typical. Almost no cancellations, no no-shows, which yield predictable forecast. And price variations, quite important price variations. You can go from €96per week up to €2. 000 a week for the same mobile home.
Skip to 3 minutes and 11 secondsSo to answer your question: Yes, definitely yes. There is a lot to improve in this industry and I'm not speaking about a one percent revenue gain.
Skip to 3 minutes and 24 secondsWe are here in a beautiful hotel, that probably is doing revenue management. Why are the tools made for the hotel industry not usable for the camping industry. What makes so specific the camping industry so that you cannot use on-the-shelf tools used by hotels. The first main difference is the size of the inventory. A campsite, a typical campsite represents 50 mobile homes. But among those 50 mobile homes, you've got mobile homes with 2 rooms, with 3 rooms, with a terrace, with air conditioning…. So every inventory is about ten mobile home large. So it's a real main difference compared to a classical hotel of 200 rooms, almost identical, or two or three different rooms. The second difference is a length of stay.
Skip to 4 minutes and 23 secondsDuring July and August in France, you stay one week or two weeks typically. In May, it's 2 days, a week-end, or a long week-end of 3 days. For 2017, we will have several long week-ends, for example. And, at last, you've got an original mix between B2B and B2C sales. B2B is made via tour operators, which buy allotments, early in the season. So it's a block of mobile home that the campsite owner sells to the tour operator. It can represent up to 20% of the inventory, it's very important and you don't have this in general in the hotel industry.
Skip to 5 minutes and 14 secondsSo, as you might have guessed already, and looking at this, long curve, small inventory, mix of B2B and B2C… All this make the classic, the standard tools of revenue management not applicable. So you've got to develop something quite different and we have observed a few failures of deployment of classic migration, naive migration coming from the classic hospitality industry to the campsite industry.
Skip to 5 minutes and 52 secondsBut, in the end, the main difference, it's my point of view, the main difference lies in the lack of analytical culture in the campsite in industry. In every hotel, just ask the barmaid, ask the concierge… Everyone knows there's a revenue manager somewhere. So it's cultural. It is in the DNA today of the hotel industry. This is not at all the case in the campsite industry. So it's not that revenue management is a taboo. It's more something emotional.
Skip to 6 minutes and 30 secondsMy prices: it's too low, then my product is really under, under seen by the users. Or, on the opposite, it's too high. My loyal customers will leave, I will have some comments on Tripadvisor.
Skip to 6 minutes and 49 secondsThese difference of culture is something you have to take into consideration when you develop something.
Skip to 6 minutes and 58 secondsYou mentioned the allotment problem, that is the sale of a block of mobile homes or sites in advance, and for a discount price. Why is that a problem? People are used to have discount for buying a lot, a big share of camp, of something. People are used to have a discount. Why is that a problem? It's a problem because it's a poisonous gift. Really, early in the season you have the opportunity to sell large blocks of mobile homes to one customer, a tour operator in northern Europe for example. So, its money. Early in the season, easy to sell, moreover maybe these guys in northern Europe can sell something and fill the holes of your capacity at a good moment.
Skip to 7 minutes and 55 secondsSo good business. But, on the other hand, the discount is so heavy (40%, 50%) that selling all the inventory via tour operators could kill you, economically speaking. So, you've got a balance compromise to make, enough allotments, or leaving some room for a forecasted individual demand that could come a few months later. And really it's a big complex and it's a binary decision because it's a take early deal. So i want 20 mobile homes or nothing. So you have to make a stochastic choice with a lot of randomness and a binary decision. So it's a bit complex. We know that revenue management relies a lot on segmentation of demand and demand knowledge.
Skip to 9 minutes and 5 secondsIn campsites, what are the segmentation variables that can be used. Is everything based on the purchase, advanced purchase, the time in advance your purchase, the site… is that based on that? Yes, mainly, you're right. Mainly, six months in advance, three month in advance for August, you know more or less what will happen. So, it's the first factor. Then, you also have the occupation date. Another factor could be the country of the consumer. So northern Europe, Irish guys, British guys, Netherland families, Dutch families, etc… really do not have the same relationship with campsite that we have for French consumers. So typically the revenue, the REVPAR, the revenue per room or per mobile room, is twice.
Skip to 10 minutes and 7 secondsThe revenue from northern Europe is twice the revenue of Latin Europeans, let say. So another factor could be the size of the family. So a lot of kids, means you like some kind of swimming pools, mini-clubs, etc… and, of course, larger mobiles homes. It's another difference. And the last one would be the day of arrival. Saturday to Saturday stays, for one week or two weeks is a typical demand in France, for many reasons.
Skip to 10 minutes and 47 secondsWhat would be the price of a Wednesday to Wednesday? So the day of arrival, the day of week of arrival is an important factor. Why that? Is not the Saturday to Saturday or Wednesday to Wednesday exactly the same good you're selling? Just look at the little puzzle. Take a Saturday to Saturday week, then, bad luck, have a Wednesday to Wednesday week. You've got a gap. And you will never fill it. Nobody wants what is in between. And if it is mid-August, you're losing the best share of your pie. Thank you very much Benoit for sharing your experience and your views on these topic with us. Thank you very much for all this environment. Thank you. Bye bye.
Business talk: RM in the camping industry
Revenue management is also a practice adopted by the camping industry.
What are the reason for developing specific revenue management tools in this sector? Why couldn’t campsite managers use the techniques and tools developed for the hospitality sector?
Benoît Rottembourg (Eurodecision) shares his experience on revenue management in the camping industry.
Can you identify the types of customers that makes revenue management in the camping industry unique?
Join the discussion
In response to the question above, share your interpretation of Benoît Rottembourg’s explanations.
Benoît Rottembourg is the creator and currently leads the “Pricing & Revenue Management” branch of Eurodecision.
He holds a Master in Computer Science from a French engineering university and a PhD in Applied Mathematics from Paris University. He teaches pricing & revenue management in some of the most prestigious universities in France. He has been an expert in revenue management for many years and has developed a revenue management platform for the camping industry which is the leader in Europe.
© By ENAC - Christophe Bontemps CC BY-NC-SA 3.0