We’ve popped a simple guide together to help you track 5 of the most influential management reports for all caravan, lodge and holiday park operators.
What’s A KPI? It’s an acronym for “Key Performance Indicator”.
Basically any report or metric that you use to give you an overall reading of the performance of your holiday park business at any given time.
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Every aspect of a holiday park has a financial value, and all of the data involved therefore has an impact on the company finances and potential growth.
Reporting on performance in financial terms sets the course for any holiday park business. Analysis of the results, and actions taken as a result of that analysis forms the day-to-day running for the next month, quarter, or year, depending on the frequency of the reporting. The greater the time between reports, the greater the likelihood of issues in your park(s) being overlooked. This could directly result in sales, customer service up-sell, loyalty, on-the-day-spend-increase or average-customer-value opportunities being missed. It’s that simple.
What’s A KPI? It’s an acronym for “Key Performance Indicator”.
Basically any report or metric that you use to give you an overall reading of the performance of your holiday park business at any given time.
True Understanding Of These Areas Is The Key To Controlling Your Park Business
These are 3 very important fundamentals for any holiday park business, as they immediately give you an indication of your performance. Reviewed over time, with seasonal sway and future growth projects however, you’ll find that understanding what influences these fundamentals will be invaluable to your decision making.
Has your office sold as many caravans as you predicted, or assumed you would sell, and are occupancy and rental rates going in the right direction?
Have all of the costs involved in creating those caravan sales and occupancy rates been identified, controlled and managed?
Are your owners, rentals, attractions, restaurants and bars bringing cash into the business to enable overheads to be met on time, to sustain the business, and to fund future growth?
Establishing a baseline average customer value is a great place to start assessing your park’s performance, as you can visualise the basic behaviours of your existing customer base.
You could use this initial calculation to make a comparison, however, as the nature of the holiday park industry is ruled by the seasons (and other influential factors that cause sway), you’ll need to limit the time you’re analysing to periods that are relevant to your customers in order to not mask or inflate your values. We recommend a monthly calculation as a minimum. When you’ve worked out the periods that you’re going to compare, you can begin to get better visibility of your performance, and see more quickly whether changes that you’re implementing are making you money. To better understand your Average Customer Value, you can break this calculation down to two further key metrics, that sit below the headline figures.
Frequency Of Visits
Frequency of visits is a very simple metric to work with, and it can provide great insight into your guest’s experience at your park. For example, if your park has a decent overall attendance, but you get very few repeat customers, you can begin to profile what kind of people you’re attracting and start to ask questions about what would make them return, and how you can influence them to do that.
Start by finding out what time of year a customer attended, or whether they came for a specific event or school break etc. You could then start an email or social media campaign to inform them of other experiences available at other times of the year, or remind them of the quality of the original visit that initially drew them in. Start working out patterns in your visitor sales and plan from there. The more visits a customer makes, the easier the pattern will be to decipher and the more qualified your marketing campaign will be.
Average Spend Per Visit
You may be succeeding with your marketing and brand awareness to get people on-site, but how much are they spending whilst they’re there? If you can get people to your parks effectively, but you can’t get them to part with their money whilst they’re there, your issue lies in conversion. Anything to do with conversion points to a problem with upselling, cross-selling, accessibility, stock and pricing. You’ve got a captive audience, so remove any barriers between them spending to make your figures soar.
A Profit Centre is anything in your park(s) to which cost and revenue can be attributed. They might be different sites, or it’s more likely to be discrete threads within the one venue – the sales office, café, bar, attractions or one-off events.
These might be considered almost as individual businesses. A holiday park business ought to record information about each of these cost centres individually in real time. Recording everything, then trying to work backwards to abstract data about one thread or another, is a waste of time and opportunity.
Basic reporting offered without an integrated system, shows turnover and profitability. If these rise year-onyear, a park business might be tempted to say that it was on track. However, even if turnover and profit are both rising, the increases may not be as marked as they might be if serious problems are being masked, and remain unnoticed because financial performance has not been thoroughly examined.
But Look At It From A Different Point Of View.
Deeper analysis of the position above quickly reveals that the holiday park’s outdoor swimming pool is seriously under-performing. Having started slowly in its first two years, the lido made a small loss in 2017, and a much more severe one in 2018 as the new indoor pool was opened. The deficit highlighted by analysis of the figures on an area-by-area basis indicates a cost centre that needs urgent further investigation and remedial action. The reasons for the apparent failure should be identified and rectified at the earliest opportunity.
Locations Versus Revenue Streams
Further visibility can be gained by analysing your cost centres from a level above. If you define your cost centres into site locations and top-level revenue streams, you can instantly expose areas for growth and investment for a greater return.
You may think that you make your most money from new caravan sales as there’s greatest revenue in it, but isolating your revenue streams for comparison might show that your hospitality offering consistently outperforms new sales for a greater total margin. In this case, you might look to address the selection of new caravans you have on sale, or offer new ways for customers to own new caravans via different payment models to increase your conversion rate on this stream.
If you separate out each individual park or location, and look at the running costs versus revenues for each, you may find that your busiest and visually most impressive park makes you less margin than some of the seemingly quieter parks. You could then look to find ways to distribute your customers out among the lower performing parks to increase their yield, or look to invest more, or replicate an installation in one of the under-performing parks to help bolster profits.
The key here again is the data. If you can’t see problems or successes, you can’t fix or capitalise on them. Having top-level hospitality profit, occupancy rates and new sales conversion rates on a per-location basis makes you better placed to make decisions that directly impact your park business for the better.
The Product Menu shown is a means of helping you understand how your park’s goods or services perform relative to each other.
The best items in a product range are those which sell in high volumes at high margins, and therefore generate the most contribution most quickly. This Product Menu can be applied to each and every scenario or location where you’re selling to your customers: new sales, owner fees, cafés, bars or online.
Nurture Your Best Sellers:
These are your parks best sellers. Avoid the temptation to put all of your park’s energy into these. Focus on them, but protect yourself from complete dependency, since it would make the business vulnerable to industry trends, problems with suppliers, or a number of other reasons beyond the park’s control.
Increase Price or Cut Costs:
This focuses on items with small margins, even though they sell in relatively high numbers. Serious consideration should be given to broadening the margin by increasing prices or by working with suppliers to reduce costs. Sustaining the status quo is reducing long-term profitability and potentially requiring high overhead to maintain volumes.
Focus On Sales & Marketing:
You might have good products with good margin, but sell in lower volumes. Consideration should be given to adjusting the margin to increase volume of sales, and therefore profit contributions, lifting the product closer to the top right quadrant or even better. Could more vigorous marketing achieve the same result without reducing margin?
Product Elimination:
Items offering low margin which sell in small volumes. There may be a strategic reason to carry on offering these lines, but you as a holiday park business must understand it, and justify the decision. Use core data to consider the real implications for your business, otherwise it’s time to remove these products and focus effort elsewhere.
The ‘Stock Days’ concept is a measure of the length of time items remain in stock, and converts the ‘dwell time’ of goods within a business to a financial value.
As such, it is an effective measure of cash flow within a business, specifically relevant to hospitality. Holding items in stock for too long means that your holiday park’s money is tied up unnecessarily and ceases to be available for payment of other more pressing bills or exploitation of emerging trends or customer requirements.
How To Calculate Stock Days
Average Stock Days = (Value of Stock – Cost of Purchases In Last 12 Months) x 365
Benchmark For Success
Does your holiday park business have more than one location or individual site? If so, you could benchmark them against each other. Perhaps they could be benchmarked against others in your industry, if you know someone well enough to ask for, and receive, such information. You could benchmark the figure against yourself on a month-by-month basis. Remember that the figure won’t be the same, or even similar, for each segment or area of your park. They’ll be different given the nature of the goods and services involved. Benchmarking as an exercise will indicate if your attraction is performing to industry standards (or market leaders), and perhaps if one of your own locations is under-performing against its peers elsewhere.
Creditor Days
Another invaluable calculation is of Creditor Days. This can be a ‘golden egg’ for any holiday park business. If stock can be sold, therefore generate revenue, before it has to be paid for, then there is no need to involve the park’s existing balances in the purchase of the goods. This is because the invoice can eventually be settled from the proceeds of the sales when it is due. For this reason, Stock Days and Creditor Days are best considered jointly for each product. From your Average Stock Day calculation, you can work out how many you can sell at the current rate before you need to pay for the stock. If you can sell all the stock in an order before the payment is due, you can re-use the revenue generated to your advantage to benefit your customers. This insight will greatly influence the size and quantity of the orders you’re placing and ultimately, the money that you’re making.
This is a big risk area since overheads are often influenced by factors external to your holiday park, although their influence has implications within it. As a result, Overhead Reporting is an area that can cause significant financial problems.
This is true for holiday parks of any size, which can get too big for themselves. Large and multi-site holiday or leisure parks with turnovers in the hundreds of millions sometimes work at break-even point because of the size of their overheads, which can get out of control.
Overheads mean nothing on their own, and need to be placed in context through benchmarking. If a holiday park is booming, rising overheads may not be an issue, but even in those circumstances, there is always scope for caution. Firstly, the effects of any downturn will be more immediately and severely felt, and secondly, profits will be reduced in good or bad years.
It is important to remember the need to capture this data quickly. This is in order for it to remain relevant to what’s happening in your park(s) at a given point in time, rather than what happened in the previous quarter, or even earlier.
The older the data on which decisions are based, the less effective the decisions will be; indeed, they may have become irrelevant. Whilst day-to-day matters can demand attention, it is important that these financial issues are not overlooked. Having regular and consistent reporting is the only way to achieve informed decision making. You are too busy dealing with whatever your park throws at you to struggle to see what the numbers are telling you. Set timetables for the data which must be submitted, ensure that the data is consistent, and insist that deadlines are adhered to.
This has shown that effective business decisions for your holiday park business can be made by:
Taking this approach means problems can be identified and addressed in a way that yields maximum benefit to your holiday park business
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