2. Profit Centre Analysis
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.