#4 Campsite Business Case Study: Campsite Expansion

Background

You have a master plan of expanding your campsite from 30 pitches to 90 pitches.

In other words, you want to add another 60 grass pitches.

This will take your total number of serviced pitches to 25 (unserviced pitches therefore 65).

The council will permit up to 120 so there are no regulatory restrictions.

However, you do understand that you’ll need to extend your current toilet and bathroom facilities, which will cost you £25,000.

Problem

“I really hope this expansion project will pay off within 3 years. If not, I’ll rethink it. But how do I make a clear judgement on that?”

“Also, I’ll need to up my marketing. What traffic level should I get my website up to for attracting the extra business needed?)

“How is it most realistic and profitable to increase my website traffic sufficiently?”

Research

You find the following inputs which you’ll use for your plan:

1. Your current website bookings conversion rate is 2%.
2. Inflation is expected to average 9% between 2023 – 2026.
3. Interest on a loan for extending toilet facilities is 7%.
4. Average monthly occupancy:
   • Mar 30%
   • Apr 40%
   • May 55%
   • June 50%
   • July 60%
   • Aug 70%
   • Sept 38%
   • Oct 30%
5. 244 total nights of trade in the season
6. 30 pitches: 65 standard at £19.00 per night / 25 premium pitches at £25.00 per night
7. Net operating income percentage: 37%

Solution

Firstly, the calculation to estimate your campsite income after expansion:

Use the Campsite Financial Analyser to calculate the solution to the problem above.

Using a net operating income percentage of 37%, you now calculate your annual operating expenses for the expanded campsite operation:

Use the Campsite Financial Analyser to calculate the solution to the problem above.

= £ 142,523.74

Now, calculate the total loan repayment for extending the toilet facilities including the interest (cost of loan):

(Source: Money Supermarket)

The total amount repayable will be £27,7000.99 (interest charge on £25,000 at 7% over 3 years).

Now, use the figures above to complete a Benefit Cost Analysis of your new campsite expansion project:

(Source: Project-Management.info)

The Benefit Cost Analysis resulted in a ratio over 1 (1.3861). This indicates a profitable venture.

And now, you reverse engineer your 2% website conversion rate to work out the necessary web traffic required to book another 60 pitches per month:

60 / 0.02

= 30,000 more targeted web visitors per month

Achieving an average position within the top 3 rankings on the 1st page Google for your selected keywords would attract roughly 18.13%, going by this research study:

(27.6% + 15.8% + 11%) / 3

= 18.13%

Therefore, 30,000 / 0.18 would be the overall traffic volume offered by new chosen keywords:

166,666 or rounded up to 170k visits per month.

Remembering that large exposure online could also be achieved through well targeted PR articles in national, regional and local press.

But this calculation above is a rough way to work out how much targeted web traffic you’d need to generate the demand to satisfy your ambition for growth.

Whilst discovering keywords grossing 170k might sound like a tall order – you can drastically broaden your search horizons online through content marketing.

In other words, adding value on related searches that your target audience might also type in relating to their journey.

Go To Part 18: https://campsitebusinessplan.co.uk/knowledge-base/quiz-plan-campsite-profits