In this post, I’m going to show you exactly how to run a financial analysis of ANY campsite business.
In fact, with this approach you can tell instantly if a campsite is worth:
- buying, or;
- selling
…and what needs to be done to make it much more profitable.
You’ll be using the our software programme called the Campsite Financial Analyser to achieve your calculation.
The following headers are the subsections of the programme and describe what’s involved:
Season length
The first step is to define the scope of your season.
Your season length is the overall container for which all your other metrics are stored.
A bit like a cup…you can fill it up to the brim, but that’s it.
The season length is often restricted by local government license to open.
Even so, regardless of regulatory constraint, you may still choose to have a close season.
Staying open in winter when you don’t expect much trade might not appeal.
You could consider taking time off to recharge for the season ahead.
No. of nights
A principal metric to have at your fingertips in the exact number of nights you plan to open in the year ahead.
Having the date range of your season committed to memory is worthwhile for general administration.
…you also want number of nights.
This will be for the sake of multiplying your units sales into a complete income figure.
No. of nights is your key baseline multiplier.
Types of pitches
Pitches are a great differentiator for campsite businesses.
They offer good way of providing a tailored service provision to guests.
Said differently, campsite customers each have something different they are looking for from their pitch.
Some want more space, others want amenities like electrical hook-up or sewage drainage…
Offering only one sort of pitch limits your ability to deliver exactly what your guests are looking for.
And the best part – to add more pitch types to your campsite business doesn’t necessarily cost a lot either.
Sure a full-service hook-up may cost some capital, but to offer larger grass pitches, for example, doesn’t.
Knowing your customer here pays off.
Number of pitches
The number of pitches is naturally constrained here by the size of your land (and perhaps planning permission).
There is a trade-off between scale and privacy with camp pitches.
Also, the you’ll want to save some room and space throughout your grounds for setting the landscape backdrop.
The danger of jam-packing out your site with pitches side-by-side is you don’t leave room for much else.
This would leave your site experience being unbearable and tasteless to guests.
In the long run your return visits will suffer.
Although you theoretically might be able to pack more numbers in at any time.
Fees
Each type of pitch offers a certain amount of value to customers.
The pitch fee you choose for each type of pitch will reflect the value given and your cost incurred.
‘Pitch nights’
Once you’ve defined your capacity in terms of number of pitches, across all pitch categories…
it now to multiply up your total number of bookings opportunities, from all pitches across your full season.
This figure is simply known as ‘pitch nights’.
If you multiply the corresponding fee per pitch type by the total pitch nights available per season…
what you get is a maximum earning potential of any given campsite.
An important figure for leading your decision making if you are interested in buying.
Also, a good measure to have on hand if you are selling.
Monthly occupancy
Now you have a maximum potential income figure for your campsite project…
…the next step, is to moderate this figure by your expected occupancy.
Occupancy is how many pitches that you plan will actually be booked per season vs. could be booked.
Armed with this actual figure. you are beginning to develop an idea of the overall earning potential of your campsite.
Ave. occupancy in that month
One modification you will have to make when estimating occupancy for your campsite throughout the year is seasonality.
Month to month customer demand will differ.
Does your campsite project follow the traditional campaign season?
You’ll have to adjust your figures to increase in the peak weeks and decrease in the low weeks. In the off-season (winter) – prepare for a complete drop-off in income because of closure.
If your campsite project is planned to open all year round, then perhaps your income continues during winter…
…but will you expect summer-like figures?
Probably not.
In which case, you’ll need a way of factoring in the ups and downs of expected trade.
No of nights stay est.
How long is each booked group, couple or individual likely to stay on-site for?
How many nights per stay?
This number gives you an estimate of the turnover of guests within your campsite project.
This number impacts other operational factors like guest welcome, onboarding and departure.
The higher your turnover of guests, the greater need you’ll have for putting on guest relations services.
Bookings
One question you might have at this stage of your planning is…
…how do I estimate the number of bookings in a season?
You get this number from dividing the expected room nights booked in a season by the average number of nights’ stay.
This gives you the number of bookings.
This is how you might go about estimating how many bookings you need in order to fill a certain number of pitch nights.
Mix of seasonal, winter storage & short stay
What about other types of pitch use?
Spreading about your income potential into a more diverse array of activities spreads your risk of loss.
By putting all your eggs into one short stay camping basket presents the danger of losing everything if that niche is disturbed by something unforeseen.
However, if you have other types of customer providing income in other ways…
…these earnings would be unaffected should your short stay market get dented by something peculiar.
Examples of diversified pitch income could be seasonal pitch hire or winter storage.
Accommodation breakdown (vehicle, rented pitch, chalet, lodge, etc.)
Pitch variety is one thing, but customers these days have a far more sophisticated expectation of accommodation type.
Chalets, lodge, glamping pods, shepherds huts are all value-added premium versions of camping accommodation.
Sure, they aren’t everyone’s taste, but some are attracted to these options.
Such accommodations offer a prepared, fully furnished and kitted out home-away-from-home experience – particularly popular with young families.
The price point of such accommodation is completely different to pitch hire.
If you plan on offering these, you’ll need to factor in the figures.
Pets
Over 1/3 of all campsite visitors bring a pet along with them.
Many sites charge a surplus fee for pet inclusion with every booking.
The fee is usually charged per night stay.
Your project calculations should include the expected revenue from pet arrivals.
Mean revenue (per pitch night, per booking)
Overall mean revenue per pitch night and per booking are very handy metrics for any campsite business.
Why?
To build an overall revenue or income picture – it becomes much easier when you can throw a single average revenue figure at every night spent or booking made.
From this figure of mean revenue, you can answer questions like…
“how much additional revenue should we gain if our bookings went up by 20%?”
or
“how much more income would we make if we extended our season by 10 weeks?”
On-site spend (domestic / international)
Aside from accommodation bookings, your site might be equipped with other revenue-generating potentials, like:
- convenience store
- activities (outdoor cinema, archery…etc)
- laundry
- vending machines
- mobile catering
These additional services might be used by guests, bringing in side-income to your campsite business.
Make an estimate and factor this on-top of your accommodation rental fees.
Expenses
As you have built up a complete picture of your campsite income, the next step is tallying expenses and overheads.
Profit after is income minus outgoings.
Without profit we have no earnings, so profitability is the principal market for sustainability in business.
It answers the question of,
“Can this business pay for itself and pay me and all those involved for our efforts?”
If after all expenses and overheads (inc. your time involvement) paid there is still money left in the kitty – then you’ve got a worthwhile venture.
The dream for many.
Capital
Outside of regular expenses and costs for running your business, you will have to make relatively large investments every now and again.
Think…
- replacing equipment
- repairing equipment
- upgrading kit
- servicing and maintenance
Although these are not routine, you’ll need to factor in the occasional cost of these to get a realistic figure of profit on your year’s trade.
Profit/Loss
Finally, the fruit of your labour.
Money available after all is paid off can go to so many functions:
- capital for expanding your scope and income potential
- diversification
- new venture investment
- exit savings
- more earnings
There are so many rewards at hand when you
plan prudently,
…and execute with excellence.
Go To Part 6: https://campsitebusinessplan.co.uk/knowledge-base/the-campsite-financial-analyser