Unlock growth synergies through revenue management
Although the customers of your theme park appreciate the vertiginous descents of your attractions, and love to be surprised by exotic experiences, your business would doubtless like to evolve in a less emotionally intense, more stable financial universe, with high and predictable incomes throughout the opening period.
Allowing your sales and marketing teams to acquire or strengthen their revenue management skills involves a modest expense with a high return on investment.
This contrasts with other methods of increasing revenue for tourist attractions worldwide that consist of gigantic reception capacities and enormous investments that must be constantly financed over the long term.
In contrast, revenue management allows you to achieve more turnover with the existing infrastructure, to increase average spending per visitor in high season, and increase your occupancy in off-peak periods.
Yield management embeds your sales teams in a universe where your income increases independently of physical constraints, with limited investments in specialized software packages and consulting services.
Let's review the easily operable levers to significantly increase the profitability of your leisure park.
The starting point for successful revenue optimization is understanding demand, and ensuring teams are working from quality data.
We will distinguish the effective demand on the site (modeled from historical performance, the projection of the annual school calendar and public holidays) from the potential demand for leisure activities in the catchment area (estimated using direct and indirect competition benchmarks, and the integration of statistical studies available at local and regional level).
The recommendations issued will concern the improvement or rebuilding of a forecasted demand schedule segmented by type of customer.
The main advantage of a good understanding of demand is to have a solid working base for building revenue management strategies. A reliable forecast of frequenting also allows you to disseminate accurate information to all internal stakeholders so that they take appropriate operational decisions. This has an indirect, positive impact on your costs, and contributes to improving the experience of your customers.
Beyond the census of the experiences and products offered, the audit of the current commercial offer will focus on your recent promotional operations, analyzing their performance, relevance, and compliance with the most recent yield management techniques.
Do the tariff offers take into account the techniques of fencing, prevention of dilution, and price elasticity?
To what degree are the synergies between entrance tickets and food and beverage expenses taken into account?
The analysis makes it possible to paint an objective portrait of the maturity of the organization.
Revenue management and pricing are analyzed through the site's overall revenues, offering areas of improvement with high return on investment.
Segmentation & Marketing
Customer segmentation is a crucial step in effective marketing. Depending on the size and type of your tourist site, the needs and possibilities of segmentation are different. Nevertheless, it is essential to ensure the consistency of pricing offers, and the proper calibration of communication operations. When carried out with the right method, the study of customer segmentation detects sources of commercial growth that are welcome during low periods.
Too often amusement parks stay focused on their natural customer base and miss out on untapped customer segments that could increase overall frequentation.
The detection of these ignored or under-exploited segments, along with a recalibration of pricing offers that may be currently unsuited to these segments, makes it possible to increase the attractiveness of the park and its frequentation, especially in low and medium season.
An audit of the communication processes in place makes it possible to measure the return on investment of your past operations, and to adjust the communication schedule and channels used in order to maximize their impact at a lower cost.
This step generally results in recommendations for resizing the communication budget by customer segment and distribution channel.
Customer experience mapping
The customer experience does not begin at the time of collecting tickets at the park entrance, but well upstream, with the acquisition phase. Alongside traditional communication operations (billboards, flyers, Internet, traditional media), distribution is a powerful lever that falls entirely within the scope of revenue management.
One of the main reasons for the lack of footfall at small and medium-sized amusement parks is insufficient distribution. Good distribution equates to welcome visibility. However, distribution costs can erode profit margins.
Between direct sales — website and on-site ticketing — and indirect sales via distribution networks — the optimal position to maximize revenue is specific to each amusement park. Are you sure your tourist site is optimally positioned? If indirect sales are under-exploited, there are latent opportunities to generate more turnover waiting to be seized. And conversely, if indirect sales represent too high a percentage of your income, you lose several points of profitability by remunerating distribution partners.
Cross sell, upsell, bundles
Once your customer is acquired — or about to be — it is essential to maximize their expenses, in exchange for a fair, shared value proposition. Even before your client has passed through the entrance gate, he must have already been exposed to upsell and cross sell proposals.
The most common upsell is to sell an admission ticket with a higher status (skip the line or complementary activities).
Cross-selling is too often limited to the sale of a ticket for another local attraction site, on which you will receive a commission.
However, there are plenty of other upsell and cross sell options that are more profitable, and yet so rarely implemented.
Their commercial success is based on statistics: a small percentage of visitors will agree to pay much more for an experience that generates high margins for you. It therefore makes sense to innovate and test which ones are the most interesting economically, and the most adapted to your customer segments.
The customer journey
The on-site customer journey is a succession of experiences inspiring various emotions more or less conducive to the consumption of complementary products.
Above all, it is a well-sequenced incentive plan, bringing together the activities of sites, that generates additional sales. You wouldn't want your customers to hurriedly leave the restaurant, without dessert or coffee, to attend a 1 p.m. event, would you?
If this analysis has never been carried out, it is time to get down to it and finally capture the full potential of additional sales.
Use of spaces
The leisure industry is, above all, about making square meters profitable over time.
Have you identified all the marketable spaces and their available time slots?
This approach, combined with brainstorming workshops and the most innovative practices in the industry, makes it possible to generate a multitude of small revenues which add up to a significant percentage of your turnover, especially in low and medium seasons. In most cases, the financial risk is carried by an external service provider who rents a small piece of your leisure center and will bear the commercial risks.
The climbing room can be used for yoga lessons, the arrival pool for water slides or aquagym when the children are at school, the esplanade at the edge of the lake for Tai Chi lessons before the opening, a themed bar used for a meeting of entrepreneurs after closing.
Once this creative exercise has been completed, potential partnerships explored, and the logistical constraints settled, our revenue management models provide valuable expertise to determine the optimal use of your spaces over time, depending on the season.
Yield management applied to the marketing of your spaces offers a framework to arbitrate between the different modes of exploitation.
By calculating the costs of loss of opportunity and the costs of displacing value, we can work out the most profitable seasonal scale for each space and time slot.
Food & Beverage
For many amusement parks, food, drinks and various sweets account for a quarter of total revenue.
In order to properly optimize this turnover, and especially the associated margin, several decisions must be made.
The first consideration is to what extent it is desirable to constrain the food and drink expenses of your visitors, bearing in mind the strengths and weaknesses of your site.
A leisure park offering a full-day entertainment experience may capture the expense of lunch, or even dinner in some cases, while smaller parks will focus more on drinks and sweets.
The next consideration is to properly calibrate the level of expenditure constraint. Between prohibiting visitors from entering with drinks and food by searching bags at the entrance, and setting up picnic areas on the site, there are a variety of subtleties. The higher the level of constraint, the more exceptional the associated customer experience must be, and the more this has an impact on price sensitivity, and therefore on the volume of entrance tickets sold.
Offering a customer experience with few consumption constraints also has advantages such as increasing the size of your potential market, or offering higher priced entry tickets.
The level of constraints related to the consumption of drinks and food has a direct impact on the total budget of visitors, and therefore on the volume of tickets sold.
As an owner-operator of a leisure park, the provision of food and drinks facilities is a delicate exercise.
Some owners feel that catering is not their job, and prefer to rely on a strong franchise or external service providers against rent or royalties, while others will want to operate directly.
In absolute terms, there is no right or wrong option, but for each leisure park (and even each location dedicated to catering) there is an optimal solution, which can evolve over the years depending on changes in visitor numbers.
If you are too far from the optimal solution, you may unnecessarily expose yourself financially (when revenues are low) or miss out on income (when the share of value captured by external stakeholders is too high).
If you are uncertain whether your decisions are always optimal, strategic thinking is required.
Beyond the financial and legal aspects associated with your analysis, a better understanding of the commercial synergies that unlock a revenue management approach on the whole site will allow you, whatever the mode of operation chosen, to ensure that the potential relationship (current and future) between ticketing and catering is maximized.
There are several angles of approach, such as carrying out an audit of the correct positioning of the menu with the selected customer segments, studying compatibility with the particular mode of operation of a theme park, and ensuring the ability to deliver the service on peak hours.
Very often, the conclusions of such an audit lead to proposals for stronger commercial synergy models between the catering division and the park's other sources of income (ticketing, events, etc.), and contractual rebalancing aimed at a better division of the park's economic benefits.
Events & Activities
In addition to the use of spaces, enriching your event calendar will increase your turnover, in synergy with the ticketing and catering divisions.
You will find valuable inspiration from techniques applied by the high-end hotel industry, which is particularly expert in the use of its spaces thanks, among other things, to events.
A well-developed activity calendar improves visitor purchase recurrence.
Merchandising & Others
While ticketing and catering (and hospitality for larger venues) make up the majority of revenue, a full audit of your theme park will allow you to further optimize your existing solutions and add new sources of revenue generation.
After several weeks of immersion in your theme park, the Yield Tactics senior consultants have aggregated millions of rows of data, met with dozens of your collaborators, and have plenty of tips to share with you.
However, their yield manager DNA prevents them from giving you recommendations without developing revenue projections. Therefore, a complete report, always linked to economic reality but without losing sight of the visitor's experience, will be built with you throughout the process. A reference document will be your support for several years, prioritizing the implementation of actions that have the greatest potential to increase your income.
Don't know where to start? Contact us and a team will come to your site to carry out a diagnosis of your commercial performance, and establish the list of subjects you should treat as a priority:
- development of revenue and pricing scenarios according to the various possible modes of operation
- ranking of recommendations by decreasing financial impact
- Ensure that the fundamentals of yield management are well applied
- Develop new market segments
- Professionalize ad spend management
- A well-thought-out customer experience increases the total revenue of an amusement park
- Maximize your income per square meter / hour
- A balanced sharing of value between business partners
- Monetize more through events
> Discuss your needs with a pricing and sales Senior Consultant
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