Cost savings and efficiencies
As the cost-of-living crisis bites, many Attraction and Experience businesses who – still reeling from the pandemic – are struggling to recover business and stay afloat. How you respond to these challenges may affect whether your business or organisation can continue to operate commercially.
The simple steps below will assist your thinking, and allow you to look at your operation objectively, and ensure that you concentrate on the opportunity to save costs and increase efficiencies in your organisation, and ensure that you respond to these commercial challenges effectively.
It is difficult to keep the emotion out of the thinking, as often you are dealing with your own business, or one you are very close to. Dealing with a service which positively impacts people’s lives, plus one which employs people or has the support of volunteers, who also benefit from in more ways than simply a salary, mean that many decisions can only be based on subjective emotions and feelings.
There is nothing inherently wrong with this – in fact we advised to ‘humanise every decision’ during and post pandemic recovery. This, however does make tough decisions tougher. The following process will hopefully prove to support the thinking in a strategic, and people-focused way, to allow you to make the right decision for the business and organisation.
Contents:
- Your Revenue
- Commercials – what is your P&L telling you?
- Identifying Cost Saving Opportunities
First Things First - Your Revenue
The cost-of-living crisis is making it hard for everyone to make ends meet, and the tourism industry as a whole, including leisure attractions, experiences and hospitality businesses are are no doubt being impacted.
Tourism is indeed the lifeblood of the local economy and operators must seek out ways to combat this change in behaviour in order to sustain commercial viability of the operation.
With the level of inflation now almost 10%, Household budgets are being squeezed, and the leisure spend is therefore being reduced. This is impacting on many activities, with research has seen some numbers to UK visitor attractions numbers down by up to 33%. The following explains the changes in behaviour, and the consequences which are being felt, and creative ways to sustain and grow footfall and profit in the face of these challenges.
The Domestic (UK) Market and ROI visitor
Changes in behaviour
Due to the high inflation level, and the cost of living, people have now less money to spend on their main holiday/their short break or even their leisure activity to keep the family occupied in the holiday season.
WHAT?
- Mindset
Budgets are tight, so every pound spent will be scrutinised and alternatives researched before decisions are made. Value for money and money saving will be higher up the agenda than it was previously, and attractions and experiences need to capture opportunity for these changes in behaviour. The decision maker will have increased pressure, and possibly more input from others, as budgets are squeezed.
- Choice of destination/Experience/Activity
Consider the thought processes which the booker will go through within this current economic climate:
- Fuel costs, i.e: travel time/distance Will I need to buy more fuel?
- Value for money, i.e:
- Content of offer/quality vs price Is it worth it?
- Facilities Compared to alternatives
- Time spent How much time vs cost
- Enjoyment factors/Reviews Important/scared of bad decision!
- Frequency of visit Can I eek out more time for the £?
- Length of stay Can I eek out more time for the £?
- Numbers in the party/Family members Who is paying?!
- Animals – Dog friendly? Saving on kennel/cattery fees
- Food offering prices become more important How many meals to buy?
- How long with the activities take/cost? Choice may relate to time spent
Post pandemic behaviour VS cost of living crisis behaviour
It is clear that some of the behaviour seen post pandemic have not lasted due to the cost-of-living crisis. Organisations which ‘pivoted’ to take advantage of such behaviours need to be nimble to exploit the current trends, and not be left behind.
Post Pandemic Behaviour trends |
Cost of Living Crisis Behaviour trends |
|
Multi-Generational groups |
Less pent-up demand for days out/holidays with family members who had not interacted for a length of time, so this is now less important – although still a consideration |
|
Prioritising Health and Hygiene |
Still important, but less of a priority. Will be more of a priority with multi-generational groups and the older generations, who will be more conscious of C-19 risk factors when determining activities and interactions |
|
Demand increased for Family Friendly Leisure Experiences |
Pent up demand originally, with a need to get out and explore after lockdowns. Now demand is there, but more price and quality driven for the reduced spend requirement |
|
The trend for domestic travel |
Demand is there, but again more driven on price, and also local experiences and less reliant on car journeys due to fuel cost hikes |
|
The demand for ‘Value Add’ & meaningful experiences |
Demand is there, but conscious of competition and more price-focused and value for money deals/promotions and packages |
|
Cashless/touch/hassle free payments |
Still important, and the public are now more advanced and all generations more comfortable with technology – QR codes, internet bookings and seamless interactions. Organisations who do not keep up and offer such services will be left behind |
Capturing the opportunity
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Know your Competition
The competition is not necessarily the activity down the road which is similar to yours. It is anything on the leisure agenda which could be an alternative to a day out or a break at your attraction/facility. Thinking along these lines you are not only competing with local attractions in the region/area, but you are also competing with newly released films, sports activities – both partaking in and viewing etc. Having this in mind when planning your marketing campaigns will enable you to tailor your offer/promotions/packages to suit the market and to entice them to spend their time/money with you.
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BE AWARE OF BAD REVIEWS AND RESPOND IMMEDIATELY
People are researching more as they do not wish to waste money or make bad decisions. This means they are more susceptible to poor/bad reviews on Trip Advisor etc. This means it is vital for you and your team to respond to any negative feedback and reassure/turn such comments around through clever responses, offering to contact them back immediately on email etc etc – it all contributes to your ‘brand voice’ in the public domain, and your prospective customer’s opinion of your organisation and customer service before they have even booked with you
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Offer Added Value or all-inclusive package deals.
Give VALUE FOR MONEY, but don’t give it away!
People are now looking for Value for money – not necessarily a price reduction. They will be more discerning as to quality and reviews will make a big difference in the decision to purchase, as above. They will be looking at quality, content, what the package includes and what it would cost normally.
Ensure you are in control. Offers and price reductions have their place, but make them work for you - ensure that they are for limited periods, or go out to limited user groups
Give them a compelling reason to purchase – and purchase within a limited time frame/redemption window:
Things to consider:
- Kids go Free with paying adults
- Free meal/Buy one get on free
- Early bird/later offers will extend your busy times and encourage the business when you need it
- Annual/monthly/quarterly passes/Locals discount – NB – CAUTION. These types of offers can encourage footfall, but if you have limited capacity, you need to ensure that the terms and conditions and entry conditions work hand in hand with people paying full price – YIELD management needs to be carefully considered.
- Free Car parking – an emotive subject, but such free offers do not necessarily cost the business much, but as they are so emotive, they can work as a Value Added element to your package and work in your favour when a guest is booking.
- Concierge service – people will often pay more if they believe they are getting special service. If you have offered it, however, ensure that it IS special, and your team and staff are well trained and conversant on how to deliver it impeccably – otherwise you may find this counts against you with negative reviews if things go awry.
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Make it easy for people to spend money – KEEP IT SIMPLE, STUPID! (KISS)
Accessibility of website, ease of navigation, clear instructions and a simple website with F&Qs with a safe efficient and intuitive booking engine, will make it easy and pain free to book with you.
Do not underestimate this issue and take good advice when it comes to ‘User Experience’ or interface with your web channels. Make it clear and easy through simple offers and effective communication through the right channels.
Accessibility for all guests is vital, and if you have good accessibility and are able to welcome certain types of visitors, then shout about it! Ensure your web and your digital channels shout about what you do best, and quote reviews etc to corroborate your claims. People will book if they trust you and you communicate clearly, without complexity and they you will find it easy to trust you, and be loyal to your attraction/experience if you do fulfil your promises and give a memorable experience every time.
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Be careful not to DOWN-SELL
Offering cheaper alternatives to the competition, or promotions and packages which on the face of it will entice your guests to spend with you, is a valid option – HOWEVER: Price points and packages need to be carefully considered for the following reasons:
- Price point and what it includes needs to be carefully costed.
- Cheaper prices will possibly increase footfall, but not necessarily profit. A 10% price reduction if your costs remain the same will yield you more than 10% reduction in profit.
- A ‘Loss Leader’ may lose you money – you need to ensure that people will spend money on ancillaries, and so make it viable commercially for your attraction/experience.
- Give people a choice, but do not lead them to automatically choose the cheapest. By having Value-Add offers first, it will make bookers consider the whole package content, not just the price point.
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Encouraging repeat visits
With more and more people wishing to holiday domestically, your attraction needs to be visited over and over again. In order to maximise this, you need to ensure you have ‘new news’ periodically – i.e. a new attraction, or a new event, etc and give them a reason to return.
If you are an attraction which you want to be the destination for returning families – you’re your team with your vision – what will it take to get people to come twice in 6 months rather than once, for instance?
Ideas to encourage repeat visits:
- Extend the day by an hour and do a special show for instance – this would encourage food/beverage and retail spend later on in the day.
- Give a special ‘return tomorrow for free’/ or 90% discount – whatever works – if you have capacity, you will gain return on retail/ancillary spend. They will also know their way around and feel you have a value for money product already, that they can take advantage tomorrow..
- Special Events – come back on ‘x’ day for the concert in the park, at a special discount if you book with us today.
- Incentivise your team to gain bookings for tomorrow/This week/Next month etc. – redemption of offer codes is a good way of doing this, or do it via a customer service point, and push these out at a good discount – one to suit your business.
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Be an Opportunist!
Do you want passing trade? If so, Have you enough signage around where you are?
Do people know where to find you?
What are you doing to promote yourself for TODAY?
See where the gaps in your forward bookings are, and promote special offers to fill the gaps. People love a bargain and will respond to it, but be careful not to do this too regularly, otherwise local people will come to expect it and wait to book at a discount. A careful balance must be struck and once again, Yield Management Principles must be applied to ensure that you are not compromising your business in any way.
The International Market
Section 1 deals with the Domestic and ROI market, who can easily access Northern Ireland for a short break, domestic travel and longer holidays, the International Market is just as susceptible to the trends affecting the Domestic UK and Irish Markets.
With a longer lead time and decision-making time, to increase footfall and to combat the initial decision-making process which may be more reticent to spend money on international travel, the rules above still apply. Guests and customers will be looking to maximise the Value for Money aspect of their trips, so price points and added value are of paramount importance for this market as well.
Attracting the international visitor
Maximisng spend from the international visitor
International visitor repeat visits
Commercials - What Is Your P&L/ Accountant Telling You?
Although it is easy to concentrate on the day to day operation of any leisure business or attraction/experience, your commercials and your accounts will tell you all you need to know.
You MUST find time to identify the trends and the peaks and troughs of the business on a daily, weekly, quarterly and annual basis, in order to stay on top of all your business trends.
This means setting aside time in the working week to go through numbers, percentages and – most importantly in this case – identify EVERY cost which is being charged to the business.
This means not leaving the finance side of the business to your accountant to work out on an annual basis, but giving you full control of the business daily, weekly, monthly etc, so you can make important decisions swiftly, based on business performance now, yesterday and last week, not merely on the last quarter or even the last year.
If you do not already record much information, it is important you set up systems and processes to do so, which can be recorded and therefore used to identify trends, and enable you to make key business decisions.
E.g. if your busiest time of the week is a weekend, Monday you need to record the actuals for this month, this year and last years and further back. This will help you identify trends.
It also is useful to record statistics:
- Revenue /Average spends etc – see above
- Costs – daily/weekly monthly etc.
- Vs last week
- Vs last year
- Vs previous years
- Visitor numbers/Thoughput/Time of Day/Duration of visit
- Types of visitor (Adult/Child/Concession)/Demograpic?/Where are they coming from?
- Other information relevant to your business: E.g. weather, temperature, travel information etc.
If you already have these records in place, ask if there is any other information which impacts your business which is worth recording from now on. Information is power and will enable you to seek out opportunities to improve through every aspect of your business.
Identifying Cost saving Opportunities
As well as ‘Other or miscellaneous costs of all kinds, there are usually 4 largest cost elements in a leisure/food/beverage business:
These will now be examined in turn, and with hints and tips for reducing these.