Leisure Trilemma: The sweet spot between capacity, revenue & experience
Traditionally seen, a visitor’s experience can be broken down into a few simple but rather crucial and interrelated factors:
1. How much personalisation the experience can deliver?
2. Is it sharable?
3. Does it involve profound storytelling?
4. What degree of personalisation does it allow?
5. How many visitors can immerse themselves into the world of choice?
6. How memorable and unique is the experience?
7. How authentic is this experience?
When studying or dissecting the experience economy, these 7 factors are inevitable to consider.
However, some of these factors might play a subliminal role in the guests’ experience, without them being fully aware to what extent they are affected by them. On the contrary, there is a very notorious and direct component that comes into play in the guests’ experience equation which we haven’t mentioned yet: Crowds!
Guests have a very different experience if they have to wait 30 or 10 minutes for a hotdog and whether they can visit all your attractions in one day or have to decide which one to give up on because time is running out. Already a long time before 2020, even before COVID-19 and its impacts, crowds were one of the main blameworthy drivers for a weak experience to remember.
But now, with new regulations in place due to the virus’ contagion risk, a lower capacity is not only necessary to ensure safety, but is also a true expectation your visitors have as brought forth by the latest studies conducted by McKinsey & Company. This means that the ability to facilitate social distancing is a new element guests will take into account from now on when considering your venue.
Undeniably, for attractions and venues alike, capacity has always been a delicate topic as it is directly related to revenue streams. In the leisure business, most income and revenue models are obviously based on how many tickets are sold and the number of people visiting a venue in a day - week - a month, or even a year!
According to Blooloop, a traditional theme park generates around 60 to 70% on admissions revenue. And think further: all the ice cream-cones, pink cotton candy, and the tempting pizza slices that those visitors consume in-venue significantly add up to the immense income as well!
Logically, if you have fewer people flowing through a venue, there is less budget spent on all these guilty pleasures. The yearly new added attraction to your venue wouldn't be planned in many parks without a proper overview of what revenue streams are to be expected. Next to numerous variables, many venues use a forecast combination of availability and demand to determine their ticket prices.
But considering the current circumstances, how can leisure venues find the optimal balance between their capacity and revenue goals, while also guaranteeing an outstanding experience for their guests? How do you deal with the challenging fact by which less capacity means less income?
Surely, as a venue, you want to be using the maximum capacity allowed by the government’s regulations in order to maximise ticket sales and revenue, but since your customers and guests are always at the heart of your decisions, you’ll also want to make sure that they feel safe within your facilities and that they can have a smooth and frictionless experience without having to deal with many queues and crowds. So how to juggle these three equally essential elements? How do you handle the leisure trilemma?
The Do's and Don'ts
- Huge discounts via third-party resellers or channels.
You only amplify the impact of the lower capacity by offering tickets with huge discounts - especially sold via third parties! These tickets fill up your venue and take the space of those who would be willing to pay the full price instead. If you are an exclusive channel selling tickets, you have full power over, not only the price, but also your customers. Do you feel like you need more input on this? We got you. Head to The problems with channels in leisure to find out more.
- Drilling up capacity until it's allowed.
We understand that this is the immediate thought that might come to mind when thinking about generating revenue quickly - but if you want to survive in the long run, it is time to think like it. If guests come to your venue just to find it crowded and unsafe while paying, most likely, the full price for a safe experience, their disappointment will hurt you more than the lowered income.
- Manage expectations while reasoning and controlling price - your visitors will understand!
Right after theme parks were allowed to reopen, quotes such as "It’s like having the entire park for yourself! " were thrown around a lot. Guests are happy - it is every kid's dream to be able to freely decide on the spot whether to take a space roller coaster or the free fall tower first. And on top of the improved experience and joy of having all rides accessible at all times - people also care hugely about their safety. If you can guarantee it, they will cherish it and react less price-sensitively.
As dynamic pricing experts, we also know that dynamic pricing strategies will help you meet pricing revenue and guest satisfaction goals all at once.
In fact, along with time-slots for example, dynamic pricing has already helped various partners within the leisure and attractions industry operate safety while still maximising their online revenue.
If you want to read more about how to use dynamic pricing as a key element to better distribute your visitor curve and influence your demand while maximising revenue, don’t miss out on this blog post.
- Have a clear cancellation window.
One great planning tool brought forth by the pandemic is the necessity to book time slots or make reservations for a visit. Of course, every visitor has their own special circumstances, and during times when things can change rapidly, venues need to show understanding for such.
However, to reduce the number of last-minute cancellations or no-shows that will then knock on your door weeks later to move their visit, you can up your cancellation window to, for example, 12 hours before entrance time. You can even implement a late-cancellation fee - this is not so much to monetise an unfortunate situation but rather to steer behaviour by price-sensitivity.
And lastly, we mentioned it before: implement a rescheduling fee and make rescheduling a self-service via your online shop. This will save you lots of time, money, and hassle while tracking behaviour.
- Learn about your guests & their experience.
Learn about in-venue behaviour, to optimise operations on guest flow control that might help you slowly scale up capacity in a safe way without harming your guests' experiences. But make sure to carefully test and track your increase in capacity! Put practices into place to be able to measure the impact.
Generally, you should ensure you measure what your guests truly value if they are not steered by crowds not only to secure a capacity strategy but also to learn about their preferences in rides or food and allow you to rethink staffing and marketing concepts or campaigns - let your creativity be, and this knowledge will take you far!
As an example, we have a partner who, with time, the tracked data brought forth that around 25-30% of his sales happened quite spontaneously. Thus, he plans his staffing not only according to his numbers the night before but also the forecast - always knowing how much staff and facilities are truly needed to have enough staff on site to cater all customers in a timely and efficient manner, but never too many to drive up costs unnecessarily.
The implementation of the following techniques or technologies can give you great insights about your guests’ behaviour and preferences, which you can use to your advantage for future improvements.
Best practices include:
- Post-event emails including surveys for feedback.
To turn a one-time visit into a loyal customer, you have to make sure that your visitors have had the best experience at your venue. And how do you do that? With a post-visit email, your visitors can let you know exactly how they felt, helping you to identify your strengths and weaknesses.
- Heat mapping and GEO-fencing to automate the monitoring of guest flow.
Your employees could manually count visitors per ride per certain time strip to create a chart of the day and compare it with the rest of the rides of the park, creating a manual heat map and or guest flow chart... but that would be a waste of time. Instead, you can use a GPS tracking heat map, which provides you with the insights that you need to optimise your in-venue operations.
- Real-time feedback requests via a mobile app notification.
Although this might sound like a fancy solution, it is one that allows you to react immediately and gives your visitors a heightened sense of control and personalisation.
- Track & analyse online purchase behaviour analytics.
By selling directly from your online sales channels, you are in full control of your customer's data, which enables you to dive deeper into their purchase behaviour, and ultimately, improve their experience.
The sweet spot
Finding the sweet spot between capacity and pricing is connected to attracting visitors, and requires the ability to forecast demand by identifying when and how it is likely to exist - but how you do that? By tracking your visitors' behaviour and putting the right strategies into place to monetise and optimise adequately so you and your guests can benefit. In a nutshell, this is exactly how a dynamic pricing algorithm works - so why do it yourself?
However, tracking demand and utilising it for revenue is not everything you need to establish for a long-term strategy. You will truly find your sweet spot by learning about your visitors and their preferences. Part of this learning is also understanding that it will not be a short-term return strategy but rather allows you to gain more insights into how to make the experience you offer even greater. Not only now, by eliciting more engagement, but also in the future when capacity is allowed to be increased. This, in turn, will have an impact on your return because the created loyalty will cause customers to come back and spend more time in your beloved venue.
So, what do you think?
We are very curious about how you see this leisure trilemma and what has been your take during the past months to find a balance between capacity, revenue and ensuring a safe and memorable experience for your guests.
We would love to hear from you and answer any further questions you might have, so don’t hesitate to contact our team of experts!