Can resorts survive an uncertain economy?
As a resort or campground buyer, you are about to spend a considerable amount of money on a business that you have never run before. You might be feeling a little nervous. If the economy goes bad, will your new business survive? While nothing in life is guaranteed and it would sometimes be nice to have a crystal ball, here are some things to consider.
Family travel habits
For people who travel, you can probably put them into two categories.
People in Group A likely have a larger budget for travel and take several trips a year.
People in Group B have less money in their budget for travel and take just one trip a year.
If something “negative” happens that could affect travel (such as rising inflation or high gas prices), let’s consider what will likely happen.
When travelers in Group A need to tighten their belt, they will likely still travel, but will reduce the number of trips they take. Since a Minnesota resort vacation is very economical in the world of travel, it’s very doubtful that it will be the trip on the chopping block. More expensive vacations will likely be the first to be eliminated or suspended.
Because travelers in Group B only take one vacation a year, it’s likely they will trim their budget in other areas rather than cancelling their only vacation. Someone once said, “People who fish …. are still gonna fish!”
Also, trips that include children or are traditions (such as fishing or golfing trips with the guys, or the traditional “week at the lake”) are emotionally harder to cancel.
Trend reports
If it’s going to be a challenging year for your business, you can see it coming months in advance, and you’ll have an opportunity to act. Reservation software systems and QuickBooks allow you to do a year to date comparison for multiple years. These are also called trend reports. It’s a good idea to view trend reports for reservations, income and expenses on a regular basis. Using these reports, you should be able to get a good idea of income expectations for the year as early as March or April.
If the year looks like it will be a lean one, you have full control to do what you need to to combat it. Action you can take includes taking on a job outside the resort, expand your advertising, cut unnecessary expenses, cut back on payroll, open the resort earlier than usual or stay open later.
Think about these more recent challenging times:
1970’s — Gas crisis and inflation – We can’t argue that there were more resorts in Minnesota 50 years ago, but the high price of gas and the resulting inflation were not the cause of resorts closing.
2008-2010 – Great Recession – While the housing market was in an upheaval, families still vacationed, but to a lesser degree. Many resorts did see a drop in income during these years, but really not enough to strain their business too much. Thankfully it was short lived.
2020 – Covid-19 – The pandemic actually ended up being a boost to the Minnesota resort industry. In the overall world of travel options, it was considered safe.
If you are paying attention to your reservation trends, paying attention to the money coming in and going out, willing to work harder or work more when it’s necessary, and willing to make a few personal sacrifices for the short term, the resort business is nearly bullet proof.