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November 2022

Facility Forum

THRIVING IN TOUGH TIMES BY  DROPPING RATES* AND BAKING A BIGGER PIE

11/6/2022

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In the best of times, facility managers face many unique challenges but today we are all facing a common and significant challenge - Costs across the board are rising and whether it is temporary or here to stay, facility managers must adapt and quickly!  Here’s some perspective:
  • Utilities - Up 15.8% annually!
  • ​Supplies (Food and Cleaning) - Cost in these areas have exceeded 10% higher in 2022.  Some increases make no sense at all, for example, the cost of frozen pretzels has jumped almost 100%.
  • Wages - As you know, staff shortages and inflation have combined to increase starting wages to up to $15.hour.  Salary costs are projected to increase another 5% in 2023.   No relief in sight.
What can a facility do to counter this?  One obvious solution is to raise prices; however, that can be problematic.  That can work for retail concession items but that is a drop in the bucket.  Other costs are piling up and while there are countermeasures (we’ll address these in another post) immediate relief is difficult to obtain.  And of course, you can cut admin costs - do more with less (see next Blog) but that is easier said than done.

While it’s almost counter intuitive, the best actions you can take may be on the revenue side and sometimes it even involves lowering rates  What…What…hear me out, please.  
  • Long term rental rates  - These are problematic as they are often locked in and can’t immediately or easily be increased.  It doesn’t hurt to try though.  Given these times, asking for a small increase to deal with the inflation are understandable by customers.
  • Retail or unbooked repeating rentals - Here there are several opportunities:
    • Raise rates on an immediate, going forward basis.
    • Use shift  pricing - Two factors at play here:
      • Prime time - People are willing to pay extra for say 6-8 or whatever your prime hours are.  Don’t be afraid to increase those rates.
      • Lower rates during non-prime times has two positive effects - It moves some customers to earlier/later times thereby adding incremental revenue in those slots AND frees up slots in your peak time increasing overall revenue.  That’s  a WIN-WIN
  • BAKE A BIGGER PIE- We often get stuck in our own perspective and forget that there is a lot of non-typical business out there looking for a home. Now is the time to GROW the PIE!  Here’s a few ways to grow that pie:
    • Adult Sports - Many adults are tired of leagues and just want to run with their friends.  These potential court renters may be looking for a spot in your area.
    • Parties - Birthday parties are a great revenue source for facilities.  Having a party at a gym offers parents a low cost easy way to provide a party.  
    • Corporate/Church events - From team building to reunions this can be a high dollar revenue contributor.
    • Homeschool Athletics - Home school athletics is growing fast (increasing more than 15% per year) and most organizations need facilities for team sports and physical education 
    • Sport Trainers - Like it or not, most sports and the related training are all year now. That has created a bigger demand for training and therefore space needs.  Given your availability you may consider dropping rates for specific trainers during non-peak times.
If these solutions seem interesting, check out My Sport Space which was built to help you, the facility manager, set your own course to profitability.  My Sport Space allows you to set pricing, discount rates, add surcharges, and give your facility exposure to a network full of potential customers.  Facilities pay NO COST for using My Sport Space. For a brief, NO OBLIGATION demo of how My Sport Space can help click below.  Thanks for your time and good luck this fall/winter!

* Selectively, of course!
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