Inflation. It’s a word business operators don’t like to hear, but the reality is it’s front of mind for many operators we speak with.
With the US inflation rate hitting 9.1% in June, the rising cost of goods and services is a key concern for all businesses. And while there are likely to be some challenges ahead, we’re here to tell you it’s not all doom and gloom.
This post will share how to better navigate cost pressures and give you clear tips for operating your business in this environment.
How inflation is impacting the attractions industry
In a recent article from experiences and attraction news site Arrival, attractions operators have reported rising costs in various business areas, with many looking to increase prices this year. That shouldn’t be a huge surprise, as increasing the price of your own products and services is one key way to help offset the impact of inflation on your business.
A survey of attractions businesses across North America and Europe conducted together with online ticketing platform Tiqets also found some interesting results:
- More than 75% said staffing and wages, technology costs and equipment were the main areas they were experiencing increased costs.
- Most are raising ticket prices in 2022, with 54% having made moderate pricing increases to tackle inflation. However, most plan increases under 10%.
- When looking at purely for-profit venues – when compared to not-for-profit or public institutions – the figure for venues increasing pricing jumps to 74% planning to increase their ticket rates this year.
And it’s not just small venues who are feeling the pinch. The Global Attractions Landscape Report by ECA and Blooloop also found price increases to be a key industry trend, with Tokyo Disney Resort increasing the prices of an admission ticket three times in the last 18 months.
How venues can beat inflation
While rising prices are here to stay for the time being, there are actions you can take to reduce some of the impacts to your business. Here are our top tips:
1. Give advance notice of any price increases
Raising prices is likely already a consideration for your business to help keep operations financially viable.
And while price increases probably won’t come as a complete surprise to your guests and members in the current climate, it’s still important to communicate this clearly to avoid churn.
Firstly, work out when your price increase will take place and give as much advance notice as you can, ideally at least three months.
For example, if you are looking to increase prices next quarter then communicate this now so it doesn’t come out of the blue.
Secondly, explain the reasons why you are increasing your prices. A price increase out of context, or without warning, is jarring, however a genuine message looking at the challenges of running a business in the current economic climate, managing increased business costs and wanting to be able to still provide the best experience for guests can all go a long way to resonating with your audience.
Think about sending multiple communications that clearly explains ‘the why, the how and the when’ of your increase and make yourself available to answer any questions. Guests will appreciate your honesty and will be much more likely to continue to support your business.
2. Offer bundle packages to help drive sales now
One of the best ways to tackle price increases is to demonstrate clear value wherever you can. As humans we’re programmed to love a bargain, so play into that value mindset.
Use a coming price increase to your advantage by offering to bundle packages at current prices. It can be a great way to increase sales today and increase your guests’ lifetime value.
Could you offer a ‘10 session pass’ at a discount as a great way to lock in a future activity before prices rise?
3. Lock in more memberships at today’s prices
Memberships are one of the best ways to generate recurring revenue, so where possible you want to be converting your most loyal guests to a membership program that will bring in reliable monthly or annual revenue.
Offering a promotional discount on your membership options can be a great way to lock in additional revenue for the coming months, with guests happy to pay upfront to score a discount and also beating any future price rise.
4. Look for ways to improve your cost efficiencies
Are there cost areas of your business you could look at reducing or potentially negotiate with suppliers without affecting your overall guest experience?
If you run an in-venue cafe, could you reduce your spending on takeaway cups by promoting reusable cups or running a food & beverage deal for dine-in guests?
Are there other F&B items or merchandise items that aren’t as popular with guests that you could cut back on spending?
5. Identify opportunities to increase revenue
One of the best ways to manage costs is to look at improving your business operations. Let’s look at your day-to-day for a start.
When it comes to selling tickets, have you set up an online ticketing system? Let guests self-serve with a much improved online checkout experience and also reduce your reliance on manual staffing, potentially reducing labor costs.
And what about payments?
With the right online payment processing solution, you’ll not only deliver a frictionless guest experience, further optimizing your online checkout, but you can potentially reduce chargebacks – one of the most significant pain points for businesses. ROLLER Payments is powered by global payments leader Adyen to protect against fraud and reduce your exposure to revenue loss and is fully integrated to streamline your operations.
Don’t be afraid of raising prices in the current climate, but demonstrate value
While nobody likes raising prices, it will be the reality for nearly every attraction and leisure business in 2022. Don’t be shy about why your prices might increase, and keep communicating value to your guests. As we mentioned, being open and honest with price increases and advanced notice can go a long way with guests. Focus on the things you do well and look for those operational efficiencies to keep growing your guest numbers in line with any rising costs.