Inspired by a recent insight shared by industry colleague Matt Whitemore
Most pricing decisions in outdoor hospitality are made by referencing whatever the guy down the road is charging. That might feel safe, but it’s financially blind. No two properties have the same expense structure, site mix, or operational model. Yet owners routinely peg their rates to peers who themselves might be making poorly informed decisions.
A better way—one that serious operators use—is to price based on the financial requirements of your own property. This means understanding the relationship between your fixed expenses, variable expenses, revenue mix, and occupancy patterns in a way most owners never take the time to model.
A recent insight from my friend Matt Whitemore sparked this broader conversation, and this article expands the idea into a complete pricing framework for RV park and campground owners.
1. Start by Separating Expenses Into Fixed and Variable Categories
This gives you a clear understanding of what your revenue must accomplish.
Fixed Expenses
These costs stay roughly the same whether you’re 30% occupied or 90%:
• Property taxes
• Insurance
• Base utilities
• Management salaries
• Accounting, legal, software
• Landscape contracts
• Debt service (while not OPEX, it must be covered for sustainability)
You must earn enough to cover these regardless of how many guests show up.
Variable Expenses
These rise or fall with occupancy:
• Cleaning and housekeeping
• Supplies and laundry
• Electricity/water tied to usage
• Credit card fees
• OTA/reservation fees
• Guest consumables
• Wear-and-tear maintenance
When you blend fixed and variable expenses together, you can’t truly understand the real cost of hosting a guest. Separating them reveals the real financial mechanics of your park.
2. Break Revenue Into Site Revenue and Miscellaneous Revenue
Your property earns money two ways:
Site Revenue
- Nightly RV
• Weekly stays
• Monthly/long-term
• Cabins and glamping units
• Premium/view sites
• Pull-through vs. back-in sites
Each category has different margins and occupancy behavior.
Miscellaneous Revenue
These secondary sales help offset OPEX:
• Laundry
• Propane
• Convenience retail
• Firewood/ice
• Storage
• Premium WiFi
• Resort fees
• Event rentals
When we underwrite parks at North Star, we model miscellaneous revenue as a percentage of total revenue, then adjust up or down depending on amenity quality and guest type. This allows owners to forecast realistically rather than guessing.
3. Convert Your Required Revenue Into Annual, Monthly, and Nightly Targets
Every park should know the following three benchmarks:
This is what each site must contribute across a full year to sustainably cover both fixed and variable expenses, minus ancillary revenue.
Seasonality matters. Strong months must offset weak months. Your monthly target tells you whether your mix of nightly vs. monthly stays is aligned with financial reality.
This reveals the minimum nightly value each occupied site must generate.
If your actual ADR is below this number, you’re losing margin every night you’re open.
When you understand annual, monthly, and nightly requirements, you can price with precision instead of imitation.
4. Segment the Analysis by Site Type
Never assume that a blended revenue target applies equally across all inventory.
Run the numbers separately for:
• Pull-through sites
• Back-ins
• Premium/view locations
• Cabins
• Glamping units
• Long-term sites
Each type has different revenue potential and variable expense profiles. This is often where owners discover pricing opportunities they didn’t know they had.
5. Add the Missing Piece: Price Sensitivity Based on Occupancy Targets
This is where owners gain the most practical insight.
Pricing is not just about the number you charge—it’s about how that number interacts with occupancy.
Example: “If I lower my rate, how much occupancy do I need to gain to break even?”
Let’s say:
• You charge $600 per month
• Your occupancy is 50%
Your annual revenue per site at that rate is:
$600 × 12 × 0.50 = $3,600 per year
Now assume you consider lowering your monthly rate to $550 to attract more tenants.
Here’s the critical question:
What occupancy must you achieve at $550/month to match the original $3,600 in annual revenue?
Solve for occupancy:
$550 × 12 × Occ = $3,600
Occ = $3,600 ÷ $6,600
Occ ≈ 54.5%
So reducing your rate by $50/month requires an occupancy lift from 50% → 54.5% just to break even.
Now the more important question: Is that extra 4.5% occupancy achievable, profitable, or even desirable?
If increasing occupancy by 4.5% is unlikely—or if the additional guests increase variable costs significantly—then lowering the rate is a losing strategy.
Conversely, you can run the same analysis in reverse:
- If you increase your monthly rate to $650, how much occupancy can you afford to lose while still coming out ahead?
- What happens if nightly ADR rises but occupancy dips 3%?
- At what point does replacing monthlies with short-term stays maximize NOI?
This rate-vs.-occupancy modeling is what sophisticated operators do constantly.
The key insight:
You can “play the rate game” against yourself just as much as you do against your competitors—but unless you’re tracking these numbers, it’s impossible to know how pricing changes affect your bottom line.
When owners understand rate sensitivity, they stop guessing and start making strategic moves.
6. Why This Matters: You Can't Manage What You Don't Measure
Owners who actively monitor:
- Required revenue per site
- Fixed vs. variable cost behavior
- Rate sensitivity at different occupancy levels
- Miscellaneous revenue contribution
- Nightly, monthly, and annual revenue requirements
- Site-type profitability differences
…can make pricing adjustments confidently.
Owners who don’t monitor these metrics are forced to rely on competitor behavior—competitors who may be:
✅ underpricing
✅ overpricing
✅ mismanaging expenses
✅ sitting on outdated 2015 pricing assumptions
✅ ignoring variable cost impacts
✅ completely unaware of their break-even points
That is not the group you want setting your pricing strategy.
Owners: Run This Analysis This Week
You’ll gain clarity you may have never had before.
- Pull your trailing 12-month expenses.
- Separate them into fixed and variable buckets.
- Break revenue into site vs. ancillary.
- Calculate annual, monthly, and nightly revenue requirements.
5. Segment by site type.
6. Model different pricing and occupancy combinations (the rate sensitivity test).
7. Identify which pricing scenarios improve profit and which quietly erode it.
This exercise dramatically improves decision-making—whether you’re operating the park long-term, preparing to refinance, or considering a sale.
If You Want Help Understanding What Your Numbers Mean
At North Star Brokerage & Advisory, we regularly help owners:
• Analyze the true financial engine behind their park
• Model pricing impacts on NOI and valuation
• Benchmark performance against similar assets
• Identify where revenue is being left on the table
• Understand how buyers evaluate rate strategy and occupancy health
If you’d like us to walk you through this analysis—or run it for you—just reach out.
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