The benefits of Dynamic Pricing
There has been a lot of coverage about dynamic pricing in visitor attractions all over the world, seemingly the majority of it negative. This piece in the UK Times Newspaper blames the high prices within theme parks solely on dynamic pricing.
In their summary, they say “The introduction of surge-pricing at attractions like Alton Towers will make school holiday days out unaffordable for families”
But we disagree.
For us, dynamic pricing allows careful shoppers the chance to buy tickets at the lowest available price, if they are prepared to book ahead a little and book away from the super high popularity peak times.
The easiest way to understand how these systems work is to dig under the skin and look at the settings available for an operator. They generally have loads of settings for max/min price variability but also three main settings as follows:
1. Maximise profit
This is the setting that it seems the Times are accusing ALL operators of deploying. It aims to use surge pricing when there are early signs of higher demand for a specific date or session and drive the price up for that, whilst not dropping any of the prices for the less popular slots around it.
2. Maximise occupancy
This is the setting to try and max out the number of people waking through your doors, almost whatever the cost. It isn’t a setting that would be used often, as logic says any AI based system would go for deep discounting to achieve its aim.
We have found that maybe counter intuitively, when people arrive in the park having paid a very low price via say Wowcher or Groupon, they always have a worse time. They are also more likely to complain, leave bad reviews and spend very little on secondaries such as F&B and retail.
So, no one uses this setting.
3. Level out occupancy within a maximum occupancy limit
This is the Goldilocks setting for most parks. yes, it pushes the price up when demand is high, but at the same time, it discounts the price when demand is low.
In reality, this generally means that off-peak prices will be lower than before and peak prices a little higher. Customers will get better prices for booking early as they then take the risk of the weather being against them on the day and still being committed to visit. The ethical operators out there will NOT allow the top-end pricing to run away with itself.
The aim is to make the quieter, off-peak days more busy and the always popular (and easy to sell out) peak days, a little quieter than they would be otherwise.
When you come to book, if you can see that tomorrow or another day later in the month maybe one price and two days ahead is looking significantly cheaper, some will definitely make the switch and get the exact same experience at a much lower price.
In some research we completed a few years ago for a large zoo in the UK, we found that the reviews improved across the board by not allowing the absolute maximum number of visitors over a bank holiday weekend.
It’s better for the visitors to limit all three days to say 3,500 per day, rather than the max possible of 6,000 where no one has a great day, the animals and food outlets are all overwhelmed and run away and hide and even the queues for play areas and ice creams are too big.
What would have happened before this man-made limit was that you would have had one day when the weather wasn’t great, so you would see a 1,000 day, one where it was great and delivers a 6,000 day, and one where it maybe clashes with football or other sporting events that gives you a 3,000 day. With the limit in place, the numbers and the gate receipts all stay the same, but everyone has a better visit and you haven’t blocked every access road within a 20-mile radius.
And the MASSIVE secondary bonus on this is that your secondary spend will double as whilst you’re busy, you’re not too busy and people can buy food, coffee and ice creams without long queues.
Summary
Dynamic pricing is not a license to gouge your customers on every peak weekend and holiday.
But handled ethically, it is an incredibly good way to back fill your quiet days and find a price that everyone is happy to pay and ensure your busy days don’t get too busy. It actually makes attractions more accessible for many.
We’re big fans of it and are absolutely sure it’s here to stay.
Do you need a Rainy Day Guarantee?
If you own or operate an outdoor attraction then we’d say yes, you probably do.
Firstly, What is a Rainy Day Guarantee?
This is an offer made by some of Merlin’s UK Attractions such as Thorpe Park and Chessington as well as some other UK attractions such as Stockeld Park and Drayton Manor, to offer a free return visit if there is an agreed amount of rain during their visit.
There is some variation in the terms and conditions between offers, so we have tried to bring together the best of all of them to create an offer that combines the best and fairest of them all.
Most attractions offer the guarantee at no additional cost, but Drayton Manor charge a premium for it of £2 at the point of ticket purchase. In the US, Sensible Weather are prominent in the market and their offer is an insurance based guarantee that is also chargeable at the point of purchase of tickets. Our advice here would be that if you are a low entry price attraction (circa £10 per guest), then offering this at 50p per ticket or a max of £2 per booking will bring in good additional revenue and feel like fair value to guests.
What does a Rainy Day Guarantee do for your business?
If you operate an outdoor attraction in the UK, you will see a decline in your visitor numbers when rain is forecast. In one major study we were involved in, for every 5mm rain forecast on BBC Weather 48 hours before date of visit, 5% of visitor numbers were lost. This was almost perfectly linear, so that a 20mm rain forecast 48 hours out meant almost no visitors two days later – pretty much whatever the weather on the day itself.
So, what are the benefits?
Encourages attendance even when it’s wet
By offering a Rainy Day Guarantee you can entice visitors to visit, whatever the weather, by providing the incentive of a free return visit. This removes the risk for them in the day being a wash-out and their visit feeling like poor value. The truly hardy may even visit in full knowledge that it’s going to rain, so they can claim their free return.
Builds customer loyalty
Offering a Rainy Day Guarantee demonstrates a commitment to customer satisfaction and enhances the park’s reputation for customer service – as long as it is administered fairly. Guests who benefit from the guarantee are more likely to return in the future and recommend the park to others.
Creates differentiation
In a competitive market, where guests have a choice of other attractions – or even a sofa day at home, offering a Rainy Day Guarantee can help you stand out from competitors. It provides an additional incentive for potential visitors to choose your venue over others, especially during periods when weather uncertainty WILL deter attendance.
A wise man (Jeff Bezos) once said ‘Advertising is the price you pay for being unremarkable’. Creating a brand is about creating differentiation that people will pay a premium for. Anything that helps create desirable differentiation is good for long term growth and business health.
Maximises overall revenue
Allowing people to come back for a free return visit will have a significant impact on your secondary spend – particularly in terms of your F&B offering. If your F&B is strong, then you will see a significant uplift in income. On top of this, it will encourage pre-booking which makes staffing easier and increase your visitor numbers, even on the wet days, or when wet days are forecast.
What are the general terms of a Rainy Day Guarantee?
There’s a lot of common terms between all of those who currently offer a Rainy Day Guarantee and these are the main ones, with a few variables highlighted.
How it’s triggered
The most common trigger is that if there is one hour of persistent rain on the day of the visit between 10.00-16.00 – This would by our suggested route for most attractions.
Some Merlin Parks say this has to be over one hour of CONTINUOUS rain and in 2023 they were forced by Advertising Standards to change their advertising as their description of the offer on advertising was ruled to be misleading.
An alternative is that a return is triggered if there is 4mm of rain between 10.00-16.00 on the day of the visit. Whilst this can be measured, we believe it’s a more tricky one to police and open to people not agreeing with your measurement.
Booking
The rainy day guarantee is generally only valid if the ticket was booked in advance, online.
What is offered
The most common offer is for a free like for like return visit. Ie an adult ticket for adult ticket, child/child in a similar operating period. Ie low season for low season and the return is NOT valid for use at the premium events such as Christmas.
This also applies to a weekday visit triggering a weekend return. A wet weekday visit cannot be used on a weekend return.
How to claim
There are two obvious ways to manage this.
The first and most simple is that guests can come to the ticket office and get their free return visit ticket. This is fine for smaller attractions on quieter days, but would be a real headache with larger numbers.
Guests would need to visit the ticket office when they leave and are issued a free return visit with the number of tickets included. The simple security measure is that the ticket must be signed by the customer. When they come to redeem the return ticket, they must sign it in front of you again, to check the signatures match.
No-one allows guests to claim a return ticket once they have left the attraction, or after the date of their visit.
What is more appropriate for bigger parks is sending an email to all of the people who booked in advance and paid for tickets online and sending them their free return ticket.
Even for smaller parks, this would be easier to manage on busier days, so may well be the best option for most.
General conditions
The return ticket is not endless. If it rains on their return visit, then another will not be issued from the day of the return visit.
It’s a like for like ticket and is not transferrable.
It can’t be used for the premium events (eg Christmas).
Guests generally don’t need to rebook for their return, just turn up and show the return pass at the gate. If this is emailed, it would need their name on it and they would need to show ID when they redeem it to prove it hasn’t been transferred.
There needs to be a designated person on site who decides if there is the right amount of rain to qualify, in which case, you could consider putting up a Rainy Day Return sign at the exit.
No cash alternative is available, return tickets cannot be sold or transferred to others.
Return tickets must be used within 30 days, or one calendar month of original visit.
Summary
For us, if you’re an attraction and not offering a Rainy Day Guarantee, you should seriously consider it. Overall, it enhances the guest experience, boost attendance during off-peak and wet days, and ultimately, assuming you have a good secondary spend level, contributes to the park’s profitability and long-term success.