Dynamic pricing for tourist attractions, or prices that change according to when a ticket is booked, could help local attractions become far more profitable.
So said Massimiliano Freddi, vice-president of strategic development at Italy’s Leolandia theme park and one of the keynote speakers at the 5th annual Attractions Africa, a conference for travel and tourism professionals held in Gauteng this week.
Leolandia, in northern Italy, is currently rated on TripAdvisor as the number one theme park for children in Italy, at number seven in Europe, and at 23 in world. The attraction focuses on rides, shows and activities for children, and attracts about one million visitors a year. Through implementing a dynamic pricing strategy, the theme park grew in turnover by 300% from 2012 to 2017, and doubled its staff complement from 300 to 600 employees.
“In 2012, Leolandia had 439 000 guests, with only 8% of tickets bought online,” said Freddi. “We introduced dynamic pricing.”
This means that visitors pay different rates for the same experience. Visitors booking long in advance get the best prices; those prepared to go at quieter times will also pay less than those wanting to go at popular times, such as at the weekends in summer.
“The price you see on our website now will always be the best price,” he explained. Prices only become more expensive the closer you book to when you want to go, never cheaper.
“We reshaped distribution channels so we were the only ones selling our tickets,” he explained further. “We cut all promotions, which had accounted for 15% of sales. We trained all staff members accordingly. We implemented a call to action on all communication tools. The message was, ‘The sooner you buy, the less you pay.’”
Today, Freddi said, Leolandia’s tickets range in price from €13.50 to €33.50, versus costing €24 across the board in 2012.
The results on the business have since been remarkable, but at first it looked like commercial suicide. “Our attendance after two months dropped 31%,” he said. “We got terrible reviews on TripAdvisor. Our shareholders were unhappy. But we stuck to the plan.”
He said Leolandia’s long-term strategy is to consistently invest in quality – and this doesn’t mean offering a new feature each year. Instead, “We are people-centric and we are obsessed with quality.”
This is demonstrated in several ways. For example, the company focuses on sustainability, using green energy, and recycling stringently. It also ensures excellent quality in providing “memorable, excellent food that is Instagrammable. A way of making sure people talk about your attraction is quality of food, quality of displays, kindness of the people.”
He said that Leolandia had completely relooked at the way the business was run. “We used to think that guests only want special offers, that if competitors have a 3-for-2 special, we should as well. We thought that kids-go-free offers were right and that Italians didn’t go to parks on a cloudy day; that we’d already invested too much on ticketing, and that Italians didn’t buy online.”
“In UK, 80% of people bought online in 2015. In Italy, less than 40% of Italians bought online. We reshaped our website and did not give people an option to purchase tickets elsewhere. People thought we were crazy. Now 60% of our tickets are sold online (even though the average in Italy for attractions is only 10% to 20%).
“The results came – attendance improved 30%, and turnover by 39%. TripAdvisor reviews improved, shareholders were happy.”
Freddi added the following points about what Leolandia had learned from its dynamic pricing exercise:
- Guests are not stupid
- They don’t have time – it’s up to attractions to be empathetic about this. They don’t want to waste time looking for the best prices. The Leolandia website will always offer the best prices
- Being innovative is key
- In being innovative, you have to find courage and not surrender to fear
- E-commerce won’t save a product. If you focus on quality, people will understand that and will be more eager to pay for it
- E-commerce is part of the experience. Make it easy for your guests
- You have to be crystal clear in your messaging
Freddi added that dynamic pricing has helped to position Leolandia to be able to offer even more tailor-made experiences and upsell further options to visitors. It is also focusing on digital integration, or ensuring that its social networks, newsletters, digital retargeting and website are better integrated with one another. Leolandia is also going to test a Christmas season this year, and on providing transportation as an extra service, for example arranging shuttles from hotels to the theme park.
To sum up, he recommended that attractions operators focus first on providing “quality, quality, quality!”; that they focus on their key target market; and that they cut out on distractions and keep their offering simple (for example, Leolandia launched an app and then did away with it, because it felt families were spending too much time in the park looking at their screens rather than interacting with one another).
He said food, shows and theming are important, and warned delegates not to become obsessed with virtual reality or augmented reality. He encouraged the audience to practise empathy: “Put yourself in your guests’ shoes; understand what they will expect from you.”
Finally, he asked attractions operators to ask themselves a few key questions:
- Who is your attraction for? Be precise. Understand your niche and conquer it
- Who is it not for?
- What is the cost for the guest (including accommodation, transportation, merchandise, the cost of organising a trip, and time off work)?
- What is the value for the guest? (The best value is family memories, he argued)
- What is our goal? Make sure it is clear
- Why? What is the long term? What will drive me and the people working for me? If it’s not clear for us, it won’t be for our teams, nor for our guests
- Describe your attraction in six words: the three words that describe your attraction at its best, and the three that describe it at its worst. Then ask your top managers, leaders, staff, guests and non-guests to do the same exercise, and compare your answers. You will quickly notice misalignments you want to correct
- What would you do if you weren’t afraid?