CEO Questioned On Camping Industry's Online Future

FROM: Jeff Crider
SUBJ: Q & A with Ken Lahoda, President and CEO of Digital Rez International

Crider - One of the biggest innovations to hit the campground sector in recent years is the ability to process reservations online.

But while campgrounds and RV parks have been relatively slow to adopt this technology, companies that specialize in online reservations technology are forging ahead, forming strategic partnerships that will ultimately give park operators a variety of options from which to choose whenever they decide to make their campsites and rental cabins available online.

One such partnership involves Barbados, West Indies-based Digital Rez International Inc. and the Affinity Group Inc. (AGI) of Ventura, Calif., whose holdings include the Woodall’s and Trailer Life campground directories, the largest directories of public and private parks in the North American campground business.

The partnership, first announced last summer, will soon provide campgrounds and RV parks listed in both directories with the ability to offer online campground reservations to the roughly 3 million unique consumers who annually visit the Woodalls.com and TLDirectory.com websites. “The potential is huge,” said Ann Emerson, associate publisher of Woodall’s Publications Corp., “because of the kind of traffic that the Trailer Life and Woodall’s websites can bring to a park. Nobody else has that kind of traffic.”

Digital Rez is currently working to develop a website called RVTripSetter.com, which will process reservation requests made by consumers who visit the Woodalls.com and TLDirectory.com websites. Consumers who click the campground reservation tabs on either website will be automatically directed to the RVTripSetter.com website to process their reservation requests.

Campground operators, for their part, will be able to allocate however many campsites or rental units they want to make available online by using the same RVTripSetter.com website.

The new online reservation system is expected to come online in early 2006. And campground operators will have a chance to get a sneak preview of the new system Nov. 30 to Dec. 3 during the InSites 2005 Convention & Expo in Austin, Texas, which is sponsored by the National Association of RV Parks and Campgrounds (ARVC).

Emerson said the cost of the online reservations service has not yet been determined, but would likely be a percentage of the nightly reservation fee. “We really think that this will be a new business opportunity for the parks,” she said.

The Digital Rez-AGI partnership, of course, isn’t the first strategic alliance in the campground reservation business. And campground operators have a growing range of options when it comes to deciding which vendors they’ll use to market their inventory online, if they do so at all.

Many private park operators, in fact, still wonder where online reservations technology is headed and what it means for them, not only from a marketing standpoint, but from the standpoint of managing their cash flow on a daily, weekly or monthly basis. Moreover, what risks do campground and RV park operators face when they place their inventory online and how does the online reservations system being developed by Digital Rez and AGI differ from other online reservations systems that are already currently available to campground owners?

In an effort to find answers to these and other questions, Woodall’s Campground Management recently interviewed Ken Lahoda, who founded Digital Rez International with his son, Chris, 12 years ago and helped build it into a leading provider of central reservation and property management software and IT services for campgrounds and RV parks and other tourism businesses in North America, England, Australia and New Zealand. Digital Rez’s clients include campgrounds and RV parks affiliated with Coast to Coast, Thousand Trails as well as the Camping and Caravanning Club in the UK. Following are highlights of the interview:

WCM - A number of strategic alliances have been formed in an effort to provide campgrounds with the ability to market their inventory online. Campground operators, on the other hand, have been slow to embrace online reservations technology. What do you see happening in the online reservations marketplace and how should private park operators respond to these emerging opportunities?
Lahoda - What you’re looking at now is the industry is moving forward to centralize these (reservation) processes. There are a lot of organizations thinking that they can provide (reservation) services by using the Internet solely, by using the Internet alone. But the critical issue there is that the campground operator ultimately loses control of their own data and we feel that it is very essential that the individual campground maintain their independence and their autonomy. They should own their own data locally because it is their own bread and butter. It is their client base. It is their information. And in many ways, you still can’t depend on the Internet to deliver service on an extended basis.

WCM - Do you mean that some online reservation systems are being put in place where a private campground owner could lose control of his inventory?
Lahoda - Well, there’s a possibility. It’s not so much control over his own inventory. But he puts a great deal of risk in the fact that his data is somewhere else other than a PC or a server of his own.

WCM - What is the risk with that?
Lahoda - Well, the Internet goes down, your business stops. Somebody with a backhoe digs through a line, your business stops. Somebody runs into financial difficulty, your business is in jeopardy. It’s the heart of your business. You’re also depending on (Internet security systems) on a regional basis. And identity theft is a major issue these days. So you’re very dependent on the level of skill and the abilities of the other operations that you’re depending on to maintain that security.

WCM - So, what’s the solution?
Lahoda - We believe the campground should continue to control their information. We see the inevitability of (online reservation) centralization. And so what we believe is the next phase here is allowing the campground to maintain control and yet be able to share their information with central (online reservation) facilities, thereby optimizing or increasing their revenues.

WCM - It sounds like there is a fundamental philosophical difference between your company and others in the online reservations business. Others seem to recommend that private parks make all of their inventory available online, whereas it sounds like Digital Rez recommends taking a “go slow” approach.
Lahoda - The only place I would make all of my inventory available would be on my own website. And I would allocate to others. This gives the campground operator control and the ability to see which marketing methods work best for that business.

WCM - So by slowly allocating their inventory to online reservation service providers, campground operators would essentially have the ability to test the waters and get a feel for online marketing before committing too much of their inventory?
Lahoda - Exactly. We feel that there is a lot to be watched over here until the industry really sees the direction it’s going.

WCM - What exactly does Digital Rez offer campground and RV park operators in terms of reservations technology?
Lahoda - The packages that we deliver are basically a solution all the way out to call centers and what not, but the individual campground still wants us to manage the front desk processes very well, and we’ve been doing that consistently. Up until now, we’ve been serving over 2,000 campgrounds in North America with a (reservation management) product called ROS2000. Were about to upgrade that in this coming season to our brand new product called RezExpert, which will have the ability to tie seamlessly with these central (reservation) operations and yet still allow the campground manager to maintain their own data locally and thereby ensure his client security and his business’s foundation.

WCM - Then how should a campground go about selecting an online partner to market its campsites or rental units to consumers?
Lahoda - What we’re saying is it’s better to consolidate around a much larger user group.

WCM - Such as the RVTripsetter website now being developed by Digital Rez for campgrounds listed in the Woodall’s and Trailer Life directories?
Lahoda - That’s the whole secret to this. It’s wonderful having an online presence. But if you don’t have a whole heck of a lot of traffic, you don’t receive the benefit. The big hype in the industry right now is everybody can go online. But if you don’t have significant volumes of traffic, you’re not going to be able to reap the benefits of that to a significant degree.

WCM - So what you’re saying is that it isn’t enough to be able to process reservations online. You have to have the thousands of people regularly coming to a website to check out your inventory.
Lahoda - Exactly, and have the marketing strategy to drive people to that product. If you look at the dot.com revolution, what you’ll see is basically people were spending billions of dollars on advertising to draw the eyeballs in. And a lot of it was hype. Almost all of it was hype. But the situation created the user base that stuck around even after the fad wore out and all of the companies went broke because they ran out of money. Essentially, they didn’t have substance. Essentially, there was no substance plus traffic. Then you turn around and start looking at eBay, Amazon, Expedia – operations that had invested heavily in marketing – but all of the sudden people started realizing the opportunities within the environment and started contributing more inventory. Both elements have to be in place: Inventory and traffic. And we think the big thing right now is there are people who are hyping the Internet, but until the big marketing players come into the scene and put their information out there so that the general public can digest it, (online reservation) traffic is going to be light to the individual campground.

WCM - Does this explain why campground operators have been slow to adopt online reservations technology?
Lahoda - The camping industry is extremely independent. These people are free thinkers. And they’ve been told a number of stories along the way. But the situation is that the strategies for online bookings have not delivered a lot of substance in terms of real reservations. And where we find our strength is that we’ve been preparing the system for the past five years now for this next major thrust. There were several essential elements that had to come into place for all of the security systems that are out there to make sure that your information is not stolen. You also have to have true substance.

WCM - So what’s needed to make campground operators more successful with online reservations?
Lahoda - What has to come together is a much greater level of traffic.

WCM - So what should campground and RV park operators do right now?
Lahoda - We feel the secret to this is establishing a very strong presence at the front desk so that you’re in control of this. And then, in turn, exercising the patience waiting for the major players in the industry to step up and do what they’re best at.

WCM - So is it your thinking that campground operators would be best off developing an online reservation system through Woodall’s and Trailer Life, using the new RVTripSetting.com website?

Lahoda - The system we're putting together is independent of us. The situation we see is that should the owner opt to use our technology at the front desk, we can make the connection more seamless. We’ve left the doors open for all of the property management providers to join in on this system.


WCM - Do you foresee other companies joining you in this endeavor?
Lahoda - It’s up to the developers on the other side. Everybody’s trying to do their own online process. You can get people to hook up to the Internet. But can they hook up their inventory to a significant volume of traffic?

WCM - How many online service providers should a campground or RV park operator use?
Lahoda - In the hotel industry, there are usually no more than three to five online (reservation service) connections because it represents an inventory management issue. You can’t manage what you’ve said if you allocate to any more than three or four operations. The problem is people think they have to choose one where they can choose two or three. What they need is better management at the front desk because if they’re not taking care of their own inventory, then it all of the sudden means they’re locked into one process, which I think is a vulnerability.

WCM - Let’s talk a little about money. Right now, when consumers book their campground reservations, in many cases, the consumer is not really processing the credit card through the campground. It’s being processed by the reservation service provider. This means that the campground doesn’t get paid right away. How long does it take campground operators to get paid when they market their inventory online?
Lahoda - If they don’t have a mechanism to get paid quickly, they could wait an undetermined amount of time. If they were using Coast to Coast, they get paid within a week of checkout. But that is simply Coast to Coast policy. They’re just waiting for the client to check out. Because if they extend their stay, they have to charge more. Now that doesn’t mean that has to be the policy of the entire campground sector. If those same resorts were dealing with a central entity like Trailer Life or Woodall’s or any other company, they would have to follow the policy set by that central service provider.

WCM - What’s the future hold for online reservations?
Lahoda - Online bookings are not the only thing that everybody is looking to solve. They’re also looking for property management, the whole issue. The situation is that this (movement toward online campground reservations) is so brand new. Everybody in the industry is still hyping this. There’s nobody making money on online bookings. But we think the situation is going to quickly change when larger marketing entities become involved because they will bring the necessary volumes of traffic to the inventory so that it starts to justify some attention by the campground owner.