The View From The Top
By Paul Cummings
When considering the financial aspects of an aerial park or challenge course on a property, it is imperative to be very clear on which type of attraction you will be operating. While the two may appear to be similar, the way in which they operate and generate revenue is different, and may not always be clear to prospective customers. Challenge courses operate primarily on the basis of group sales, and are usually tied to a specific outcome. Aerial adventure parks operate on a pay-to-play basis, meaning that individuals visit the park, seeking a recreational activity.
What are the key differences?
· Are representative of the “experiential education” model, wherein individuals learn while actively engaged. The focus is primarily on the educational experience.
· Typically contain both low elements (6 inches to 2 feet above the ground) and high elements (anywhere from 15 feet to 60+ feet above the ground, but typically 25 to 35 feet, requiring a belay system). Low elements involve a group of people working together to solve a problem, while high elements are completed individually, or occasionally in pairs or trios.
· May involve static belays, which individuals clip and unclip their own equipment at height, or dynamic belays, which an individual or group on the ground is responsible for managing the rope that prevents the climber from falling.
· Are outcome-based. Groups often visit challenge courses to work on leadership, trust, and communication, or to give a new team the opportunity to know one another.
· Are traditionally sold as a half- or full-day experience.
· Will likely employ staff, or facilitators, who are skilled in debriefing an experience (i.e., leading a group discussion at the conclusion of an activity).
· Are almost always sold as a group experience, rather than an individual experience.
· Are designed to provide a recreational experience, where individuals enjoy a novel, human-powered activity at a height that may involve some physical challenges. The focus is almost solely on climbing.
· Consist primarily of high elements (anywhere from 10 feet to 60+ feet above the ground). Low elements, if they are installed, are primarily designed as a recreational activity for children too young to be responsible for their own equipment at height.
· Will almost exclusively involve static belays, wherein participants clip and unclip their own tethers, while at height. Elements may also involve auto belay systems, QuickJump systems, or zip lines. The static belay process allows for a self-guided tour.
· Are recreation-based. Guests pay for an experience that will be primarily focused on climbing, with an emphasis on mastery of the safety equipment they must use.
· Typically last 2 to 3 hours, based on athletic ability and fatigue.
· Will employ staff, known as course monitors, who are responsible for educating participants on use of the equipment, and assisting participants if they struggle.
· Are often sold as an individual experience and target outdoor enthusiasts, families, and tourists in any given area. Group sales are not unheard of, but are a secondary market for most aerial parks.
What are the staffing models for aerial parks and challenge courses?
Much like the target markets, the staffing considerations vary between the two types of attractions. In both instances, however, it is best to hire staff members who have soft (service) skills, which should be prioritized over hard (technical) skills, as the latter skills are easier to learn.
Both types of attractions require comprehensive technical training, but challenge courses require staff to be skilled at presenting and debriefing activities, which is a learned skill. As such, it is best to hire staff at the senior level with some experience in the field. Aerial parks require less hands-on time with groups, but it is important to concentrate hiring efforts on individuals with a high degree of sensitivity and interpersonal skills, as they may be responsible for aiding a client who may become panicked, which may occur on occasion with any activity that takes place at height.
Compensation varies with both models. Aerial parks typically pay staff $10 to $15 per hour, based on experience. Challenge-course staff pay varies based on experience, with rates starting as low as minimum wage on university-based challenge courses, and ranging up to $25 per hour in areas that have a high demand for experienced facilitators. Median pay typically ranges from $10 to $15 per hour, based on experience.
Both models generally have around 40 percent of their operating budget allocated to staffing, with 30 percent being the minimum and 50 percent the maximum. Should your percentage exceed 50 percent, improvements may need to be made to the staffing model, and may be related to staff pay or overall volume of staff.
What are the primary sources of revenue?
In a challenge-course experience, revenue comes primarily from group sales, which may be charged based on a per-person rate, a per-facilitator rate, or a flat rate (the number of participants). Per-person rates are often more lucrative than a per-facilitator rate, but are dependent on all of the projected participants showing up. Flat rates are often the most lucrative because they can be based on a maximum number of participants and account for attrition in the number of participants attending.
Aerial parks charge a per-person rate, as guests typically attend as individuals, or in small groups. Reservations may or may not be required, depending on the market and the size and scope of the park. For a 2- to3-hour ticket, rates range from $40 to 60 per person, based on the size of the park and the region.
An aerial-adventure park will typically see a greater throughput, at a lower rate per person, on a typical operating day. However, challenge courses may run 7 days a week, as the model appeals to school, professional, and community groups. While there may be fewer people in attendance on a given day, the outcome-based model and longer days allow for a higher average per-person rate. Aerial parks typically see limited weekday traffic, with the exception of tourism-dense markets.
It is not uncommon for aerial parks to offer group sales, particularly when targeting high-revenue corporate groups. Likewise, challenge courses may occasionally open up to the public for pay-to-play days. However, neither of these offerings is within the specialty of the designated attraction. As such, it is important for transparency in advertising for both attractions, in order to manage client expectations.
Assuming a break-even operation:
- Maintenance costs should be 10 to 15 percent of the overall revenue.
- Administration and personnel costs should account for 40 to 50 percent of revenue.
- Marketing and advertising should receive 10 percent of total revenue.
- Furniture and amenities should be allocated 15 percent of the revenue
- Working capital should account for 5 percent of revenue.
While these numbers can serve as a general guideline, the ratios may vary from one park to another. It is most important to track ratios on an ongoing basis in order to note any unexpected variables in the financials.
What are the maintenance numbers one can expect as a facility depreciates?
Maintenance numbers are less correlated to the type of attraction (challenge course or aerial park) and have more to do with the type of construction (trees vs. poles) and annual throughput.
Years 1-5: During the first 5 years of operation, expect to see replacements of harnesses, helmets, safety lanyards, and any parts of the course that are showing rust. In addition to equipment replacements, if the course uses utility poles, they need to be treated annually with a wood preservative. These replacements and maintenance expenditures generally account for 5 to 10 percent of yearly operating costs. It is important to note that manufacturers’ recommendations should be followed in the replacement of all safety gear.
Years 6-10: At this point, some of the individual elements of the course may need to be replaced. Ropes, pine boards, carabiners, and belay cables may show enough wear to mandate a replacement. Assuming that an independent party is inspecting the course annually, you should be aware of the items that are wearing faster than normal. Belay cables, in particular, need to be inspected carefully. Twenty-five to 30 percent of the initial build cost for the project should be spent during this time.
Years 11-15: Depending on the climate in which the course is located, it may be time to plan on replacing the primary poles. Rot, twisting, and sun damage factor into whether or not a pole needs to be replaced. At this point, most of the key pieces of hardware have been, or need to be, replaced.
On average, a challenge course or aerial park will last 15 years before the elements need to be fully replaced. By this point, the course or park should have realized a sizable return on the original investment.
Strategic Planning/Capital Improvements
How does one plan for changing demographics and trends, as well as expansions in a facility?
Planning for change is never an easy process. As technology evolves and the population becomes more sedentary, it becomes more and more difficult to encourage people to go outside to participate in a physical, recreational activity. As a trend, there are more and more pay-to-play aerial parks open in state and municipal park systems, designed to appeal to visitors who wish an adventurous experience with a perceived risk. If you have a traditional challenge course, and are considering adapting it to an aerial park, be sure to contact your builder to see what physical changes will be necessary. If the course is at the end of its estimated life, it may be best to consider removing it and installing a new aerial park.
If you have a newer challenge course, or if you have an older course that is still generating significant revenue, you may want to consider adding an aerial park. Each type (course or park) will need a separate marketing budget, as each will appeal to different types of visitors.
Paul Cummings is the Chief Client Advocate of Strategic Adventures, a business development firm for the adventure industry and a 17-year veteran in the industry. Strategic Adventures works with challenge courses, aerial parks, zip-line tours, and climbing gyms in order to help make them more profitable and to serve more clients. Reach him at firstname.lastname@example.org.