By Tino Fiumara
How much revenue do birthday parties and groups really bring in? This is the million dollar question that no one really wants to answer. So what is the value to your model in accommodating party business? Honestly, for 99% of the gyms, it is probably invaluable. Party business may not be sexy, but nothing else will get more potential customers in through your doors. The customers have invited themselves and are paying you for it. Now you just have to do what you do best: create an incredible experience that makes people want to come back.
The Brass Tacks
Group party business, including birthday parties, is an undeniable source of revenue without which a majority of gyms could not survive. The level of importance of party business to a model is roughly correlated to the gym’s location. Suburban or rural gyms tend to rely more on revenue from party business than urban gyms; but that is not a rule. Urban gyms see a lot of group business, yet fewer birthday parties than their less metropolitan counterparts.
Many gyms are unwilling to comment on the percentage of revenue they attribute to group party and birthday party business respectively. However, an informal survey of gyms show a 15-20% of revenue coming from the overall group party business and 5-7% coming explicitly from birthday party business.
When there is a concentrated amount of gyms in an area, there is a natural differentiation between the competitors as market forces are at work. This means that as most gyms choose not to close their doors to party revenue, there are a couple that do. However, if anything, gyms have responded by offering fewer party slots or by out-pricing themselves from the bulk of the business, thus increasing the profitability of each party, while obliging their membership population.
Size Doesn’t Matter
It is not the amount of revenue that you get from party business that really matters, it’s where it leads. Unfortunately, most gyms don’t explicitly track how many day passes or memberships originated from someone who was first introduced to the gym through a group party. There are fields in Rock Gym Pro and other POS software, but many gyms aren’t taking the time to build that data set.
The data on party converts may not be tracked, but most gyms capitalize on the positive energy that comes from having a party. When a parent tells Paul Short, the owner of Inspire Rock in Spring, TX, that they had no idea their child would love climbing as much as they did, he goes right into his pitch for the types of programming offered by his gym. Short looks at participants as being “members of the future”.
Luke Bertelsen, the manager of Rocks and Ropes in Tucson, AZ, confidently states that “parties are a great initial contact point for programming” and he sees it as “perfect in-house advertising”. This is the view point that many managers take. Parties are basically marketing that make you profit from dollar one.
All Dressed Up and Nowhere to Go
Dan Hague of Rise Up, in Lynchburg, VA aptly points that, “parties are good for gyms when they are not operating at capacity.” This applies to most gyms, as it is a rare to always operate at capacity. It doesn’t take much to know what nights of the week or what weekends of the year show the greatest usage by members and day-pass users. This is a simple function in any gym management software. The key is to understand this ebb and flow and routinely schedule parties when the facility is under utilized.
Gyms do not operate at capacity at all hours of operation. It doesn’t take much to know what nights of the week or what weekends of the year show the greatest usage by members and day-pass users. This is a simple function in any gym management software. The key is to understand this ebb and flow and routinely schedule parties when the facility is under utilized.
For the gyms that have a higher percentage of clientele that climb outside, it is easiest to schedule parties at times that don’t conflict with the Tuesday and Thursday evening crowds. For gyms with a lower percentage of outdoor climbers, birthday parties are a weekend based income stream.
In regards to opportunity cost, parties compare well to hosting competitions. For example, profitability is marginal unless the process is truly dialed in for efficiency. They both build stoke, build community, and are a great form of advertising. Actually, parties may harbor more potential for bringing in new members than competitions, while tying up significantly less overhead.
The Infamous Birthday Party
The era of playing pin the tail on the donkey at home for Johnny’s birthday seem to be over. Now people want trampoline parks, laser tag, life-sized video games, and urban jungles. This increased competition has put pressure on climbing gyms, but it has also delineated a playing field for the pricing structures that gyms should reference. Though every birthday package is different, a gym should make sure it is not missing out on the opportunity for optimized revenue.
Most party options offer two hour time slots, a dedicated room for food, and the featured activity. The main differences are the price per participant, the amount of participants allowed, and the amount of staff needed to run the activity. Staffing for parties ranges from 3 to 6 climbers per staff member, a number that greatly impacts the bottom line on party profitability. If your competitors have a cap of 8 participants, can you reprice to win business and be more profitable than you were yesterday?
Many gyms have opted to use Auto-belays for parties as fewer staff are required to manage a group. Though auto-belays are a debated topic in gym circles, they have slowly become a standard in gyms for their usefulness in party management as well as serving clients that are without belay partners. In the long run, this will greatly economize parties. This is easily witnessed at FunTopia’s and Clip-n-Climb’s where few staffers manage large groups by clipping one client in and immediately facilitating another client.
The model that is increasingly popular in the birthday party climbing world is the one with a dedicated party space denoted by shorter walls, auto-belays and integrated play area climbing structures, like mountains and castles. It’s a far stretch from the gyms some of us grew up in, but they are actually really cool and innovative. This is the model that doesn’t just enjoy its party business, but intends to grow it.
The Road to Tomorrow
It’s commonly mentioned that a large percentage of indoor climbers are not regular outdoor climbers. This population is the engine of growth in the indoor climbing industry. In this same vein, not everyone googled their local climbing gym after reading about the historic Dawn Wall project. Many people first experience the joy of social fitness through a school group, girl scout troop, team activity or birthday party.
In the indoor climbing industry it is one of our roles to provide great experiences to new comers and regulars alike. The more new comers a gym can convert, the more it is winning. Not only at the game of business but also at spreading the love of climbing. We want there to be more gyms, more opportunities, and more investment to fund industry growth.
Party business is a dually profitable form of advertising. Revenue is taken in during the party as your gym advertises itself to dozens of potential future members every week. What gym can say this about any other form of advertising? Really, it’s like having your birthday cake and eating it too.
Climbing Business Journal is an independent news outlet dedicated to covering the indoor climbing industry. Here you will find the latest coverage of climbing industry news, gym developments, industry best practices, risk management, climbing competitions, youth coaching and routesetting. Have an article idea? CBJ loves to hear from readers like you!
