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In 2000, Holiday World & Splashin’ Safari in Santa Claus, Indiana, made a big leap of faith. It started a programme that it knew we could never end without really upsetting its guests. But was giving away free unlimited soft drinks too much for Holiday World to swallow? Here the park’s president and general manager Will Koch explains why it was one of the best decisions he ever made
Many in the industry thought we were foolish for doing it. Now, seven seasons later, we’re still around, still growing and earning a great deal of respect from our peers. Looking back, was the move to implement the Free Unlimited Soft Drinks programme at Holiday World & Splashin’ Safari a wise business decision or a foolish attempt at promotion that was ultimately a disaster?
Let’s review the evidence. In 1999, the last year we charged for soft drinks, our annual attendance was 564,373. In 2006, we reached the one million mark for the first time in our history, with 1,004,788 guests. That represents a 78 per cent increase attendance in seven years. In that period, each year set a new record attendance with the exception of 2005.
Okay, you say, attendance isn’t everything. You don’t spend attendance. But our total per-capita spending has risen over the period by 41 per cent. Our EBITDA is up 304 per cent, and our net income is up 569 per cent. Each of these statistics represents a solid trend that has been occurring throughout the period.
So, from the 30,000ft, it seems like free unlimited soft drinks was a good deal for Holiday World & Splashin’ Safari. What about the lost food revenues? How do you get that back? We’ve made no secret of the fact that we added an estimate of our in-park drink per-cap on to our gate admission when we made the transition.
In 2000, we added a big new wooden rollercoaster (The Legend) and began Free Unlimited Soft Drinks. We raised our gate by $4.00. We thought of this as $1.00 for the new ride, and $3.00 for soft drinks (allowing that some tickets are comps, season passes, etc.). Did we get complaints about the increase in gate prices? No. Did our guests thank us for giving away soft drinks? Boy, did they ever. They still do.
What about food per-caps? Surely, those have gone down? Here’s the most amazing piece of information I have about our change to free unlimited soft drinks. Our food per-cap now exceeds what it was in 1999 when we last sold soft drinks. The 2006 per-cap is 20 per cent higher than our per-cap in 1999. In fact, it only took us until 2003 to recover the loss in food per-caps within the food service department (that is, not allocating any gate per-cap to foods).
How about waste? Surely, there must be enormous waste of free drinks? There is, in fact, more waste than there was when we charged for soft drink, but you must keep in mind that the cost of the product is quite low. The cost of the wasted product in comparison to the revenue side benefits is very small.
However, I must admit that the amount of liquid in our trash stream has been an issue, and we’ve had to make more collections in the afternoon to avoid super-heavy bags the next morning. We’ve also had to provide drains under our trash compactors to get the liquid from the trash out of our trash containers. We reduced waste by using 12-ounce cups at our Pepsi Oases out in the park. In our food service locations though we use 16-ounce cups in order to provide a more satisfactory drink to accompany a meal.
But how can it be that food sales have gone up? I think it is a result of a number of strategies that we’ve employed. We look at food pricing as a strategic decision. We intentionally keep our prices lower than most of our competitors. We believe that the irritation we cause guests does not make up for the added revenue we might receive if we charged higher prices for our food.
In fact, we try to stay within 20 per cent of the pricing at fast food chains. Thinking about the cost of a meal at Holiday World in comparison with a meal at a fast food location, our total cost may well be lower than it would be outside the park because the food prices are reasonable, and the drinks are free.
This has had an unanticipated consequence. It has increased our guests’ length of stay. Because they can stay more hydrated and comfortable throughout our hot, humid summer days, and because they don’t feel cheated when they buy a meal from our food services, our guests stay in our park longer than they did before. When guests stay in the park longer, they spend more money on food!
Of course, the most important impact that the free soft drinks have had on the park is in the word-of-mouth advertising that it generates for us. It is such a “wow” that when they leave our guests talk about the programme, and about the park in general.
Free Unlimited Soft Drinks is a great “symbol” for all of the many ways that we’ve created value for our guests in our parks, including our long list of “freebies” (free parking, free admission to our waterpark, free sunscreen, free use of inner-tubes, free loading platform lockers at the coasters), and our low food pricing as well. All of these freebies appeal very much to our target market: Families.
In addition, our PR department found the number of “petty complaints” dropped off the charts during the 2000 season. Sure, we still receive some negative feedback, both valid and ridiculous; but the cranky minor complaints have all but disappeared. We believe this is because families just feel better physically when they leave the park since they’ve been properly hydrated all day. Compounded with the goodwill the free soft drinks create, we’ve found that any minor bumps guests experience during their visit don’t usually get blown out of proportion.
Those “petty complaints” have been replaced by an outpouring of appreciation via email, letters, phone calls and in-park feedback. Just take a look at our “What Our Guests Are Saying” feedback blog (http://holidayworld.com/feedback/feedback.html) and you’ll see how often we are thanked for the free soft drinks.
Finally, I must add that there are some costs over and above the obvious ones. We built four new buildings when we started the programme to house drinks fountains and ice makers. And, now we have an entire crew whose sole purpose is to operate the Pepsi Oases.
Of course, this is offset by a labour savings and improvement of speed of service in some of our food service locations, where we’ve been able to remove soft drinks from inside the building. In these locations, we provide free Pepsi tower access to guests in the seating area for the restaurant, and so eliminate handling drinks inside the building entirely. This speeds up service, and saves labour inside the food-service building. It also effectively increases the capacity of each building.
Looking back, have I ever regretted the decision to convert to Free Unlimited Soft Drinks? I have not. I regard it as one of the best business decisions that our company ever made. It symbolises a number of other value messages about our park, and gives our target market something extra to talk about after their visit. This word-of-mouth advertising is more effective than TV, radio and outdoor combined. It has been a big contributor to our attendance growth. Implemented well, it could work in other parks as well as it has in ours.
Will Koch is president and general manager of Holiday World in Santa Claus, Indiana. During his 20 innovative years at the helm, he has created the the adjoining Splashin' Safari waterpark, three of the world’s top wooden coasters, and the Free Unlimited Soft Drinks programme. He serves on IAAPA’s board of directors and executive committee.