Operating Aquatics in the Black
By Dawn Klingensmith
As kids, most of us of a certain age enjoyed access to a community pool, where year after year a rectangle of chlorinated water, a diving board, some deck chairs and a vending machine supplied a summer's worth of fun. Slathered in baby oil, we gave as little thought to how the pool afforded to operate as we gave to the risk of skin cancer.
"If you go back a little ways, pools never used to be asked to cover their costs. They were always viewed as an amenity that would be offered to members of the community. It was understood that it would cost money, but it was seen as a worthwhile thing" to fund on the city's dime, said Dave Rowland of Lutra Aquatics, a Simsbury, Conn.-based design and operations consultancy for commercial indoor aquatics facilities.
But we're entering a whole new era in aquatics.
Since the economy hit the skids, "A lot of taxpayers are starting to rebel," Rowland said. "They're looking at recreation departments with pools and wondering why it costs so much money. In any given community, the percentage of people who use the pool is small," and non-users are demanding more accountability. In fact, there's increased pressure for aquatics facilities to break even, if not turn a modest profit.
Aquatics program specialist Sue Nelson of USA Swimming, the sport's national governing body, puts it bluntly: "Operational subsidies are becoming a thing of the past."
At the same time, though, aquatics facilities face steeper operating costs and fiercer competition. "Ten or 20 years ago, in order to draw users, the neighborhood pool didn't necessarily have to be well-run. But there's been an explosion in private health clubs and waterparks, to speak nothing of the fact that we have a whole generation of kids who would rather play videogames," Rowland said.
The cost of utilities, insurance, staffing and building materials have shot up, alongside kids' expectations that a municipal aquatics facility should be akin to a waterpark. Yet while taxpayers are not necessarily unwilling to help fund construction of an aquatics center, "they are not willing to help operate the facility at a loss on a long-term basis," said David Sangree, president, Hotel & Leisure Advisors, Cleveland.
Thus, public aquatics facilities now face financial pressures for which past experience has not prepared them, and most are struggling to adapt.
"It's very difficult for municipal aquatic centers to make money, especially given the template for operations," Rowland said. "Municipalities all tend to do things the same way with the same poor results. In most municipalities, the community pool loses several hundred thousand dollars a year."
And the problem keeps repeating itself, even as taxpayers and decision makers demand more accountability. "Any municipality that builds a pool looks a couple of towns over and says, 'How do you run your pool?' and so a singular (and financially unsuccessful) management style has spread across the U.S.," Rowland said.
From coast to coast, severe budget shortfalls are forcing public aquatics facilities to pay closer attention to the bottom line or, in dire cases, to cease operating altogether. Many cities with multiple pools have closed some or all of them. Countless other cities have cut hours of operation or shortened the season. For example, faced with a budget decrease of 12 percent over two years for aquatics, the parks and recreation department in Raleigh, N.C., started closing pools at 5 p.m. on weekends instead of 8 p.m.
In addition, "Last year, we looked at certain holidays or days of the year we could get away without being open, like the day after Thanksgiving," said Aquatic Director Terri Stroupe.
In the coming season, the pools might close for all federal holidays. "We want to stay open because schools also are closed on those days, and we want to provide recreation for kids and their families. We just can't," Stroupe said.
Other communities have relied on fundraisers to stay open. For example, Glen Hall Pool in Sacramento, Calif., was slated to be closed this summer for recreational swimming due to budget cuts. A city council member, local church and neighborhood association pitched in to save recreational swim hours, along with residents who organized a carwash fundraiser and made personal donations.
Carwash fundraisers and the like are creative short-term solutions, but for long-term survival, aquatic operators need to make operational, programmatic and philosophical changes.
Utilities and staffing top the list of operational expenses, so let's start there. "These are two major items to monitor in pool operations. Many people aren't aware of the potential cost savings," said Daryl Matzke, director of aquatics for Ramaker and Associates, a Sauk City, Wis.-based engineering services firm that designs aquatics facilities.
Depending on its location, a facility might be able to shop around for electricity and natural gas providers. But sometimes you have to shell out money to save in the long run.
"From an energy-consumption perspective, certain investments pay off. Water chemistry and air quality you should definitely spend money on. Variable frequency drives (for pool pumps)—spend money on those. They pay for themselves in a short while and can be retrofitted," Matzke added.
Most pool pumps are oversized. VFDs adjust according to usage so as not to waste energy.
The biggest energy hogs for indoor facilities are heating the pool and maintaining air quality, Matzke said. "Poor water quality means poor air quality. Use UV supplementary treatments; don't rely just on chlorine," he advised. "If you keep your water quality in line, you'll have fewer problems with air. If you have fewer problems with air, you don't need to bring in as much air from the outside, so you're using less energy and saving money."
Air-handling units with energy recovery systems and pool covers also make Matzke's list of wise investments. Pool covers can save 50 percent to 70 percent of the pool's energy use, 30 percent to 50 percent of its makeup water, and 35 percent to 60 percent of its chemicals, according to the EPA. Indoor pool covers typically pay for themselves in a year. Covering heated outdoor pools and hot tubs may yield even better savings.
In addition, regenerative media filters save on water consumption by reducing backwash by as much as 90 percent.
When it comes to staffing, most aquatics facilities overdo it, said Rowland of Lutra Aquatics. "One common mistake is to staff all the time for peak use. People don't want to get caught short-staffed," he said. "But if you examine usage patterns, and from 9 in the morning to 1 in the afternoon you hardly have anyone there, you only need one lifeguard. If you have one lifeguard on duty and 100 people unexpectedly descend on the pool, admittedly you'd have to turn people away."
But since that's improbable, at any given time of day, "Staff for likely demand as opposed to peak demand or full capacity," he advised.
Reevaluating work schedules with respect to slow periods and peak periods usually reveals misjudgments in timing and opportunities for adjusting staffing levels and employees' work hours. Software programs are available to help optimize scheduling.
Swarms of unnecessary lifeguards aren't the only problem. At the management level, many aquatics facilities and recreation centers have "too many people with not enough to do," Rowland said.
The Oakland County Parks and Recreation Commission operates two waterparks in Michigan, and recognized there were redundancies and inefficiencies because each park had been operating independently under separate management. Bringing the two waterparks under the same management and sharing a maintenance crew—along with cost-cutting initiatives of a broader scope—enabled the commission to reduce full-time staff from 97 in 2006 to about 75 today, said executive officer Dan Stencil.
Rowland said many facilities "are not getting as much out of staff as they could."
Lifeguards do require downtime from pool surveillance. "But that doesn't mean they do absolutely nothing. There's nothing saying they can't be doing maintenance or cleaning duties," he said. They could also teach classes.
Cornerstone Aquatics Center in West Hartford, Conn., is known for its pristine cleanliness, yet it does not employ a professional cleaning crew. The lifeguarding staff does all the work.
"If asked, most pool managers probably would not be able to tell you the profitability of various programs," Rowland said, adding that some programs don't cover their own costs but are still important to offer.
Many managers don't know business basics, like the difference between revenues and profits.
Kevin Post, a project manager for the St. Louis-based aquatics facility design firm Counsilman-Hunsaker, knows of a municipal pool that thought its concession stand was its biggest profit center because it did, in fact, bring in the most money. However, upon closer inspection, management realized that the cost of running the concession stand exceeded its revenues, so it was actually running at a loss.
Concessions can be profitable in the right type of facility, though. Sometimes using an outside vendor is best because an aquatics facility then pays nothing for supplies or labor, while charging rent and taking a percentage of the profits.
Providing the right mix of programs is essential for all facilities, as is ensuring "every single foot of water is being used for something at all times," said Everett Uchiyama, aquatics director, Country Club of Colorado at the Cheyenne Mountain Resort.
Post agrees: "If a pool is to be successful, it has to operate like a three-ring circus," with different programs running simultaneously most of the time.
Unfortunately, "Most pools are set up to offer one activity at a time," Rowland said. "Even if you only have one pool, there's no reason why it can't have multiple uses. You can have lap swimming all day long. Lap swimming tends to be overlooked as a profit center. Just post a schedule to let people know when you'll be shutting down lanes for other programs. There's no reason to shut down all lanes just to have swim lessons for seven or eight kids.
"I've seen countless clients who closed the entire pool for rental groups or programs that only needed a portion of the pool," Rowland continued. "By opening up the other portions of the pool at these times, these clients have increased revenues generally by hundreds of thousands of dollars each year."
Uchiyama agrees that lap swimmers tend not to mind sharing the pool with an aqua aerobics class but cautions aquatics directors not to combine two programs that would clash due to noise levels, for example.
Programs that generally pay for themselves or make money are group water fitness classes, lifeguard training and learn-to-swim programs, including private swimming lessons. "One-on-one instruction has been very profitable for us," said Stroupe, though as a whole, the city of Raleigh's aquatics facilities operate in the red.
Other facilities have had success with triathlon training, scuba lessons, doggie dips, "dive-in" movie nights, aqua therapy and hosting teams without pools of their own. Consider your market and then reach out to specific groups that might rent lanes or participate in programs during midday lulls, such as preschools, senior centers, homeschoolers, and moms and tots.
Regarding seniors, "I think that within the next two to three years, if facilities don't start doing a better job of serving that population, they're missing the boat not just in revenues but also community relations," Uchiyama said.
Cornerstone Aquatics Center, which consistently turns a profit, offers intensive pre-season training geared toward high school swim teams. "It's a two-week program held right before their season starts, so they can get up to full speed without injury. It's been a fantastic program for us," said Rowland, who manages Cornerstone in addition to running his consulting company, Lutra Aquatics.
Oakland County plans to use its lazy river on occasion for aqua walks against the current. A local hospital is co-sponsoring the events.
Sponsors can help programs get off the ground, and they can take a leading or supporting role in marketing as well as bearing other expenses. Finding appropriate and willing sponsors requires a lot of legwork, though. That's why even in the midst of aggressive downsizing, the Oakland County Parks and Recreation Commission hired a full-time employee to seek out and establish sponsorships and partnerships. "Historically, finding sponsors had been an add-on to other employees' responsibilities," Stencil said.
Although rare, public-private partnerships are among the few successful models for municipally owned aquatics centers. At least one city pool has been spared closure by entering into such an arrangement. The city of Fullerton in Orange County, Calif., decided to close the Janet Evans Swim Complex because it was as much of a money pit as a community asset. However, a local swim team stepped in and offered to manage the pool, its programming and staffing, and proposed that the city retain ownership and maintenance responsibilities. Now the swim complex operates as a nonprofit that makes money and then invests the earnings back into the community. For example, last year, it gave 2,000 free swim lessons to disadvantaged youths.
The Fullerton Aquatics Sports Team, or F.A.S.T., brought a fresh management perspective. "There's a preexisting, established mentality very common among recreation departments across the U.S. to operate only during the summer months," said William Jewell, chief operating officer and head coach, speaking in 83-degree weather in late November.
The city had been offering two-week learn-to-swim sessions in the summer, which Jewell felt was insufficient from both an economics and an educational standpoint. "If you learn to swim in two weeks at age 4 and then you're not exposed to water for most months out of the year, your retention is going to be zilch. We like to encourage year-round lessons," which has been lucrative, he said.
The new management is also more aggressive about renting out the complex to other swim teams and groups. In fact, teams travel all the way from Canada to escape that country's harsh winters and soak up the California sun.
In the neighboring state of Arizona, Yuma Union High School had been unable since the 1980s to follow through on plans to add a swimming pool for its competitive team and physical education classes. At the same time, the city of Yuma lacked funds to provide its residents with a community leisure pool. Eventually, the city and school district joined forces—and funds—to build a shared facility, which opened in July.
The school paid for a competitive pool, while the city funded a leisure pool with a slide, dumping bucket and a splash pad area, banking on the idea that such features would draw families and help the facility break even or perhaps turn a profit.
Public-private partnerships are hardly a novel idea, though. West Hartford, Conn., and the private enterprise Aquatics for Life (part of Rowland's Lutra Aquatics company) entered into a contractual agreement nearly two decades ago. At the time, the town had a newly renovated facility—the aforementioned Cornerstone Aquatics Center—but it also had a strained budget and staff shortage. Researching possible solutions, the town came across Aquatics for Life. The company said it could make Cornerstone self-supporting, with no taxpayer subsidies, if the town would simply stand out of its way.
Aquatics for Life takes care of all the day-to-day operations, while the town is responsible for the building's structural maintenance. West Hartford's public school swim teams get to use the pool for free, and the town's youth swimming program receives a discount. Yet Cornerstone's revenues consistently exceed expenses by a comfortable margin.
Left to their own devices and lacking profit-hungry private partners, most municipal pools do not operate like businesses. With government involvement, "Any change you want to make needs to be approved," Rowland said. "It slows down the decision process."
In a capitalist society, innovators come out ahead. But managers of municipally owned aquatics centers will find "it can be very difficult to gain approval to make investments in something new and exciting and worthwhile," Rowland said.
By contrast, Rowland's Aquatics for Life added an aquatics cross-training center at Cornerstone consisting of 16 underwater stationary bicycles and four underwater treadmills to entice people who aren't lap swimmers to exercise in the pool. The imported equipment cost upward of $60,000. Had the purchase required city council approval, "It probably would have been a three-year process, and they probably would have shot it down because there are always taxpayers who will scream, 'Why are we spending money on this?'" said Rowland, adding that the underwater equipment generated positive publicity right away and, in time, the expected profits.
To the extent they are able, municipal aquatics facilities could incorporate elements made popular by privately held, resort-style waterparks, which are all about making money. For example, Oakland County is looking into launching a merchandise program. "Our waterpark has a concessionaire, so we're working with them to offer waterpark memorabilia," Stencil said.
However, "If a municipal facility is just a single pool, the chances of having a successful gift shop are slim," said Sangree of Hotel & Leisure Advisors. "But even a single pool maybe never thought about selling suntan lotion or goggles—things people realize they forgot to bring when they get there. That might be a way to help them make money."
A small municipal facility will never be able to offer what a private waterpark offers, he added. "But some things translate well on a smaller scale; for example, an arcade room can be pretty profitable."
Generally, municipal aquatics facilities charge such low admission fees in the name of accessibility that it's all but impossible to break even. The city of Raleigh charges $1 for children, $2 for seniors and $3 for adults. Rates are established by the city council. Like most aquatics directors, Stroupe does not have the support or authority to set fees to make money, although she thinks people would pay more without too much grumbling. After all, were she to double or even triple the price, it would still cost less than going to a movie.
Because accessibility is important, pools could perhaps raise rates in conjunction with implementing sponsorship programs whereby local businesses provide funding for "free days," Stroupe suggested.
Unfortunately, the system "won't allow us to see what the market will bear. And we can only change fees once a year," she said.
Oakland County is an exception. The Parks and Recreation Commission recognized that "It is imperative to employ responsible business practices and empower staff to make and implement decisions," and in April 2009, it changed its pricing policy accordingly, Stencil said. Now, without prior approval, management is permitted to adjust prices as needed to respond to supply and demand, which fluctuates according to season and time of day. A point-of-sale system captures patron data and usage patterns, and has enabled to county's waterparks to develop a customer loyalty program.
"When it comes to defining a price point, the more you're offering, people are willing to pay more," said Post of Counsilman-Hunsaker.
Patrons tire of the same old same old. "You need to have some sort of cycle for updates and improvements, including new features for patrons to look forward to," Stencil said.
Sangree agreed: "If rates were higher but people can see you're continually reinvesting, they'll keep coming."
Nelson of USA Swimming said aquatics facilities must abandon the pricing model that has been carried over from the past. "Plan to offer a superior service and set your pricing so you can afford to do so," she writes in a co-authored guide titled "Facilities Development," available from USA Swimming. She suggests that users pay a membership fee plus additional charges for specific programs and services, with rates based on how much each costs to run. Know your aquatic centers' entire budget, she advises, and then determine how much each program needs to bring in to contribute to its share of the expenses.
Fears persist that customers will leave if prices are increased. But this mindset does not take into account the rising cost of construction, utilities and staffing. "Traditional pricing simply cannot keep up with escalating costs," Nelson writes. "Value Received Pricing (VRP) should be the pricing philosophy for the future." It's based on the premise that a facility is offering better amenities, programming and customer service than the competition.
Unfortunately, customer service is an area where many facilities fall flat. A common failing is that the only way to get information about the pool is by calling the parks department office, which has limited hours, Rowland said. Customers who really want to swim will figure things out. "But to make a pool work you need to attract the users at the margin—those who are mildly interested in swimming but not committed," he said. "Committed swimmers are fairly rare or at least don't exist in sufficient numbers to support a facility. You need the ambivalent users, and to get them you need great customer service."
That includes an informative, user-friendly Web site; quality brochures that give a professional impression; and well-trained, friendly staff who are eager to help. "How many aquatics facilities have employees—customer service or otherwise—who aren't really performing their job properly but who keep their job simply because they haven't committed any egregious offenses? Most people in this country are in situations where they'll lose their jobs if they don't do them well," Rowland said. "In community aquatics, a different set of rules seems to apply."
One thing is for certain: The rules are changing—not just for customer service but for community aquatics as a whole. Most important, "We're having to justify ourselves more than we ever had in the past," Stroupe said.
In fact, when Raleigh was forced to make budget cuts, there was a showdown of sorts between pool users and supporters of the local art center, which was required to reduce its hours. Although the city's pools also reduced their hours, some people argued that if further sacrifices should be made, they should be borne by aquatics. "Thankfully, we had been tracking numbers, so we could demonstrate our relative worth to the community," she said.
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