Beyond Treading Water

Finding Profitability in Aquatic Operations

By Dawn Klingensmith

If only aquatic facility managers could control the weather, they might be able to improve their bottom line.

"The heat helps a lot," the local pool manager told the Morgan Hill Times in 2011, when the California community's aquatic center posted high revenues after three years of poor performance.

"But," she added, "we've also changed a lot of program scheduling."

Pool personnel knew from previous summers that demand is high for swim lessons and actually drew a map of the facility to figure out where and when to schedule classes so all the center's pools would be used. They worked to maximize income from food concessions, retail sales, monthly memberships and party packages. With all the improvements, the facility covered 90 percent of its operating costs, up from 74 percent.

That's a remarkable achievement for a municipal aquatic facility. But it's not a result of weather control or any other form of magic.

"You can probably find a number of people who would tell you that Magic Program X, whatever it may be, is a surefire way to raise revenues, but I'm going to give you the non-sexy answer: The best way to bring people and money to a facility is by getting all the little details right," said David Rowland, president of Lutra Aquatics, a consulting and management services company based in West Granby, Conn.

The quest for the "magic" programming solution that would make pools profitable may have peaked during the recession, but Rowland said the public's demand for cost-efficiency predates the recession by several years: "It started to shift 15 or 20 years ago—the increased pressure on municipalities to not have this sinkhole in the budget."

There are those who steadfastly believe that even if a pool operates at a loss, it is still a valuable community asset worthy of taxpayer support. But they compete with vocal groups who can't see funding a facility that only a small percentage of the community uses. "Asking the community as a whole to spend a lot of money for the benefit of those few people" is asking a lot, Rowland said.

Whichever side you take, running a pool at a deficit for too long is a real problem and the reason for most permanent pool closures across the country, said Mick Nelson, facilities development director for USA Swimming, the national governing body for the sport of swimming.

So perhaps pools have earned their "bad rap" as "money losers," he said, but in reality if they abandon the old model of charging a nominal fee for a day pass, they can make money. But how?

Back to Basics

It helps to understand the competition but not necessarily emulate it. "For almost every pool, whether they realize it or not, the competition is a waterpark, even if the waterpark is 100 miles away," said Robert Clayton, owner of Aquatic Partners, based in Fort Collins, Colo. "People go to the pool for fun. There are those who lap swim, but setting that aside, you have a rectangular tub of water where the temperature is never quite right for most people."

Waterparks, on the other hand, have attractions that magnetize families with kids—slides, water features, lazy rivers. Municipal pools in recent years have tried incorporating some of these elements to increase their appeal and improve their bottom line, and adding a few play features may indeed make sense. Some manufacturers have elements you can switch out to keep your facility fresh and exciting. But parks and rec purists believe that morphing into mini waterparks undermines a municipal pool's principal mission.

"It's still the case that there's a lot more emphasis on waterpark-type features, whether it's adding splashpads or putting in rivers. The perception is that those things will attract users," Rowland said. "But the scary thing is, none of it involves swimming. Sure, getting 400 pounds of water dumped on your head is fun, but it's not swimming. It's not exercising. It's not developing a lifelong skill."

Too often, splashpads are offered as a replacement rather than an addition to a pool, Nelson said: "How else will kids learn swimming and water safety?"

People's schedules are bloating along with their waistlines, so parks and rec facilities need to make it easy and rewarding to be more active. "Swimming is a form of physical activity that is available to such a wide range of people," Rowland said. "It's a great place for people to start to get in shape if they're new to exercise, and it's great if you have an injury or disability."

Rowland suggests that municipal pools stay true to their "swim mission" and quit trying to be something they're not. "The way to attract users to traditional swimming is to offer a great product on that level," he said. In other words, the primary product or service is the opportunity to swim. Making that opportunity inviting and worthwhile comes down to basics: updated locker rooms, overall cleanliness and customer service, he said.

Though not as essential, concessions and retail bring in money and offer customer convenience. "If your goggles break or you left your swim cap at home, you can just go buy one," Rowland said.

Asked to describe an ideal municipal pool, Rowland starts with "a couple of bodies of water" or more at different temperatures for different uses. A single pool cannot please all users temperature-wise and otherwise; certainly, patrons can't be expected to pay to experience physical discomfort or come back for more.

Rowland follows up with a bright, well-maintained entrance where guests receive a friendly greeting from staff; "clean, modern locker rooms with more of a club-like feel" and signage reminding people to shower before entering the pool; attentive lifeguards; and impeccable water quality.

And finally, "Whatever I want to do, there's some pool space to do it," he said.

Pleasing patrons and turning a profit is not impossible, Rowland said. "You just have to work hard at the details."

Knowing (Not Blowing) the Budget

Minding the details includes minding the money. "Most pools don't really know what their costs are. The city absorbs certain expenses," Clayton said. "Well, you need to know your basic costs. Lots of facilities rent out their pools for less than the operating costs because they don't know those costs. It can be hard to get a handle on the exact cost of running a pool. But if you figure out it costs roughly $50 an hour to run, you can't have recreation that brings in $20."

To turn a profit or just break even, aquatic facilities must be run like a business, he added.

Risk of closure forced the city of Seattle to take a more businesslike approach to running its eight indoor pool facilities and two outdoor pools. Back in 2002, "Looking at all 10 pools, cost recovery was less than 50 percent," said Kathy Whitman, aquatics manager for Seattle Parks and Recreation.

While Whitman supposes that's "probably typical across the nation," she and her team knew that in Seattle's case it was not enough to keep the doors open. That was a problem—and not just from her perspective. "We had kids showing up in life jackets at public meetings saying, 'We want you to keep our pool open,'" Whitman recalled.

The aquatics team began to conduct monthly financial analyses, looking at costs and performance compared to the same time in previous years, and compared to other pools in the region. The result is better asset management and 80 to 90 percent cost recovery across all 10 pools. Like most parks and rec departments, Seattle's provides free and discounted programs to ensure inclusion. Were that not the case, the pools would actually post a profit, Whitman said.

The department did increase fees with community support, but at the same time developed a scholarship program to keep swim lessons accessible to low-income children, with funds coming from the city as well as donations.

More pools need to follow Seattle's lead and raise fees, matching program pricing with the cost to operate the pool, said Nelson, adding that aquatics managers have a hard time heeding this advice. "They think people won't pay it, and they think it will exclude low-income members of the community," which runs counter to the parks and rec mission, he explained.

But if Seattle is any indication, communities would rather see fee hikes than pool closures.

Increasing Revenues

In addition to evaluating fees against pool costs, facilities should concentrate on their greatest money makers. In Seattle, "Swimming lessons are number one for revenue generation and our number-one priority in terms of service to the community," Whitman said.

As 2014 was drawing to a close, Seattle's aquatic facilities all together had brought in $4.8 million, with swim lessons accounting for half that amount. Recreational swimming brought in the second largest chunk, followed by rentals and water exercise.

Nationwide, "Demand for swim lessons keeps going up year after year," Rowland said.

Therefore, for most parks and rec facilities, figuring out how to maximize the number of classes offered would pay off both in terms of revenues and mission advancement. Identify and accommodate groups with the greatest demand, and increase demand where possible. For example, demand may be greatest for classes for 3- to 5-year-olds, and it can be increased still further by outreach and marketing efforts aimed at parents and organizations emphasizing the importance of water safety.

In addition to group lessons, Seattle offers one-on-one swim instruction, which in 2014 brought in about $40,000. "That's not a lot," Whitman said, "but it makes a difference added in to all the other small things."

Individual lessons take place in one corner of the pool. Cordoning off a small area is key to the program's financial success. From a business perspective, it's a mistake to limit pool use for the sake of one small activity; all parts of the pool should be in use at all times. "Shared pool space is necessary in the typical rectangular-shaped pools," with dedicated areas for lap swimming, lessons and exercise classes, Whitman said.

Seattle now has minimum class size requirements and either cancels or combines classes rather than running them at a loss.

"If you turn your whole pool over to 12 to 15 kids, it's just not economically feasible," Clayton said.

Rowland agrees with the general view that swim lessons should be kept affordable to promote participation across income levels. But Clayton suggests that, given the demand for group and private lessons, there may be room to increase their cost: "If you talk to parents, they all want their kids to learn how to swim and the perception is, the more you pay, the better instruction they're getting."

Profitable Programming

There are other profitable programming options besides lessons, but aquatics managers should focus on fully developing proven money-making programs before adding on. "If it's lessons, get to 100 percent on that before adding," said William Miller, owner of Miller Aquatic Professionals in McHenry, Ill.

Reaching out to area schools is one way to maximize the capacity and money-making potential of learn-to-swim programs, he suggests. Seattle partners not only with public schools but also with a local hospital to help promote its program. "Where our missions overlap—healthy families and safe children—the hospital pays for marketing reminding families to swim where there's a lifeguard," Whitman said. The hospital also supplies scholarship funding.

"Once you've grown your base, then you can start specialty programs like special needs and adult triathlon training," Williams said.

Adaptive and therapeutic aquatics in particular can make money, especially through partnerships with health organizations, Clayton said.

Adopting certain features and business practices associated with private clubs, including an annual membership model, may help boost the bottom line, Rowland said. But it can be a challenge, he added: "Trying to sell memberships to adults going to use my facility as a gym that at certain times of day will be inundated with kids? It's not a peaceful environment vs. a private health club."

Offering in-pool personal training is another idea borrowed from private clubs. "People don't think twice about paying a dollar a minute for one-on-one fitness training," Nelson pointed out. "If this were pushed, it could be 55 percent of a pool's income."

To truly determine a community's wants and needs, conduct program interest surveys every year or so, and ask about desired class or program times as well, Clayton advised.

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