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Occupancy
Why it's
important, how to improve it
Why occupancy is
important
Why should you care whether ICC is full or
not? Simple: When we have lots of members we have
more income so room rates can be kept steady. But when
there are lots of vacancies we make less money and that
means that members have to pay more to make up the
difference. Bad occupancy this spring could mean that
room rates are $30/mo. higher next year.
Occupancy (keeping the houses full) is also
important to houses themselves. The labor system in a
house can easily fall apart if there aren't enough
members living there to handle all the housework. Keeping
your house full is key to keeping it running
smoothly.
Is ICC too big? Do we
have too many houses in order to fill them
well?
No. When we have occupancy problems they're
generally unrelated to ICC's size. As I write this in
Spring 2004, occupancy is terrible and many members are
quick to blame the fact that we recently added two new
houses, 1910 and Arrakis. But the evidence doesn't
support the idea that being smaller means better
occupancy:
Just two years ago, in Spring 2002, we had
occupancy problems just as bad as they are now. And
that was with two fewer houses. This shows quite clearly
that we can have occupancy problems no matter how few
houses we have. Let's say that we had just one house, New
Guild (or Avalon, or HoC). Would that mean our occupancy
would be good? Probably not. Each of those houses has
terrible occupancy, maybe 60-70%. If we owned just one of
those houses, we might own a single house with 60-70%
occupancy.
You might say that people who would have lived in the
other houses would go to that one house if that were all
that was available. But why would that house be the only
one that's available? French House, Helios, Seneca, and
the other houses don't just cease to exist if ICC doesn't
own them -- somebody else owns them instead. And people
can and would still live there.
The point is, if you have nine houses that are at
about 80% average occupancy, and you sold three, then you
just have six houses that were at about 80% average
occupancy. Having fewer houses doesn't help. If you have
nine rotten apples and you throw away three of them, then
you still have six rotten apples.
People are confusing ICC owning fewer houses
with there being fewer houses total in West
Campus. They're two totally different things. If the
number of available housing units decreased then sure,
that would help our occupancy. But our merely selling our
housing units to someone else doesn't change the number
of housing units available. In fact, it probably makes it
worse, as whoever we sold to would tear down the houses
and build something with more units instead.
Bear in mind that Arrakis had been part of the ICC
family and reasonably full for nearly 25 years before it
burned down. It's not suddenly harder to fill just
because it took a three-year vacation while it was being
rebuilt.
Or consider 1910. For years we had our own houses,
and 1910 was owned by somebody else. Did 1910 suddenly
become harder to fill just because we own it?
Hardly.
Probably the biggest reason why occupancy is bad this
spring is that we opened a house in the middle of the
long term. The fact that Arrakis opened in the spring
meant that it was impossible to get people to live in it
who already had long-term contracts elsewhere. In this
case this did dilute the members from the other houses
who are moving into Arrakis. But this is a one-time
fluke; next year Arrakis will be available in the Fall,
just like all the other houses.
Bottom line: when occupancy is bad it's for reasons
other than ICC's size. If you sell off houses to try to
improve occupancy then not only will you destroy ICC but
you'll still fail to even solve the occupancy
problem.
How much occupancy is
"good" occupancy?
We typically budget for this much occupancy:
|
|
% Occupancy
|
Beds filled
|
Beds empty
|
|
Fall
|
96%
|
180
|
8
|
|
Spring
|
94%
|
177
|
11
|
|
Summer
|
75%
|
141
|
47
|
|
Average
|
90%
|
169
|
11
|
In a typical 20-person house, 1 vacancy means 95%
occupancy. (19/20 = 95%)
If a 20-person house has "only" 2 vacancies than it's
not almost full, it's one person under budget, and costs
us over $5000/year. If that vacancy is unfilled for a
year that costs everyone in ICC $2.50 a month.
Good occupancy for most houses is at least Full
-1.
How much does it cost us
when we have bad occupancy?
Here's how much income a single member adds,
after taking out the cost of feeding them, based on
2003-04 room rates. (Average rate is $530/mo., minus
$105/mo. for food.)
|
Income added by 1
member
|
|
|
Yearly
|
Fall +Spring
|
Fall
|
Spring
|
Summer
|
|
Single bed (60% of
beds are singles)
|
$5700
|
$4600
|
$2100
|
$2500
|
$1100
|
|
Double bed (40% of
beds are doubles)
|
$4300
|
$3500
|
$1600
|
$1900
|
$800
|
|
Average
|
$5100
|
$4200
|
$1900
|
$2200
|
$1000
|
Remember that it works both ways: The above table
shows how much we lose by being one member short.
Below is a similar table, showing how much income we
get (or lose) for each percentage point of occupancy. (1%
point is 1.88 members, since we have 188 total members
when we're 100% full.)
|
Income added by each %
point of occupancy
|
|
|
Yearly
|
Fall +Spring
|
Fall
|
Spring
|
Summer
|
|
Single bed (60% of
beds are singles)
|
$11,000
|
$8500
|
$4000
|
$4700
|
$2100
|
|
Double bed (40% of
beds are doubles)
|
$8000
|
$6500
|
$3000
|
$3500
|
$1500
|
|
Average
|
$9700
|
$7800
|
$3600
|
$4200
|
$1900
|
Hey Bluejay, would you
like to try that again in English? Like maybe a practical
example?
Sure. Your command is my wish.
At the beginning of Spring 2004 we're at 78.5%
occupancy, but we budgeted (planned for) 94% occupancy.
So we're 13.5 points short. We see from the second table
above ("Spring" column, "Average" row) that each point
costs us $4200. So 13.5 x $4200 = $56,700. So if
occupancy doesn't improve this spring, we can expect to
lose about $57,000.
This wouldn't be accurate if the proportion of single
to double vacancies was different from the 60/40%
proportion of all rooms, but in fact we have 24 single
vacancies and 16 doubles, exactly 60/40.
So how much does this impact room rates? There
are a number of ways to look at it. If we consider this a
$57k deficit that next year's members will have to make
up, that means that room rates will have to go up by
$29/mo. next year to pay for the deficit.
More on how to calculate the impact is in the related
article, How much
does an $X deficit raise room rates?
Okay, so if the problem
isn't too many houses, why does our occupancy
scrape?
There are any number of reasons why occupancy
can be bad:
- Members got better deals somewhere else.
- Members thought they got better deals
somewhere else.
- Members didn't like:
- Messy houses
- Conflicts with other members
- Having to participate in operating a successful
house
- Drama
- Potential applicants don't know about ICC
- Potential applicants think ICC is too:
- Nobody answered an applicant's email when they
wrote to the house
- When an applicant toured the house the other
members didn't seem excited about the applicant living
there
So how do we get better
occupancy?
There are any number of ways to increase
occupancy, limited only by your creativity.
Energize the membership
- If everyone who already lived in ICC were
enthusiastic about it, the houses would fill
themselves. Members need to feel a sense of ownership.
If they do then ICC will be full and successful. If
they don't then no amount of marketing will compensate
for the fact that the members don't really believe in
their organization. There's more on this in the
article about fostering a
sense of ownership.
Getting the word out
- Put "Rooms Available" signs in front of the
houses.
- Make a promotional video and put it on the web
(currently planned)
- Take out more ads in newspapers. Look at the
picture ads ICC ran in the Austin Chronicle in
the late 80's (archived in the office)
- Advertise on the radio
- Give out free ICC t-shirts
- Get your website ranked high in Google (currently
done)
- Table on the West Mall (currently planned)
- Flier at the student union and around campus
- Talk to friends
Making ICC appealing
- Keep rates as low as possible
Making houses more appealing
- Assign the Membership Officer and others the
responsibility of making the house more "new member
friendly".
- Make sure houses are clean and attractive when
prospective members visit -- especially bathrooms and
kitchens.
- Make sure empty rooms are clean and
functional.
- Check with the office about new applicants, and
invite them to dinner.
- Answer the phone when it rings, it could be an
applicant.
- Return applicants' calls and emails promptly.
- Have all house members be educated in the
application process, so if someone shows up and asks
how they apply the answer is something besides,
"Uh......", or "You have to go to the office." Have
applications on hand to give to prospects, or lead
them to the house computer so they can apply on ICC's
website.
- Be genuinely friendly to interested in applicants
when they visit the house.
Marketing
- Point out what makes ICC different from other
housing choices (member-owned, democratically managed,
community of cooperation)
- Advertise the rate without food & utilities,
and let the houses be responsible for their own food
& utilities budgets. Even though everything is
included people may see the ~$600/mo. price tag and
get sticker shock.
Promotions
- Hold events to get people to come to the houses,
such as a Free Tutoring Day.
Discourage members from leaving
- Charge more for Fall-only contracts than
Fall/Spring contracts. (Careful, this could backfire
if people don't wind up signing for Fall at all
because the price is higher.)
Research
- Survey applicants who decide against ICC, and find
out why.
- Survey members to find out why they leave, and
what it would have taken to get them to stay.
Thanks to Silas and Suellen for giving me ideas for
this page.
Last Updated: Jan.
2004
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