Dear Board of Directors,
As budgeting season approaches, I wanted to offer some
unsolicited ideas for new things to try with room
rates.
1. Charge more for
non-students.
If ICC's mission is low-cost housing
for students, then why do non-students get the same
deal that students get? Why is ICC doing its damndest
to keep rates as low as possible for students and then
giving the fruits of that effort to people who ICC
isn't even in business to serve? Also, how are you
going to convince the IRS that you're really organized
to serve students when you give non-students the same
lowest rates available?
I suggest that the rate for non-students be a token
amount more, say $10-$25/mo. You have a lot of
flexibility to make this as painless as possible. For
example:
* Grandfather existing non-students.
* Give everyone the same rate in the summer.
* Give someone the student rate in Spring if
they were a student in Fall.
2. Give houses control over their
food & utilities money.
We've been talking about this for years. If
you don't do it now it may never get done. If you're
not ready now, and you weren't ready last year, and
you weren't ready the year before that, will you ever
be ready? Bite the bullet and get it over with.
If you're worried about this being a radical
change, you can try it as a pilot program with 2-3
houses who are interested in being more
independent.
Sure, there are a number of issues to address, such
as rewriting contracts. None of them are
insurmountable. Other student co-ops operate this way,
we can too. It's different, but it's not rocket
science.
3. Reward summer houses with
progressively lower rates as they fill up.
One of the whole points of co-ops is to split
costs among a large number of people. The more people
who are chipping in, the less they pay. So why is it
that members pay the same amount no matter how many
members we actually have? My idea is that in summer,
the room rate for a house could go down as it gets
fuller. This is described in more detail on the page
about lower summer rates
as occupancy goes up.
4. Slash summer rates.
I hope the board will adopt some form of the
idea mentioned above about lowering summer rates as
occupancy goes up. But if it doesn't, then I hope it
at leasts simply slashes summer rates across the
board. Simple economics says that the lower the price,
the more people will buy. We don't know how many more
members we'll get by lowering rates by $X, but that's
because we've never tried on the scale that I'm
suggesting. It's time we tried and found out what
happened.
Even if lower rates increased occupancy only
slightly and we made the same amount of money, that
would be a huge benefit for the houses and for
ICC:
- Houses fall apart during the summer because there
aren't enough people to make the labor system work
smoothly. More members means it's easier for houses to
be functional.
- More members in the summer means more members stay
for the Fall. That's good for occupancy.
- Fall houses often get off to a shaky start because
too many people are new and inexperienced, especially
in officer positions. When more members get their feet
wet over the summer, the stronger the house will be in
the Fall.
- ICC exists to offer low-cost housing and to serve
its membership. If we lower our rates and get more
members, then we both fulfill our low-cost mission
better and serve more people at the same time. That's
ostensibly why we're here.
Here are some options you have for lowering
summer rates, for fiscal 2004-05:
SCENARIO A: Lower Singles by $50/mo., Lower Doubles
by $100/mo.
* Occupancy needed to break even: Singles
83%, Doubles 99%
* Revenue lost if Singles stay at 75% occupancy:
$11k
* Revenue lost if Doubles stay at 75% occupancy:
$15k
* Revenue lost if Both stay at 75% occupancy:
$27k
SCENARIO B: Lower Singles and Doubles by
$75/mo. each
* Occupancy needed to break even:
Singles: 88%, Doubles 92%
* Revenue lost if Singles stay at 75% occupancy:
$17k
* Revenue lost if Doubles stay at 75% occupancy:
$12k
* Revenue lost if Both stay at 75% occupancy:
$29k
SCENARIO C: Lower Doubles by $100/mo.
* Occupancy needed to break even: Singles
75%, Doubles 99%
* Revenue lost if Doubles stay at 75% occupancy:
$15k
Thank you for the opportunity to share these ideas
with you.
