So… did you jump on that early bird special and register your child for summer camp back in January?
The economy is tough on summer camps. Not only can they be a “luxury” expense for many families, but with so many parents out of work and staying home we also know that summer camps no longer have the same role in child-care.
Since camps are in a yearly revenue cycle with huge dry spells and just a few peak sale months (March – May), it can take until June (for summer camps who are on the edge) to figure out if they can make payroll or pay for facilities through the summer. What? Really? Yep. Summer camp payroll is a huge expense for camps that do not run off volunteers, as are facility costs for any camp that doesn’t own its own site. And keep in mind, those that run off volunteers are generally non-profits relying on fundraising and donations; contributions that also dry up in slow economies.
What happens when a summer camp is in the red?
That depends on the summer camp company. Many summer camps are part of a bigger organization, and the camp can be a loss leader. To stay a float some summer camps will renegotiate terms or payment plans with venders or facilities. Some camps will turn to volunteer staff or cut staff ratios. And a few will run to the bank and hope they can get that loan to cover payroll. When those attempts are successful they squeak by. But it happens every year…. some summer camps will close mid-summer or just before they are due to run.
Will you get your money back if a summer camp closes?
That depends on the summer camp company. Most summer camps that are associated with a youth organization, to protect the reputation of the umbrella company or the facility they work for, will be covered by the latter. A summer camp run by a multi-program agency has other budget to draw on and can’t afford the legal entanglement from a Chapter 7 that leaves customer damages. But companies that only run camp… well, these are the ones that can fold up on you. (Don’t get me wrong, these are also some of the best camps because they devote full time to just running camps. But as a possible indicator of stability in tough economic times – a diversified company may be more resilient.)
Back in 2001 ACE computer camps, a nationally run chain of computer camps with over 60 locations nationwide stopped running mid-session. With estimated numbers at 10, 000 campers per summer – this was a big upset.
When campers came back from lunch some happened to search out the ACE website, they found this message: “American Computer Experience is going out of business immediately. All ACE computer camp locations are cancelled effective immediately.” So, the campers and staff went home. None of the families of that week or subsequent weeks were refunded. Camp staff who had worked at camp several weeks were not paid. The rented camp facilities also did not get paid. Lawsuits went on for years and financial restitution is still incomplete.
How can a summer camp customer protect themselves?
It can be hard to find out if a summer camp company has solid financial footing. In the 2009 camp season, you should assume all camps are struggling a bit so don’t be afraid to ask some pointed questions:
1) Assume your summer camp might have to close slow weeks and move everyone together to reduce the cost and maximize the profits. Ask your summer camp which weeks might they close if they have to consolidate?
2) If your summer camp is using a rented facility; ask if the camp has paid upfront (or are they past the point of canceling) where the camp would have really committed to the week? (In rental contracts there are dates by which payments become committed, if it’s past that point (or if they paid in full upfront), then they will run the week even if it’s lower in numbers.)
3) How many campers are registered in the summer camp? Ask for totals for each class as well as over-all camper registration numbers and ask what they had expected. Ask what happens to classes or registration numbers that are low? What is considered low? You are looking for a reasonable answer and a plan for how they will serve lower number. Do some simple math based on what you are paying for the camp and how many kids they say each staff will cover. And if you think because you pay $600 or $1000/week that they must have a ton of profit to play with… think again, summer camps just don’t operate on huge margins until they really have volume, it’s the “economy of scale” that work in this business – which is why every summer camp may be hurting right now.