How to create a capacity planning model

Carla Vianna
Carla Vianna
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How to create a capacity planning model

Your attraction can’t afford to guess when it comes to knowing the right amount of staff and equipment to invest in.

Capacity planning removes the “guessing” out of one of the most important areas of running your business: determining the resources you need to meet your current guest demand. In this case, resources are your tour guides, activity equipment, and venue.

For example, a kayaking tour company needs to know how many kayaks and tour guides it needs to run its tours smoothly. To figure this out, the company needs to find out if it has the right amount of equipment and staff to run its tours.

During this process, the company will also be able to predict how these needs might change in the future.

In this guide, you’ll learn how to create a capacity planning model to ensure you always have the right amount of resources to meet customer demand — even as it fluctuates.

What is a capacity planning model?

What goes into a capacity planning model?

How often should you do capacity planning?

5 best practices for building capacity planning models

What is a capacity planning model? 

A capacity planning model is used to determine and predict your future staffing and equipment needs. This involves predicting the fluctuations in booking volume, such as an influx of guests during the busy summer months.

When your company has insufficient capacity, you won’t be able to meet customer demand. This means guests might need to add their name to a waitlist or come back to try and visit another day when you have enough staff and equipment to accommodate them. This can clearly result in lost business and revenue for your attraction.

At the other end of the spectrum, if your attraction hires too many employees without enough booking volume to sustain them, then you’ll have extra fixed costs.

Most companies use one of three capacity planning models to avoid either one of these scenarios.

1. Lag Strategy: Many businesses like to stay on the safe side when it comes to capacity planning. With the lag model, a company only increases capacity when there’s an actual demand for it.

Rather than anticipate a rise in booking volume over time, an attraction would continue operating at or near 100% capacity — as in, its equipment and staff are all booked — until it can no longer meet guest demand.

Pros: The lag strategy cuts down the risk of hiring extra staff you don’t need.

Cons: When you’re operating at or near 100% capacity, you run the risk of overworking your staff. 

2. Lead Strategy: Other companies take a much more aggressive approach. The lead capacity planning model involves an upfront investment in more equipment or staff. This is based on the assumption that booking volume is going to increase.

Pros: Your company will have the resources needed to cover an influx of bookings and tours. 

Cons: If your booking volume remains the same, you’ll have an excess of labor or equipment that isn’t used to its full capacity. You may need to do layoffs or sell excess equipment at a steep discount.

3. Match Strategy: The match model adds capacity in small amounts based on real-time demand. Under this strategy, a tour operator would closely monitor its resources and hire a new guide when its current workforce becomes overwhelmed.

Pros: It is less risk-averse and gives attractions room to grow.

Cons: This strategy can be more difficult to accomplish than others.

Long term vs. short-term capacity planning 

Capacity planning involves both short-term and long-term considerations. 

Short-term capacity planning focuses on the seasonal and irregular fluctuations you might see in guest demand. It involves scheduling, employee shifts, and balancing resource capacities on a daily or weekly basis. Sometimes, short-term planning can extend as far out as six months.

This involves tracking capacity in real-time and adjusting your resource pool accordingly. For example, a food tour company decides to hire a few freelance tour guides once the busy summer season starts.

Long-term capacity planning, on the other hand, is the process through which a company prepares for future growth and expansion. This requires forecasting, which will allow you to define new capacity requirements. 

Understanding your current resource pool and utilization will give you a better understanding of what needs to be done before adding new tours or expanding to new markets.

What goes into a capacity planning model? 

Here’s a step-by-step guide for approaching your capacity planning process the right way.

  1. Identify the key resources that need to be measured. If you’re an escape game operator, your company’s ability to meet guest demand will depend on the number of escape rooms and staff you have available. A walking tour company, on the other hand, would focus on tour guide schedules to ensure there are enough working hours to match its tour volume.
  1. Measure the performance and utilization of your current resources. For the escape room, this would involve looking at the capacity utilization of its rooms. Once the company finds out how often its rooms are being used compared to how often they’re available, it’ll have a better idea if its current space is meeting guest demand. If the company’s escape rooms are under 100% capacity, then it still has room to grow.
  1. Forecast anticipated demand and determine your new capacity requirements. At this point, you’ll have a solid understanding of where your company stands in terms of capacity and resource utilization. But do you know if your current staff, equipment, and/or space will be able to meet future guest demand? Statistical analysis can help you predict fluctuations in booking volume. 
  1. Plan how to align capacity with anticipated demand. Now you can plan for the additional capacity that would be required to accommodate more guests. If you’re following the lead strategy, you’d start investing in new resources today to accommodate an expected rise in demand. Under the lag model, however, you’d continue running your business with your current capacity until you have no choice but to invest in more resources or lose bookings.

How often should you do capacity planning?

Most companies have typically performed a formal capacity planning exercise once a year. Yet the level of uncertainty and fluctuations in demand in today’s market has transformed it into an ongoing planning process, especially since the pandemic. 

Since capacity planning provides your company with data that helps you determine how and when to hire staff, companies that continuously track their resource capabilities can be more proactive to changes in demand.

Business owners and top stakeholders conduct capacity planning to ensure that the company has enough resources to fulfill its main objectives. Meanwhile, resource managers focus on having the right staffing and equipment resources for day-to-day operations.

5 best practices for building capacity planning models

Before you start building your capacity planning model, consider the following tips.

1. Analyze your existing capacity

Is your current team and equipment meeting guest demand? Analyzing your existing capacity is key to the capacity planning process. How many hours are your tour guides actually able to dedicate to your tours? When you’re calculating this, consider the administrative work or transactional activities like checking email or attending meetings they have to do. You want to get a realistic view of your teams’ capacity.

2. Understand overall demand

Take a deep dive into your company data to learn more about guest demand. Pay attention to fluctuations in booking volume and when they happen. Business intelligence tools can help you make sense of this data by highlighting booking trends and overall demand over time. Your guest demand will inherently impact your capacity needs, so it’s important to get a good handle on your current numbers.

3. Forecast capacity needs

Predictive analytics can look at historic data to help you forecast long-term guest demand. This will help you determine if you need to hire more staff, keep things as-is, or decline your capacity. This will help you avoid overspending on resources you don’t need.

4. Prioritize areas to allocate resources

It helps to think about the areas you want to focus on before making hiring decisions. Does your company want to expand its tour offerings or focus on its marketing strategy? Depending on your answer, you’d make different staffing decisions.

5. Identify bottlenecks

Where do delays occur? You can identify bottlenecks by closely monitoring your resource utilization. Perhaps an employee is forgetting to complete a key part of their role as a tour guide. This is causing friction for the rest of the tours happening that day. After further investigation, you find that this employee is overloaded with work. You then know that you might need to adjust guide schedules or increase your capacity.

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Don’t make your resource planning a guessing game: Use the strategies in this guide to build a capacity planning model for your attraction.

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Writer Carla Vianna

Carla Vianna

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