KOA: 2008 2nd Best Revenue Year

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December 2, 2008 by   - () Leave a Comment

Who could have imagined a year ago what 2008 would hold for the American economy, Kampgrounds of America Inc. (KOA) President Shane Ott asked 600 attendees at the Billings, Mont., franchisor’s 2008 KOA Jamboree, Nov. 8-10 at the Sheraton Myrtle Beach & Convention Center in South Carolina? Back at KOA’s 2007 convention in Phoenix, said Ott, KOA and its franchisees were celebrating the best year in its 46-year history.
“While we might have guessed that we would be challenged by higher fuel prices in 2008, I doubt last year at this time we could have said we’d see gas over $4 a gallon,” said Ott, addressing a morning crowd, many of them suitably dressed in KOA yellow, “And who would have guessed that we’d see the near collapse of worldwide stock markets on the eve of a presidential election? But before you think that our current challenges are unprecedented, let me tell you about a conversation I had a few weeks ago with one of KOA’s original home office executives, Jerry Hanson. Jerry reminded me about living through the Arab Oil Embargo of the late 1970s. For those of you old enough to remember – and yes – I’m old enough – it was a time when it wasn’t just the price of gas, it was the fact that there wasn’t any gas at all.
“Jerry also reminded me that Kampgrounds of America is a tough survivor. In our 47-year history, we’ve been punched in the nose by circumstances before, and we’ve always come through. As I think we’ve all been reminded this year, you never want to go through challenging times alone. Being part of the KOA system means that there are literally hundreds of helping hands out there, ready to pick each other up when one of us gets knocked down.
“Remember,” he added, reiterating the theme of the Jamboree, “together we thrive.”
Having said that, Ott reminded the franchisees, many of whom were staying at the spacious Myrtle Beach KOA, that KOA has been in a rather enviable position relative to the rest of the U.S. and much of the recreational vehicle business. That fact was borne out in the company’s annual report, which Ott reviewed in detail at the 2008 Jamboree, which was generally viewed as successful and upbeat by many of those in attendance.
Ott Puts Downturn
In Perspective

“When you’re living through a year like this, it’s easy to feel overwhelmed by circumstances,” said Ott. “But folks, I’m here to tell you that the downturn of 2008 feels really, really bad right now because things for the past several years have been really, really good for the KOA system. Despite everything we’ve been dealing with the past few months, 2008 will go down as the second best year – in terms of revenues – in the 47-year history of KOA. We, as a system, are generating more revenue than we did even in 2006, which was also a very good year.
Indeed, in the face of an emerging recession in 2008, KOA, which currently has 460 parks, 28 of them company-owned, is currently looking at a relatively softer yet respectable performance, with:

  • Nationwide camper nights off 6.6%
  • Total registration revenue slipping only 2.9%
  • A steady growth through 2008 of nearly 39% in total registrations over the last 10 years. “That, my friends, is not too shabby,” said Ott. “I know a lot of RV manufacturers and automotive industry professionals who would like to trade places with us right now. So, 2008 certainly wasn’t the year we were hoping it would be, and it wasn’t the year a lot of companies in a variety of industries thought it would be.”
  • Regionally speaking, Northwest KOA’s were off 10.7% in camper nights and down 5.5% in registration revenues from 2007. The Southwest dipped 7.2% in camper nights and 2.3% in registration revenues. The North Central zone slipped 7.2% in camper nights and 4.5% in revenues. The Southeast, with its snowbird crowd, edged down 7.3% in camper nights and 5.5% drop in revenues, while the Mid Atlantic region retreated 6.9% in camper nights and 1.9% in registration revenue and the New England area slowed 8% in camper nights and 2.6% in revenues.
    South Central Region
    KOA Bright Spot in ‘08

    In the big picture, the South Central region was the only U.S. region reporting a gain. “Thank God for Texas, Kansas, Missouri, Arkansas, Oklahoma and Louisiana,” noted Ott. “This is our only region on the plus side for 2008, with about a 1% gain in camper nights and 3% more in revenues. I’d love to tell you that they had the magic formula down there, but the reality is that this was the section of the country that struggled so much with weather in 2007. They didn’t have the soaring results we saw in other parts of the system in 2007, so 2008 has actually been a bit of a recovery year for them.”
    North of the border, things were a bit more robust, with Eastern Canada camper nights down 1.3% and revenues up 3.7%. And although camper nights were down about 6% in Western Canada, registration revenues were actually about flat with 2007 year-to-date.

  • As for the various types of parks, or “segments” that KOA tracks, “attraction campgrounds,” those deriving more than 40% of their camper nights from campers registering for two to 28-night stays, were down 7% vs. 2007. “Overnight parks,” with more than 35% of their camper nights stemming from guests registering for one-night stays, were down more than 8%. “Snowbird/seasonals,” where more than 60% of camper nights stem from 29-plus night stays, have seen a 3% dip, while business at “combination campgrounds,” those that don’t fit firmly in any one category, slipped 7% in 2008.
    Rogers: This Country
    Needs You Right Now

    In his turn at the podium, KOA Chairman and CEO Jim Rogers told the Jamboree attendees that they, as entrepreneurs and sole proprietors who control their businesses and don’t have shareholders or boards of directors to answer to in most cases, are just what the country needs right now to lead it out of its economic malaise. “You don't have to deal with those demands,” said Rogers. “You have the ability to continue to take risks, grow your business and remain as enthusiastic as you are. We have to remember that. This economy, this country needs you right now. You create and make revenue every day.”
    Rogers maintained that KOA’s operators, who continue to reflect a younger demographic, will not only survive – but thrive – as the nation emerges from the current downturn.
    “Don't get me wrong,” cautioned Rogers. “I think we are in for some tough times in the first six months of 2009. You have to think about budgeting. But as we think about the next three to five to 10 years, we've got a nice foundation here. While we’re seeing a continued loss of sites as county or city or state parks or private RV businesses decide to sell out for an alternative use, our sites become more valuable.
    “We are not building new campgrounds in the United States. That's not happening. This (lack of) inventory is very important.
    “You see, there are 175 million camping nights generated in this country ever year. We (KOA) do 6 million. The pie is huge. We get a little sliver of it. Even it constricts a little bit, there's plenty of businesses out there for us. We just have to go get it. And obviously, the RV industry is going to adapt. We are an economical vacation, perfectly positioned for these people who are trying to find ways to save.”
    Overall Camper
    Satisfaction on Rise

    Regarding KOA’s own programs, Rogers addressed the company’s 6-year-old Kamper Satisfaction Survey (KSS), which reflects a 6.5-point increase in four years for overall camper satisfaction. Those KSS surveys also indicate that one out of five campers in the KOA network this year had never before been to a KOA. “We are building this business with new people,” said Rogers. “That it so important. And more importantly, if you think about the market that you want to spend a little more time in, about a third of all our campers are traveling with children. When we look at first-timers, over 50% are families. They give us very high satisfaction marks. These are happy people. About 10% systemwide of our campers are using tents, and about 22% of first-timers are using tents.”
    “There is a lot in these (KSS) diagnostics that is very, very positive,” he added. “When you look at the different campers, you need to think about their habits and what is changing and are we adapting and what are their expectations?”
    Also evident in the results of the KSS surveys, said Rogers, is the trend of people traveling fewer miles. Back in 2003, he said, 43% of KOA’s campers spent the night before they visited a KOA park at home. This year, 57% of all KOA campers spent the previous night at home, clearly reflecting the fact once again that people are not going cross-country to the extent that they once did. That means that a given park’s campers are its neighbors, said Rogers, who urged his operators to tune into that fact.
    “You've got to team up with the RV dealers in your neighborhood,” he maintained. “Their customers are your customers. Your customers are their customers. In a time of need like we've got right now, we've got to help those partners. We've got to have events at our campgrounds and help them sell vehicles. We've got to use that camp mail to reach out to your customers to spread the word.”
    Other KOA
    ‘08 Highlights

    In other news, KOA’s management team reports:

  • Launching the company’s upgraded online Value Kard Rewards loyalty program in March proved to be a challenge, according to Marketing Vice President Lorne Armer. “That (the launch) went very well,” said Armer, “but there are some things that didn't end up quite like we expected so far. Our projection was that by the end of the year, we wanted to have 262,000 (individual campground sales) of Value Cards from all sources. We think that by the end of the year it's going to be 210,00.”
  • Despite the vagaries of the current economy, the KOA network of franchise parks grew marginally in 2008. “You might think that with all of the challenges that came with 2008, that we should have seen a steep decline in the number of campgrounds added to the KOA system,” said Ott. “You’d be right to say that it certainly is more challenging, but it’s also been a year when a lot of independent park owners decided they no longer wanted to do this alone.”
  • KOA plans to expand its new partnership next year with Australia’s BIG4 Holiday Parks, and Rodger Powell, chairman of the 175-park concern, underscored that plan in his remarks to Jamboree attendees. Part of that linkage involves cross-training employees.
  • At a time when many observers might have felt otherwise, the cabin business continued to grow among KOA’s parks, just as it is among many of the nation’s other RV parks and campgrounds. Occupancy of KOA’s “Kabins” and “Lodges” grew 2% in 2008
  • The Montana franchisor has announced a unique partnership with Thor’s Airstream Inc. to station the classic towable RVs at participating parks.
  • Since KOA started the Come Camp and Care With Us charitable event in 2004 to assist kids with cancer, KOA has gone from raising a total of $29,000 its first year to $250,000 this past May. In 2008, more than 370 KOA campgrounds participated in what has become one of the industry’s true charitable success stories.
  • The fact that 100% of KOA’s parks have now adopted the KampSight reservations program has greatly enhanced the company’s ability to track progress and report various data. And plans call for further integration of the system in 2009. “This gives us data and knowledge that nobody else – nobody else – can duplicate,” Ott told KOA’s franchisees. “Go down the street and ask your independent campground neighbor if he knows how his season results compare to what’s going on in the rest of North America. Run some of the invaluable reports that KampSight now provides you. Give your independent neighbor a look at those. He doesn’t have that kind of information. Heck, ARVC (the National Association of RV Parks and Campgrounds) can’t produce that kind of campground-specific data, and neither can any of the state, provincial, or national governments in Canada or the U.S. They are all coming to us now to find out what’s going on.”
  • KOA named Cam and Paul Friesen, owners of the Watkins Glen, N.Y., KOA campground for the past 17 years, Franchisees of the Year. "Paul and Cam Friesen are great role models for every KOA campground owner – or any campground owner, for that matter," said Ott. "Paul has played a big role on just about every key advisory group within KOA, and has helped make the Kampgrounds of America system the industry leader that it is today."
    Also receiving special recognition was the Cardinal/Ottawa South, Ontario, Canada KOA owned by Daniel Parent and Karen McAndrew. That campground received the KOA Rising Star Award, given each year to a new KOA franchisee who has demonstrated “great operational and customer service skills early in their KOA careers.”
    The day began with the awarding of KOA President's Awards to 275 franchisees who received high guest service scores from their own campers in surveys and 99 KOA Founder's Awards to those franchisees who had received the very top scores from their campers via the surveys.

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