Demand for Park Models, Cabins & Yurts Grows
Private campgrounds and RV parks and resorts are continuing their move into the accommodations business with park models, yurts and site-built cabins, despite continued difficulties obtaining financing in many cases.
The reasons are clear: Rental accommodations broaden a park’s business base while generating at least two to five times as much income as a traditional RV site, depending on the park’s location.
At Yosemite Pines RV Resort & Family Lodging in Groveland, Calif., for instance, 26 park models and eight yurts generate nearly as much income as its 181 RV sites combined, according to park co-owner John Croce. That’s roughly five times the income of a typical RV site.
In the 465-park Kampgrounds of America Inc. (KOA) network of franchised and corporate-operated parks, in turn, recreational park trailers account for two percent of campsites, but generate 6% of income, or triple the typical RV site revenue, according to Mike Atkinson, KOA’s director of lodging.
And while the recession has hammered the hotel industry, private park operators have found that their rental accommodations have remained resilient. KOA alone saw a 14% increase in “same store” park model rental income from 2008 to 2009, Atkinson said.
This kind of market success with campground rental accommodations is spawning intensifying competition among park model manufacturers as they vie with one other to provide private parks with increasingly attractive, competitively priced units.
And that competition more than likely heated up last fall when Jackson Center, Ohio-based Thor Industries Inc. announced a new strategic partnership with the National Association of RV Parks and Campgrounds (ARVC) to provide rental-lodging at special discounted pricing for ARVC’s nearly 4,000 affiliated parks.
“The immediate response since we made the announcement last fall has been overwhelmingly positive,” said Shane Ott, Thor’s director of campground relations. “We’ve literally had dozens of serious inquiries regarding both park model and travel trailer rental options.”
The ARVC-Thor partnership involves “ruggedized” park models and travel trailers tailored for rental use by Thor’s Breckenridge, Airstream Inc. and Keystone RV Co. subsidiaries.
Possibly adding to the impact of that new partnership is the possibility of Thor finalizing terms of finance package with “a major financial institution” that could sweeten the deal by helping ARVC campground owners obtain financing for Thor’s campground lodging products, Ott said a press time.
Cavco Pursues Eastern Market
With Fleetwood’s Virginia Plant
Meanwhile, one of the nation’s largest park model manufacturers, Phoenix, Ariz.-based Cavco Industries, has ratcheted up its competitive edge by developing its first ever East Coast manufacturing presence with the acquisition of an 80,000-square-foot manufacturing facility in Rocky Mount, Va., which it acquired through its purchase of Fleetwood Homes. The plant helps Cavco significantly reduce its park model shipping costs for its Eastern U.S. customers, since the company’s other park model manufacturing plants are in Texas and Arizona.
Tim Gage, vice president of Cavco’s specialty division, said the Rocky Mount plant has been a boon for KOA’s East Coast franchisees, who can now order custom designed Kamping Lodges with lower shipping costs than they could in the past from Cavco – a preferred KOA provider.
KOA, in fact, is increasingly embracing park model accommodations. While KOA parks have traditionally provided their guests with site built cabins and cottages, Atkinson said the company’s focus today is on fully furnished park models. “As we grow our accommodations business, park models are the product of choice over site-built cabins – not because of quality, but because of ease of installation,” he said, adding that KOA expects to have 1,000 park models in place across North America this year, up from 640 in 2009.
Unlike site-built cabins, park models manufactured by members of the Recreational Park Trailer Industry Association (RPTIA) can usually be set up in private parks without building permits because they have an RPTIA inspection seal.
Nor are building permits typically required for travel trailers manufactured and inspected by the Recreation Vehicle Industry Association (RVIA). Permits are usually required, however, for yurts and site-built or kit cabins.
“The need for building permits (for yurts) will vary depending on the local site, intended use and conditions. But most of the time a permit will likely be needed,” said Pete Dolan, a customer service representative for Pacific Yurts Inc. in Cottage Grove, Ore., adding that the company offers its customers documentation regarding the fire resistance of the yurt materials as well as a structural analysis of snow and wind loads to assist with the permitting process.
“Ultimately,” he said, “(whether or not a permit is needed) will be the local building official’s decision, since the yurt is a unique structure and can fit into a number of different categories within existing building codes.”
Dolan added that Pacific Yurts is seeing growing demand for its products as rental accommodations. “Although it’s only February, we expect our sales figures to be stronger than last year,” Dolan said. “The demand for yurt rental accommodations has been steadily building for the past decade and a half. We are seeing this trend continuing to build steam as more people experience the unique comfort and durability that our product offers.”
Dolan also said the private parks are seeking larger yurts with more amenities, including bathrooms, kitchens and television. “These deluxe accommodations offer the comfort of a deluxe cabin, but still offer a closer connection to the natural environment that tents provide,” he said.
There’s Nothing Like a Rustic
Cabin — Park Model or Not
Of course, while park models and yurts are becoming increasingly appealing to park operators as rental accommodations, some parks retain a soft spot for the traditional log cabin or site built cabin. Log cabin builders also tout the value of their products.
“Typically, park models don’t appreciate while a custom-built house appreciates,” said Mike Sokol, owner of Distinct Discovery Homes in Greenville, Mich., which specializes in high-end custom log cabins for consumers and private park operators. Units can be built with cathedral ceilings, ponderosa pine interiors, stone fireplaces, and wraparound porches.
“We can build their lodges, their bathhouses and their activity centers,” Sokol said.
Clayton Eash, owner of Ligonier, Ind.-based Riverside Cabins, started building log cabins three years ago after purchasing the business from his father-in-law. He said he started building custom log cabins for campgrounds to use as rental units last year and has had “an amazing amount of calls” after promoting his log cabins in WCM.
Eash uses white pine logs and believes that his structures will last longer than park models. “They’re built a lot stronger,” he said. “I also insulate them. It doesn’t take a lot to heat them.” He also uses log purlins instead of rafters to help support the roof. “People really like them,” he said.
Private park operators thus have a growing array of accommodations products from which to choose, and the list keeps growing as the RV park and campground sector turns toward these types of accommodations. Only time will tell how far this trend will extend, and how much it might ultimately change the face of the business.
“Units for rental purposes are a growing percentage of our business,” said Dick Grymonprez, vice president of marketing for Texas-based Athens Park Homes, whose company announced an agreement this month to provide park models for RVC Outdoor Destinations, which has private parks in Arkansas, Georgia and Florida.
“We’re real encouraged about the number of resorts that are looking at park models as either a rental unit or a unit to sell,” Grymonprez said, adding that the only thing keeping parks from purchasing greater numbers of units is continuing difficulties obtaining financing.
Athens introduced a rental cottage series last year. “It’s a series of units that have 6-foot front porches, Hardiboard siding and very sturdy interiors so they can handle the wear and tear of rental use.”
Breckenridge, Chariot Eagle,
Others Look for Solid 2010
Tim Howard, president and CEO of the Breckenridge Division of Thor’s Damon Corp., Nappanee, Ind., said the recent ARVC-Thor agreement has helped to energize the accommodations market sector. He also sees this year being a turning point of sorts for the park model business, which suffered a decline in sales during the recession along with other segments of the RV business.
“If I was doing a line graph and graphing the overall prevailing business, last year that line would have been headed down. This year it’s heading up,” he said.
Park models utilized as rental units by campgrounds are becoming an increasingly important market segment, according to Chariot Eagle founder and CEO Bob Holliday, whose company has manufacturing operations in Ocala, Fla., and Phoenix, Ariz. Rather than spend money to purchase their own park model, many consumers may be inclined to rent one, he added. Chariot Eagle is also seeing more market optimism among its dealers and retail customers. “We expect business to be better this year than last year, which was the toughest in our 25 years,” he said.
“We see (campground rental products) being a growth market for us,” says Larry Weaver, national sales manager for CrossRoads RV, a Topeka, Ind., Thor subsidiary that introduced a travel trailer at ARVC’s annual InSites Convention in Orlando that has been “beefed up” so that it can be used as a rental unit.
So, too, does Nappanee, Ind.-based Fairmont Homes take an optimistic view of 2010, according to General Manager John Soard.
While 2009 was a tough year, Andy Davis, sales manager for Pinnacle Park Homes, Ochlocknee, Ga., says his company managed to stay profitable through the worst of the recession and is off to a “phenomenal” start this year.
And Western Homes’ Silvercrest Division, a Corona, Calif.-based subsidiary of Champion Enterprises, which has traditionally targeted consumers with its high-end park models, is looking for a continued surge of business from the high quality units the company is providing for timeshare developments in Northern California and Arizona. “These units are designed as rental units,” says Western Homes General Manager Al Whitehouse. “That’s why the timeshares have come to us. They sell at intervals, a week at a time, and they are specifically interested in the durability of the units.”