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WCM Survey: Park Model/Yurt Builders Optimistic

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January 19, 2012 by   - () Leave a Comment

The master bedroom of a solar-powered park model built by Palm Harbor Homes, a division of Cavco Industries Inc.

Private park operators are continuing to increase their investments in park model cabins, cottages and yurts as they work to both diversify and fortify their business base in a challenging economy.

And even though private parks have been stepping up their investments in rental accommodations for several years, the parks themselves are still a long way from reaching the saturation point, according to both park model and yurt manufacturers.

“There’s no letup in demand for rental units,” said Joe Follman, sales manager for Ocala, Fla.-based Chariot Eagle, which is promoting new floorplans as well as more rustic cabin-style park models.

“I don’t think there’s saturation by any means,” said Alan Bair, president of Cottage Grove, Ore.-based Pacific Yurts, adding that demand for yurts as rental accommodations is coming from both public and private parks.

“Once a campground or park puts them in, they buy more,” Bair said. “People love the unique experience. It’s different than what they’re used to. It’s unusual and exciting and they remember it.”

Park model manufacturers report a similar experience. Small- and medium-size parks typically order one or two park models to start out, and then gradually increase the numbers based on consumer demand.

Some park operators say the level of demand for rental accommodations has surprised them.

Operator Surprised by Rental Demand

Interior of a upscale yurt by Pacific Yurts.

“It’s a market I didn’t plan on,” said Ken Butschek, who owns La Hacienda RV Resort near Lake Travis, Texas, who is seeing rising demand for park model rentals from RVers and non-RVers alike. His park model renters include Lynn and Gary Kingsbury of Vermont, who opted to leave their fifth-wheel at home this winter and rent a park model instead.

“One of the issues we have in leaving Vermont in January is that it’s quite an adventure with the cold and the snow and the roads,” Lynn Kingsbury said. “We love our RV. But we decided to see how we like staying in a park model.”

Liz Fisher of Seattle drove her Class B RV to La Hacienda RV Resort this winter as well, but she’s renting a park model instead of staying in her RV.

"One thing I like about park models is there are windows all around, so there is more light coming in, and I have a deck facing south, so I can enjoy the sun," she said.

Butschek said Winter Texans are also renting park models because they offer an easy way for retirees to enjoy the Sunbelt during the winter months. “I’m getting a lot of people renting my park models this winter because they don’t want to rent an apartment or sign a lease,” Butschek said. “Here, they don’t even have to turn on utilities. They just bring their clothes and food, and they’re good.”

Butschek said he is considering adding eight park models this year to his stock of 21 because of the winter traffic.

Park model rentals, of course, also enable park operators to broaden their business base to include individuals and families who don’t have a tent or RV, which explains their allure to public and private park operators across the country.

KOA, LSI Still Growing Park Model Segment

“We’re going to continue to grow (the rental) segment of our market,” said Pat Hittmeier, president of Billings, Mont.-based Kampgrounds of America Inc. (KOA), adding, “I don’t think we’ve hit saturation by any stretch.”

KOA corporate and franchise parks purchased several hundred park models during the past two years, including 340 in 2010 and about 230 in 2011, Hittmeier said, adding that KOA parks plan to purchase another 230 park models this year, which the company plans to market as “deluxe cabins.”

Dutch Park Homes park model

Milford, Ohio-based Leisure Systems Inc. (LSI), parent company of Yogi Bear’s Jellystone Park Camp-Resorts, also expects its franchisees to continue to broaden their rental base with park models this year. “We saw revenues jump 13% in the rental business (in 2011),” said Rob Schutter, LSI’s COO. “We don’t see that abating any time in the near future.”

Aside from broadening a park’s business base, park models can significantly increase a park’s income, said Dick Grymonprez, vice president of marketing for Athens Park Homes in Athens, Texas. He added that park operators can pay off their units in less than two years in some locations.

“In my campground, it’s about 20 months,” said Joe Moore, general manager of The Vineyards Campground and Cabins in Grapevine, Texas, adding that park models can generate two to three times the revenue of a typical RV site. “It depends on how well you market the product and what your clientele is and your location,” Moore said, adding that he’s been purchasing units from Athens Park Homes in recent years.

Ken Lawrence, production manager for Indianapolis, Ind.-based Yurts of America, which featured a yurt at the Outdoor Hospitality Conference & Expo in Savannah, Ga., sponsored by the National Association of RV Parks and Campgrounds (ARVC), said the payback can be even faster with yurts, given their lower cost. He added that 24- and 30-foot-wide yurts are also available, which are ideal for large groups, such as children with chaperones.

Builders to Market Product at State Shows

Interior of a park model built by Woodland Park.

Increased park operator interest in rental units has also generated increased competition among manufacturers as they compete for sales in a challenging business environment.

“It is a fairly competitive market,” said Daryle Lambright, North America sales manager for Woodland Park in Middlebury, Ind. “We really see the rental market opening up to more floor plans as well as some units with nicer features and residential style appointments.”

Despite the competition, growing numbers of park model manufacturers are stepping up their involvement in the rental market. “We’re going after the rental market more than we have before,” Lambright said.

Larry Weaver, sales manager of Goshen, Ind.-based Dutch Park Homes, whose product offering includes a log cabin style park model, said his company is also stepping up its involvement in the rental accommodations market. “We’re going to be a lot more aggressive at Dutch Park than we have been,” he said. “We’re going to attend the Ohio and Michigan state shows,” he said. “By being at the state shows, we’ll find out what (parks) want and we’ll build it. Rental units are really coming on strong. You need to be where people are looking for rental units.”

ARVC has also weighed into the market, offering park operators significant savings on rental units through a preferred provider agreement with Elkhart, Ind.-based Skyline Corp. Skyline, in fact, is expected to showcase a new rental unit for the campground market in March during the Wisconsin Association of Campground Owners (WACO) conference and trade show.

Solar-Powered Park Model Unveiled at Tampa Show

Phoenix, Ariz.-based Cavco Industries, for its part, has increased its competitive edge by acquiring other companies, including Palm Harbor Homes, Fleetwood and Nationwide Homes, which provide Cavco with the ability to produce park models in every region of the country. “Our direction has always been to work outside of the box and create products that are conducive to the property that wants rental cabins or cottages,” said Tim Gage, Cavco’s national vice president of park models, cabins and specialty products.

Cavco’s latest park model designs include a new off-grid solar powered park model cottage, which the company showcased at the KOA convention in Las Vegas, as well as the nation’s first “net zero” park model, which was shown by its Palm Harbor Homes subsidiary in January at the Florida RV SuperShow in Tampa.

“This is green to the point of being ‘net zero,’ which means you typically have a ‘zero dollar’ utility bill or in some cases end up selling power back to the utility company,” said Mike Wnek, Palm Harbor’s senior vice president, adding that the unit’s 3.2 KW photovoltaic panels generate more than enough electricity to use each day.

Dubbed the Staniel Cay Eco Cottage, after an island in the Exuma Cays archipelago east of the Bahamas, the 399-square-foot unit is designed for use as a part-time residence or vacation cottage in Sunbelt RV resorts as well as on private property in the Caribbean and Central America.

Builders Say Lending Environment Improving

Pinnacle Park Homes park model.

About the only thing putting a brake on park model sales is the availability of financing. “I could list 10 campgrounds who will tell me they’ll buy five park models right now if we could find them some financing,” said Grymonprez of Athens Park Homes. “We need some new lenders out there.”

But while the limited availability of financing has limited the park model industry’s growth in recent years, some park model manufacturers tell Woodall’s Campground Management they are starting to see some improvement in the availability of financing.

“The market has started to loosen,” said Lambright of Woodland Park. “We’re hearing a lot less complaints from the dealers (about the availability of financing). There are a couple more lenders that have entered the market, which has helped as well.”

Andy Davis, national sales manager for Pinnacle Park Homes in Ochlocknee, Ga., is also seeing some improvement in the availability of financing.

Manufacturers are also working to increase their sales of park models to consumers, who use them as weekend retreats or vacation cottages at private parks across the country. “This time of year, most of our sales are in Florida and Texas, but there is still business going up north,” said Follman of Chariot Eagle.

Some park model manufacturers are seeing rising demand for their units in Canada and overseas as well. “We’re actually building units for China,” said Dave Hostetler, sales manager for Bridgeview Manufacturing in Elkhart, Ind. “A lot of our business is overseas.”

Bair of Pacific Yurts is also seeing rising demand for yurts overseas, particularly from vacation resorts in Europe. “We expect to see a continuing trend of (sales) improvement,” he said.

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