Gorin: Park Owners Should Watch RV Buying Trends
David Gorin is the former president of ARVC and is currently the president of Best Parks in America and the principal of David Gorin Associates LLC. He can be reached by email at david@bestparksinamerica. The following column appears in the December issue of Woodall's Campground Management.
As 2012 winds down and the winter holidays approach, I want to wish all of the park industry people a very Merry Christmas, Happy Chanukah and a wonderfully happy New Year. It's been a tough year in many places and a very good year in others – the one thing that is consistent in most of our lives is inconsistency from one year to the next. I know I join with everyone in the hope and prayer that 2013 will be more consistently peaceful, healthful and prosperous than years we've experienced in recent times and that everyone enjoys a year of health, happiness and success.
What are the State Parks Thinking?
If you follow the daily campground and RV industry e-mail newsletters that hit our e-mail boxes daily, you can't help but sense that the state park systems around the country are gearing up to expand their services to RVers and campers and move more and more in to the heretofore space reserved for private commercial RV parks and campgrounds. Despite budget crunches almost everywhere, it seems that state parks are trying to ride the wave of increased interest in camping by upgrading their campgrounds and seeking to build revenue to support the parks.
I recently had occasion to work on a project that involves the upgrading of an existing state park campground. The state is providing $1 million to upgrade a 50-site campground located in a state park about 50 miles from a mid-sized city. The park already has a swimming pool, picnic areas, athletic fields, mountain biking and hiking trails and other typical park amenities and recreation.
The campground offers 50 sites of varying sizes and can accommodate RVs of almost any size. The park has 2 ADA accessible sites and all sites have 30-amp electric and water hookups and about half the sites have sewer hookups as well. There are two bathhouses and one covered pavilion with a very attractive large fire pit. The park charges just $20 a night. The day I visited the park midweek in October, about half the sites were occupied. The two very spacious and very well appointed ADA sites were both occupied by folks from Florida who were spending two weeks at the park before heading back home to Florida.
I am still trying to figure out the rational for a state to spend $1 million to upgrade 50 campsites so they can accommodate the largest motorhomes at just $20 a night. And then fill the place up with out-of-state visitors taking advantage of the state's generosity? I can't understand the reasoning here. I don't know of any commercial park that would spend upwards of $20,000 a site to upgrade existing sites and then charge $20/night for the sites. Not sure how that math works out for a private park owner or for the taxpayers in this particular state.
I did a little checking around and found that RV camping at state parks in the surrounding states ranged from a low of $23 to a high of $38.50 – and here's this state offering overnight RV camping in fully developed sites at just $20.
Are Fuel Economy Claims Accurate?
A recent Winnebago announcement reports on its new fuel efficient RVs: “The combination of the powerful six-cylinder turbo-diesel engine with Winnebago Industries’ build quality and floorplan selection make these products a ‘can’t miss’ at this year’s California RV Show,” said Winnebago Industries’ Vice President of Sales and Product Management Scott Degnan. “Winnebago Industries produces more motor homes on the economical Sprinter chassis than the rest of the industry combined, with consumers reporting between 15-20 mpg.”
In the auto industry, the Environmental Protection Agency oversees auto industry compliance with posting of fuel efficiency data and compliance with the corporate average fuel economy standards. Fuel efficiency is posted on a window sticker on every new vehicle. Many Americans count on accurate fuel efficiency reporting in making purchase decisions.
The time is either rapidly approaching or is already here for the RV industry to develop a third party verification system to support the energy efficiency claims of manufacturers in a manner similar to the data posted on the sales stickers of autos. Either the industry should act on its own to provide consumers with reliable efficiency information, or face the likelihood that the federal government could step in as they have with the auto industry.
Changes in Preferences Hit the RV Market
In recent months there's been some below the radar reports on a very important change becoming evident in consumer RV preferences. The number of Class A and Class C motorhomes has declined dramatically in recent years and the impact on the park industry may be quite significant.
The ratio of towable sales to motorhome sales for the last decade of the 20th century was about 2.2 towable sales for each motorhome sale. It was this balance that led to many campgrounds undertaking to enlarge RV sites to accommodate the increased sales of larger motorhomes and to many new sites being built far larger then previously considered necessary.
For the first five years of the 21st century (2000 to 2004) the ratio of towable sales to motorhome sales ranged from 3.8 to 4.4 towables sold for each motorhome sale.
From 2005 to 2009, the ration began to widen from a low of 5.5 towables sold to each motorhome sold in 2005, to 12.7 towables sold for each motorhome sale in 2009!
For 2010 and 2011, as sales of RVs generally picked up, the ratio dropped a bit to 9.4 and 9.9 towable sales for each motorhome sale. The estimate for 2012 sales is 9.4 trailers for each motorhome sale.
Will motorhome sales rebound? Is this a new normal?
My sense is that the Baby Boomers who were driving motorhome sales prior to the recession, have re-evaluated their options for retirement and for consumption of luxury goods and motorhome purchases are not as possible or desirable as they were in earlier years.
On the other end of the age spectrum, younger families and empty nesters have become more cautious and realistic about their needs and capabilities. The recession has, in my view, caused significant re-evaluation of priorities and the need to protect against future economic possibilities. Smaller and less expensive is better; energy efficiency is important to control costs; and in many cases, renting is far better than owning expensive toys.
The park industry should carefully consider and watch the purchase trends regarding towables and motorhomes. Class A only resorts may be very vulnerable in the coming years as the existing stock of Class A motorhomes declines. As current Class A owners and Class A-only site owners age out, where will the replacements come from? Will more towables lead to more seasonal camping? Will towable buyers move up to motorhome ownership as they age?
Interesting trends call for careful monitoring, research and adjustments in the coming years.
One Other Thought
From a park industry executive as quoted in a recent newspaper article: “We felt and still feel there is an opportunity to disrupt an industry that has not changed in 50 years.”
The article goes on to say that the executive noted that there wasn’t a hospitality company that oversaw many of these sites and that most were owned by people looking for passive real estate investments.
What's your perspective on this? Do you agree with this assessment? Has the park industry been stagnant for 50 years? Have you seen changes in the industry over that time? Are many of the sites owned by people looking for passive real estate investments? What does it take to be successful in the park business?
Please share your thoughts at firstname.lastname@example.org. I'd enjoy hearing from you and exchanging views.
Happy New Year!