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KOA Says Time to 'Rebrand' Parks Has Arrived

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March 4, 2013 by   - () Leave a Comment

The dust has settled over the dramatic announcement last fall that Kampgrounds of America Inc. (KOA) would embark on a new program to segment or rebrand its nearly 480 campgrounds into one of three categories and by and large, the bold move has won style points from across all sectors of the RV park and campground industry.

The idea is to step away from a “one-size-fits-all” perception of KOA parks in the public’s eye and, in the process, to generate new business among consumers who will have a better ability to match their expectations with the park at which they choose to spend the night, the weekend or an entire vacation.

Says Jim Rogers, KOA CEO who came to KOA from the hotel industry, “We have to appreciate that this is where we have come from and that our research tells us that there are still millions upon millions of campers in this country that think of us as an Interstate system. This is how we begin to break through that perception.”

Industry members sampled by Woodall’s Campground Management (WCM) had glowing comments:

  • “I embrace it,” said Al Johnson, executive vice president of Outdoor Adventures Co., a Hill City, S.D., firm that owns 10 KOAs from coast to coast and is the largest franchisee.
  • “We think segmentation is inevitable,” said Andy Cates, president of RVC Outdoor Destinations, a Memphis-based owner of upscale RV resorts across the Southeast. “KOA is such a large player in our industry, their movement to segmentation is important for all of us and for the entire industry.”
  • “I’m not surprised by KOA’s move to segment its parks,” said David Gorin, founder and president of Best Parks in America. “I’m sure they’ve extensively studied every aspect of this very significant move and that they've got a very sound strategy to make the segmentation work for their exceptional brand.”

KOA President Pat Hittmeier speaking at the 2012 KOA convention.

Definitions Still Being Formulated

KOA plans to brand its parks into one of three categories: Journey, Holiday and Resort. The standards for each category are still being formulated but in general, the Journey campgrounds are designed for overnight guests who are looking more for a place to spend the night than for an amenity-rich park. The Holiday campground would be more of a destination park, while the Resort campground would be a place that has an abundance of services and facilities.

The concept of segmentation is patterned after the hotel or indoor hospitality industry where it has proven very successful among consumers who have developed clear ideas on the differences among accommodations.

For his part, Pat Hittmeier, KOA president, said the initial reaction to the branding strategy among KOA franchisees when KOA unveiled it to all the franchisees at the convention in Orlando, Fla., was one of acceptance.

During the convention, Hittmeier told WCM, “Based on the kind of reaction we’re getting here with this record crowd, I’d say that we were on the right track. We laid things out on the first day and have been talking about this new program in the hallways and we’ve got a lot of momentum going with this right now, and I think it’s going to be very big.”

Over the winter, franchisees had more time to think it over.

“As things settled down, people become more tentative,” he said.

“The reality is, I’ve become very confident in what we’re doing and the reasons why we’re doing it. I think the franchisees are struggling with it,” Hittmeier said.

KOA distributed two brochures to franchisees detailing the new strategy, and owners have now had several months to pour over the details.

To further gauge public reaction and iron out the weak points, KOA top management met with the 12-member board of the KOA Owners Association in February in Florida to review the plan.

Hittmeier expects as many as 50 “early adopters” will open their campgrounds this season reflecting the rebranding, while others may take several years.

KOA projects to have the entire system rebranded by mid-2016, he said.

Outdoor Adventures Co.’s Johnson anticipates his firm will have two to three campgrounds that meet the Resort brand and two to three that fit the Journey brand, with the rest falling into the Holiday category.

“We’re still trying to figure out what we need to do for each of our properties, figure out who our customers are at each one and figure out which branding will apply,” said Johnson, an exercise that every KOA franchisee was likely engaged in over the winter.

He expects the company will have to make certain expenditures at each park, no matter what category they end up in.

The necessary expense to meet the new criteria is part of the initial backlash that KOA expected from the rebranding, Hittmeier said.

“I feel like the process we’re initiating includes a longer timetable,” Hittmeier said, because it will give campgrounds time “to pay attention to things that are most important to the guests: improving campsites for size, power, access and angles. We have many parks that already do that; some don’t. The process to get the majority to meet these criteria could take many years. The bottom line is: it will improve the quality of the system.”

At the same time, Hittmeier stressed that this new way of looking at KOA’s franchised and corporate-owned parks is not a “good, better, best” type of formula, but one that should instead appeal to an Internet-minded world in which a demanding and time-starved public has increasingly exhibited a “need-to-know” or a “know-before-you-go” sort of attitude. And KOA’s management believes these new brand positionings will not only help set those expectations, but, according to the plan, ultimately drive new business to KOA campgrounds.

Andy Cates

Cates the Cheerleader Applauds KOA Move

There may be no one in the campground sector more excited about the KOA rebranding than RVC’s Cates. He has met with KOA often over the past four years to discuss industry matters, and quite often the topic of branding came up in discussion, Cates and Hittmeier confirmed. “They have been open and friendly about it,” Cates said of his talks with KOA. “We have absolutely begged them to accelerate what we knew they needed to do.”

“We felt when we started RVC that branding was inevitable,” Cates said, a mantra he has tossed around in so many discussions across the industry that he concedes listeners are “sick of hearing it.” But, he quickly adds, “It is necessary for everyone in the industry to hear. It is critical that it moves forward and accelerates. I know guests want to know what they’re getting. That is also true for franchisees and individual property owners to find out where they fit in.”

Cates continued, “I think their current segmentation effort is probably a compromise between what we would consider segment definitions and their reality in trying to keep a big tent in place. Regarding the pushback (from franchisees), there will be some pushback but ultimately they will keep some franchisees happy. If this keeps strong properties in the network, then good for KOA. They needed to do that. It’s not who they will anger but who they will keep in the long term. We would posit they didn’t have a choice. It’s more dangerous not to segment.”

He feels that RVC is establishing the “Hilton niche” in the outdoor hospitality market, but it becomes harder for guests to identify if they can’t compare it to the entire industry and other players. In the long run, this move by KOA will benefit RVC, he maintains.

Cates said KOA is not only the most recognized brand in outdoor hospitality but also one of the most identifiable among all U.S.-based franchises of any product or service. Yet, within KOA is “extraordinary inconsistency across the properties. Physically, these properties are very different.”

Outdoor hospitality is such a diverse industry that it is hard to segment, Cates admits, unlike the hotel industry. Indeed, RVC’s own definition of segments within the industry differs greatly from KOA’s. For example, Cates and RVC identify five different segments within outdoor hospitality. They term them campgrounds, RV parks,

RV resorts, outdoor destinations and luxury motorcoach resorts and like KOA, RVC has extensive definitions for each segment.

Cates said he was heartened by the fact that KOA will adopt a form of quality assurance to guarantee that each of their franchisees who adopt one of the three brand names are what they profess to be. “Campgrounds are not going to be able to just hang the sign up tomorrow without having to make sure that they meet these qualifications that we can then market to that particular defined camper to help drive that business,” Hittmeier said.

That’s good news to Cates, who considers his RVC holdings upscale resorts, which will now be competing on a more level playing field with other parks, at least the KOA ones, that call themselves “resorts.”

However, Cates quickly added, “We are much less concerned about the specific definitions and more excited about the broader conversation.”

At the other end of the spectrum, Johnson said he’s glad KOA chose the word “journey” to describe the campground best suited for overnight travelers, the type of campground his company seems to specialize in.

“The journey serves a traveling market. It’s helpful to us. We don’t have to wonder if we have to be doing resort style amenities. We don’t need an Olympic swim pool or a hall for reunions” to be considered a “journey” park.

As an outsider, Cates says he’s still thinking through whether KOA went far enough in its segmentation.

For example, he noted that some KOA franchisees have made a considerable investment in their campgrounds but they are in isolated areas. “Other properties are in good locations and in good markets but the property owner is not putting dollars into the property. That is their biggest challenge.”

Of the 26 campgrounds that KOA directly owns, Hittmeier anticipates that four will carry the Resort label with most falling into the Holiday category.

The Outlook for Segmentation

Not all in the industry are going to wrap their arms around segmentation, Cates predicts.

“There are some major players who do not want segmentation,” he said. “They don’t care. They say they do but they don’t. They are investors. They are manufactured housing operators. I don’t think they are motivated to see significant change in customer expectation. If you are a giant and the world is working just fine for you, change is not in your best interest.”

Cates also anticipates there will be KOA franchisees who are in a great market and want to be considered a “resort” property but KOA will say they can’t because the franchisee is not meeting the resort standards and the franchisee is unwilling to make the capital investment to meet the standard.

“That will lead to a lot of uncomfortable conversations,” Cates said.

When asked whether he thought the KOA rebranding would become an industry trend, Hittmeier initially said, modestly, “I don’t think so.”

But on further consideration, he said he would not be surprised if parks adopt some of KOA’s principles in marketing themselves.

“They might look at it as a way to address their marketplace. It’s the best way to compete in a local marketplace, in an area with, say, five RV parks around you; I think they’ll do that.

“Out 10 to 15 years in this industry, the natural tendency of the independent operators will be to congregate in groups, maybe a common ownership to a Best Parks kind of thing going on. It could be campgrounds that focus on transient overnight business become their own marketing group.”

Does KOA risk losing some franchisees over the branding effort?

Hard to say, says Hittmeier. But, he added, “KOA will work hard to keep that from happening.”

In summary, Hittmeier said, “I feel good that it will be a good platform for us to improve the overall experience for our guests at KOA campgrounds and improve the quality. It’s not easy to do when you have a lot of independent parks. In the end, it will increase our business.”

 

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