Category Archives: 2014 InSites Archives

Industry InSites July 2014

Competition Heats Up

Over the years, independent park owners that comprised much of the industry prided themselves on their openness and willingness to share information and experiences with other owners or new comers. This spirit of cooperation was a hallmark of the industry for many years. A rising tide – better operated campgrounds – would raise all boats – and everyone would benefit. While this spirit of cooperation can still be found in the business, there’s no doubt that competition is heating up among parks in many parts of the country. Several factors are contributing to the emerging competitive environment within the park business.

First, on the heels of the recession of 2008-2009, many campers and RVers are staying closer to home and traveling far and wide less frequently. The local and regional markets are the primary source of business for many campgrounds and attracting local and regional business is increasing important and competitive.

Second, there are more large companies expanding their network of campgrounds by acquiring parks in many markets, promoting their brands with considerable financial resources and expertise, and providing real competition where it may not have existed previously. Companies such as ELS, Sun Communities, Carefree, RVC Outdoor Destinations, Yogi Bear Jellystone Parks and KOA are bringing new marketing energy to the industry and working hard to expand their market share.

The deep discount camping clubs – Freedom Resorts, Passport America, Escapees – continue to expand, adding a competitive factor into the marketing plans of many parks.
And of course Good Sam and the new Amerigo Camping Club have more than 1.5 million members combined that they are pushing to their affiliated parks.
And for the independent campgrounds and RV parks around the US, we can’t overlook the new competitive force of Kampgrounds of America. Always a force in the market with more than 500 franchised and corporate owned properties, the new KOA initiatives to re-brand their affiliates to better help the RVer and camper find a KOA that meets their needs and now their plan to launch major national television advertising, KOA is rapidly repositioning its brand to gain wider appeal to all segments of the RVer and camper market and to expand their markets into the non-camper segment by aggressively promoting their cabins. KOA has always been a powerhouse marketing engine within the industry, but now with these initiatives, they are changing the popular perceptions of KOAs as good but not great places to camp to great places to visit. Raising their standards and demanding that affiliates become better and better, they are likely to grab market share across the US.
Finally, the competitive field is being challenged by federal, state and county parks that are expanding campgrounds and upgrading to a higher and more developed standard in order to attract more business and raise rates to support public recreation and public parks. There is no doubt in my mind, that these facilities are going to increasingly challenge private, commercial parks for market share.

The future is clear for independent campgrounds – step up your game in all aspects of your business to compete successfully or risk being the victim of declining occupancy as others “eat your lunch” in your market.

With the growth of RV sales and the rising popularity of outdoor recreation and camping, it’s a new era for the park business, one that calls for everyone to be on their toes all the time.

Technology Comes to the Laundry Room

I remember being impressed when my kids were in college and they could use their credit cards or school-issued meal cards to pay for the washers and dryers in the dorm laundry. Great idea. But I was taken by surprise by the latest development in laundry technology that I saw recently at a campground.

Aside from the ability to charge your washing and drying on a credit card, there was a system that enabled a customer to receive a text on their phone when a washer or dryer became available and another text to alert when their washing or drying was finished. No more hanging around waiting for an open washer and wondering where the thoughtless person was whose wash was done, “why were’nt they here to take their clothes out so I can use the machine?”

A good step forward in delivering top notch customer service in today’s technology age.

Are Campground Game Rooms and Cable TV On Their Way Out?

I’m hearing that many parks are re-positioning their game rooms and arcades. As more and more kids and families are traveling with their own game devices, many of the formerly popular arcades are seeing the revenues decline, especially on video games. While there may still be a good market for pinball games, billiards or pool, air hockey and crane games, the old reliable video games are rapidly becoming a thing of the past.

What’s your experience?

Along the with the changes in the game room business, it would seem that offering cable tv may also be on the decline, or at least about to head in that direction. With rapidly expanding demand for quality internet service with sufficient bandwidth to enable streaming of movies and television programs, combined with rising costs of providing cable television, it seems that the time may be coming to do away with cable television and put the savings into providing the best internet access possible. There is significant cost associated with quality park-wide wireless internet, but the savings on eliminating cable tv may compensate for the cost of providing high quality wi fi.

Anybody heading in this direction?

Digital Marketing for the Outdoor Recreation Industry

Industry digital marketing expert and RV Cooking Show hostess Evanne Schmarder is publishing a bi-weekly Digital Marketing Newsletter for the Outdoor Recreation Industry. The newsletter is available at no charge – drop Evanne a note at evanne@roadabode.com and ask her to add you to the subscriber list. If you agree that electronic marketing is the way to go for marketing your park, and even if you’ve got an expert social media marketer on your staff, you owe it to yourself to subscribe to this newsletter and keep up to date on the rapidly growing field of digital marketing.

Each issue is filled with ideas, tips, suggestions on how to improve your digital marketing and how to expand your reach.

And while you’re at it and contacting Evanne, ask her for a copy of her recently released Digital Marketing Benchmark Study, a valuable report on what your competitors are doing in the digital marketing era.

David Gorin Associates is a sponsor of both the Digital Marketing Newsletter and the Digital Marketing Benchmark Study. Digital is the wave of the future.

Industry InSites

Campground Management Myths
David Gorin

As I write this column on February 10th, we’re slightly more than halfway through the winter. And a tough winter’s it’s been certainly for the middle and northern tiers of the country. For the southern tier across California, Arizona, Texas and Florida it’s been pretty good – not great but way more better than up north. So with an unusual winter weather-wise, what’s new in the park and RV business?

Class A’s Coming Off the Floor?

Sales of motorhomes of all types were decimated during the 2007 – 2010 recession. Class As hit the floor in 2009 with the sale of just 5,900 units. These units appear to be making a comeback sales slowly improving to 13,100 in 2010, dropping slightly to 12,700 in 2011, increasing to 14,582 in 2012, and to 19,054 units in 2013. This latest number amounts to approximate 6.7% of all RV sales falling into the Class A category, up from just 5.6% in 2012, 5.5% in 2011 and 6% in 2010.

Can Class As continue to make a comeback in 2014 and beyond? In 1999, the peak year for Class A unit sales, these motorhomes were 15.4% of the total RV market. Will the industry reach that class A penetration any time soon?

The impact of the decline of class A unit sales seemed for some time to have effected the site sales in class A motorcoach only resorts and the development of new Class A only resorts. Judging from anecdotal information gathered at the recent Tampa Super Show, the Class A only resorts seem to be making a comeback, at least as far as exhibiting at Tampa would indicate.

If RV sales continue their march upward in the next few years, sales of Class A will likely also continue to trend upward in terms of numbers if not in terms of a percentage of RV sales. Will the increase in sales lead to a further resurgence of Class A only resorts? From my point of view, I don’t see a need for many new motorcoach only resorts, at least until all of the current inventory is absorbed, and it appears there’s a way to go in that direction. And from a development point of view, going Class A only certainly narrows the consumer market. With new luxury Class C’s and 5th wheels, the luxury RV park market can continue to grow while serving the upscale luxury RV segment without limiting itself to just Class As.

Many RVers I talked to at Tampa and at various parks in Florida are interested in luxury and the cost of the rig is not critical. However, the size of many class As is intimidating or simply considered unnecessary for much of the sophisticated upscale RVer market. I want the best but in a small, luxurious package. I want it simple and easy. And most of all, I want it to be reliable. The bigger the rig, the greater the possibility for mishaps and breakdowns.

Reservation System Choices Expanding

Of late, I’ve noticed two trends around the park business…….more and more park owners wondering how to best select a property management and reservation system and more companies apparently entering the park property management and reservation software business. This comes as no surprise as the park industry generally seems to be in the midst of a growth spurt and when business increases, new entrants are expected at all levels and in all business segments.

The latest entrants……..The Flybook, Front Desk Anywhere, RV Spotfinder, Go USA Camping, RMS North America

The latest entrants are best characterized by their new market approach, their background in related markets such as hotels, b & b’s, outdoor activities, their younger cutting edge team, and their stretch into the outdoor hospitality business. Expect you’ll hear a lot about these companies in the coming months.

The industry stalwarts……Campground Manager/Bookyoursite.com; Campground Automation/Sunrise; Digital Res International; Leisure Interactive/Hercules; Reserve America; Cottonwood Software/Campground Master; Vestivo RV/Reservation Management Solutions Inc.

These companies generally have a solid footprint in the park industry by virtue of their longevity in the market. These are well respected companies that have a long record of supporting the park industry and ARVC and are in to both the public and private campground sectors.

The up & comers…….Campground Connections; Open Book; Webrez Pro; Campworks, Centrum Systems.

These are generally new comers to the park business but have strong backgrounds and roots in technology and hospitality. Expect these folks to make noise in the coming years.

How to select a system for your park?

Selecting a system is a time consuming and tedious job that starts with park ownership and management doing an honest and deep assessment of what they want a technology system to provide. This entails carefully analyzing the park’s current business strategies, marketing, advertising, pricing, reservation practices and policies, activities, retail and rental operations, accounting practices, and information needs. And then, easier said than done, matching this analysis to the available systems.

Cost is always a factor and the systems vary widely in how they charge for services. The more bells and whistles, the higher the cost is likely to be. The more basic the system, the more basic the cost will be.

If you are just starting out in the process of selecting a Property Management System (PMS) or Reservation System or both, this might be an area where a consultant might be helpful, depending on your own level of knowledge and comfort with technology and park business. If you are thinking of switching from one system to another, here too a consultant may be helpful in working through the options and screening the park management from some very capable sales people. You don’t necessarily want to be sold on a system; you want to make your judgements based on needs and your assessment and not on a friendly salesperson.

Feel free to use the list of companies mentioned above to start your search on the internet. Each has a website and that’s always a good place to start to familiarize yourself with the products and services. And as with everything else these days, remember to check consumer reviews, talk to colleague park owners and seek out testimonials.

Good luck in your search.

Build New vs. Buy Old

Campground Management Myths
David Gorin

For some time, I’ve been on my soap box talking about the need for new product in the campground and RV park business. Why are there so few new parks being built? What’s the attraction to buying older parks and trying to modernize them to meet today’s consumer desires?

Well, the last two weeks or so, I’ve been hit between the eyes with two real life opportunities that have challenged and tested my ideas on new development vs. buying existing. Here are the two scenarios. What road is the best to pursue – developing new in an A location or buying existing in a B or C location.

Scenario One

The property is a 12 acre parcel located on a primary 4 lane highway less than a mile off an interstate highway exit in southwest Florida. The property is about 9 miles from the Gulf of Mexico beaches in a very prominent tourist area. I’d consider the location to be an A or an A-.

The land is approved for 109 sites including RV sites and cabins and no length of stay restrictions. The site is served by municipal water and sewer. Directly across the highway is a major high end residential and golf club and about 2 miles down the highway is the entrance to a very large and very successful residential, retail and recreational community. The curb appeal of the property is very good to excellent.

10 years ago the property owner and his son began building an RV park. 49 sites were developed, all with 50 amp electric and about 40’ x 70’ dimensions. An attractive entry road was completed and all the internal roads were asphalt. Individual sites were not paved. The park has never operated.

The owner’s son was the developer. Unfortunately, the son passed away suddenly at 44 years old. His father was devastated and for 10 years he could not bring himself to either finish the project or sell the property. The park was not completed and has never operated.

The seller is asking $2 million for the property and the improvements and is not interested in providing any financing. It is estimated that it will cost about $3 million to complete the remaining approved sites and rehabilitate the existing 49 sites. The existing roads need to be re-surfaced and the pedestals probably need to be replaced and electric meters added. The site also needs a swimming pool, restrooms, laundry and a clubhouse of some kind.

Because of the quality of the location, there is considerable demand for affordable RV sites. A review of the area indicates that monthly rental in the $500/month range is reasonable and annual leases could go for $4500 to $5000 annually. It is assumed that the park could be fully rented to RVs and park models within 24 to 36 months.

Scenario Two

This property is a 12 acre parcel located on a just off a primary 4 lane highway about 15 miles from a major interstate highway exit in central Florida. The property is located in a mid-size city and is along a commercial stretch of highway. While the area is known for its equestrian farms and there are many large equestrian estates in the general area, the park is not located in that area. Due to the commercial nature of the adjacent property and the uncertainty of future uses for the undeveloped land across from the park, I’d consider the location to be an B- or a C.

A road passing along the rear of the park is now being expanded from 2 to 4 lanes. How this will impact on traffic and noise along that part of the park is uncertain.

This is an existing and operating RV parks with 104 RV sites and 2 park model sites. There are no restrictions on adding more park models and there is no length of stay restrictions. The site is served by municipal water. Waste is handled with a septic system.

This park was developed in 1998 by an RV dealership that is located adjoining the RV park. The park was developed as a sales and marketing tool for the dealership. The dealership has used sites in the park for their customers taking delivery on a new RV or coming for service. They provide up to 3 nights for buyers of units and provide driving and RV maintenance lessons during that time.

The RV park is accessed down a road that runs a long side the dealership. The land opposite the dealership along this road is vacant. There is also direct access from the park into the dealership.

The internal roads are asphalt as are all of the sites. There is a 4000 sq ft combination office, store, clubhouse, restrooms, and laundry. This building is in good condition. There is a small fenced in swimming pool with a nice sun deck next to the clubhouse.

The seller is asking $2.1 million, and is offering to finance about $1.5 million at 5.5%, 30 year s amortization with a ten year balloon. In 2012, the park grossed approximate $330,000 including store sales (amount unknown) and about $84,000 in rent from the RV dealership for the use of the sites. Revenue was about $3000 per site. Occupancy from December to April runs about 85% and rental rates are in keeping with the surrounding area parks. There are 10 sites that are occupied on an annual basis. It is estimated that there is about $350,000 in deferred maintenance including upgrading the restrooms, resurfacing the roads and sites and adding electric meters to each site. The park is rated 9/8/8 by Good Sam.

Based on the above and assuming that financing was available for each scenario, which route would you take? Buy and develop the A property in a solid location but no current cash flow, or buy and upgrade the B/C property in a marginal location but with existing cash flow?

Thoughts? Comments? Please drop me an email with your ideas…..david@davidgorinassociates.com

Campground Management Myths Debunked – Part 2

Campground Management Myths
David Gorin

Last month’s column featured 5 popular campground management myths and this month we continue that conversation with 5 other myths that seem to be particularly popular these days.  And once again, my thanks to colleague Evanne Schmarder for sharing some of her campground management myths.

As always, reader contributions are encouraged.  Are there other campground management myths you’ve come across that you would like to share?  Leave a reply below so we can share them with our colleagues.

Myth 6 (we left off last month at Myth 5)

 Work Campers are Free Help. Or at least they are inexpensive help.

 Nothing could be further from the truth but it’s this campground  management myth that makes the concept of having RVers work in a park so attractive to many park owners.  Everyone who works in a park carries some cost equal to at least the federal or state minimum wage.  Federal law requires businesses to pay their employees and generally volunteers are not permitted.  Every worker must be compensated in some form, either cash or a combination of cash, living expenses and other benefits to which a cost is clearly assigned (electricity, use of a company car, etc.).

As an aside here, if you are hiring minimum wage staff, there’s a good chance you’re getting minimum quality people.

Myth 7

 ADA compliance isn’t terribly important; in all the years I’ve owned this park, I’ve had only one or two persons with disabilities as guests.

 Assuring that your park is compliant (or working towards compliance) with the various provisions of the Americans with Disabilities Act is important for several reasons.  First, the ADA is a federal law and your business must be complying with federal laws.  Failure to comply can open you up to federal lawsuits brought by the US Department of Justice if a guest files a complaint with the Justice Department.  Second, parks that offer ADA compliant facilities and services and welcome persons with disabilities will find that niche market to be a profitable addition to their business.  Approximately 8% of all Americans have a disability that is covered by the ADA – and that’s a market that is as large as the RV market – about 8% of all American households own an RV.

Compliance with ADA not only makes your park accessible to people with disabilities, it also makes your park more attractive to senior citizens and to families with young children, both of whom share the benefits of ADA compliant facilities and amenities.

Myth 8

 A large majority of my guests come from more than 50-75 miles away.  There’s really no reason for me to advertise locally or be very involved or concerned about my community.

 When they review the geographic distribution of their guests, many park owners are quite surprised to see how many guests come from 25 miles or less from their park.  Local folks who own RVs are always looking for places to go and even just 25 miles from home can feel like a real vacation – even for just a day or two.

Being known locally, being involved in local civic, business and other groups will surely lead to referrals from people in your community who may have friends, relatives, friends of friends and so on.  Just 25 camper nights resulting from local referrals at $40/night is an extra $1000 in revenue this year and over the next 10 years as fees rise and your reputation grows locally you could be looking at way more than $10,000 in revenue as a result of local involvement.

One other thing.  You never know when you will have an emergency need that someone locally can help address.  People help people they know and like and that will help them when needed.  Buying locally, supporting community and being an active player in addressing community needs will put you in a position to where others will want to help you in times of need or trouble.

Myth 9

 I’ve owned and run many successful small businesses – a restaurant, a HVAC company, and a self storage facility.  And I own some rental vacation properties.  Running a campground is a piece of cake and I really don’t need to go to industry meetings and conventions.  Not much more I can learn.

 Like any business, while running a campground may not be rocket science, an RV park or campground has many unique characteristics and aspects not found in most other businesses.

There are very few businesses where the customer is in the “store” for 24 hours at a time, where you have to provide for their basic needs like water and heat or a/c, and take care of their hygienic and bodily needs.

There are very few businesses where the customers are in such close quarters with each other for long periods of time, where they are sleeping, eating and doing whatever else they do in a small box maybe just 15 feet from their neighbor, where they often share bathrooms with strangers, and where their conversation, music, television, and kids can be heard by surrounding neighbors.

And how many businesses are there where the owner or manager has to be a store keeper, a utility operator, a recreation director, a swimming pool operator, a social worker (to deal with difficult people and seasonal campers), personnel specialist, maintenance expert, and do all of this not just with the guest looking over their shoulder, but often their spouse and kids watching and commenting on every move.

Fortunately, there are numerous ways for the new park owner to gain the knowledge necessary to transfer from former businesses to owning and operating a campground.  Trying to build a successful campground business based on your previous business experience could be a fatal mistake.

Myth 10

Walmart is killing my site nights and taking my business.

 If you are simply providing amenity-free, no hook up, parking lot camping and charging for it, yes, you may be losing site nights to Walmart to those campers looking for that type of overnight camping.    Walmart (and other parking lots) offer amenity-free, no hook up, parking lot camping for free so if you are offering a similar experience and charging for it, you will probably lose some business.

However, if you are a full service RV park and are priced appropriately for your market you will attract those RVers who seek a full service RV park experience.  You and Walmart are competition with each other the way a Motel 6 is in competition with a Hilton. Both levels of accommodations will attract a specific market each night.  Motel 6 customers will always go to a Motel 6; Hilton customers will go to Hiltons.  Only rarely will a Hilton customer go to Motel 6 or a Motel 6 customer go to a Hilton.

Yes, sometime Hilton guests will stay at a Motel 6, but that’s generally when no Hilton is nearby.  And yes, some campers will stay some nights at Walmart, but generally that’s when there is either no full service campground nearby, or it is difficult to get to, or the price is out of the ballpark.

How to compete with Walmart for campers?

Here are some ideas:   Add value to your overnight experience – offer a complimentary continental breakfast each morning; provide a discount coupon for use in your park on a return trip; charge non-overnight RVers full price to use your dump station; offer a travel rate for arrivals after 7 pm and departure by 8 am; offer complimentary shuttle service from your park to Walmart for guest shopping, etc.

I don’t mean to minimize the damage a Walmart parking lot can cause to a nearby campground.  But Walmart’s focus is on retail sales.  Your focus is on overnight camping.  Walmart knows more about retail then you do – and you know more about RV parks and RVers than Walmart.  Focus on your strengths and think out of the box.  Rather than wasting time and energy on Walmart, put that time and energy into attracting more guests to your park.  It’s not always about the money.

Campground Management Myths – We Want to Hear from You!

Comments?  Criticisms? Suggestions?  Weigh in on the campground management myths discussion by leaving a reply below.