By Andy Zipser
Author, Renting Dirt
Last week, I briefly outlined how soaring demand for RV campground sites is stressing out commercial campground operators, even as it has sparked growing interest in the investment class.
People with money see campgrounds as relatively unexploited investment opportunities, while campground owners are increasingly receptive to being bought out. But what does all that mean for the RVing public? The answer, I’m afraid, is less personal service, higher prices and more dissatisfaction overall.
Let’s start with RV site rates.
I’ve mentioned “dynamic” or “demand” pricing in the past, under which the cost of a site will vary according to demand. This algorithmic approach is already familiar to anyone booking an airline flight or hotel room, and the “hospitality industry” gurus sweeping into the campground sector don’t see any reason it shouldn’t be applied to RV sites as well. For these experts, campgrounds are simply a “back of the woods” sector of the lodging industry – that’s exactly how a former CEO of Kampgrounds of America (KOA) described it almost a decade ago – that needs to be dragged into the modern age. And the RVers who are rolling into campgrounds with their oversized fifth-wheels and motorcoaches are making the case for them.
“These aren’t campers,” one campground owner told me at the Virginia Campground Association (VCA) meeting two weeks ago. “They’re hotel rooms on wheels,” and they’ll be priced accordingly.
Occupancy rate at RV campgrounds
But there’s an additional dynamic that most RVers don’t understand that’s also goosing prices, and that’s the occupancy rate. Most RVers assume that campground owners desire a 100% occupancy rate, because that means there’s no wasted inventory – all the sites are being used. But for the industry’s number crunchers, 100% occupancy (except on rare occasions, like holiday weekends) means you’re not charging enough. “When occupancy rates start hitting 75% or 80%, it’s time to raise prices – you don’t want to be at 100%,” Donna Bordeaux, a CPA who specializes in campground accounting, told VCA members last week.
Raising rates will drive down occupancy, which means less stress on the facilities and on staff, and if balanced correctly will bring in just as much (if not more) income. Over time, as the occupancy rate starts inching back up because of continued high demand and waning price resistance, the rates will be raised again. Meanwhile, Bordeaux added, campgrounds also need to do away with weekly and monthly rates in season, when the potential to fill those sites at overnight rates means “you’re just giving it away” with a discount. Indeed, Bordeaux would do away with all discounts – from Good Sam to military and first responders to AAA – which in her view cheapen the product.
Most family owners of campgrounds resist these prescriptions because they don’t see themselves as being in the lodging industry. They tend to view their campgrounds as recreational facilities, with repeat customers who come back year after year for the unique combination of staff and amenities that they’ve enjoyed in the past. “I couldn’t do that to them,” an owner for more than 30 years of one of Virginia’s largest campgrounds told me about the increasing pressure to raise rates.
“They’re almost like family.”
But “family,” alas, does not factor into the algorithms driving the new acquisition wave, which treats campgrounds and RV sites as fungible commodities. Indeed, the McDonaldization that has overcome virtually every consumer segment of the economy, with its emphasis on efficiency and predictability, is starting to wash over the campground industry as well.
So, for example, while online reservations initially were embraced as a premium add-on, that script is starting to flip: pretty soon, it will be campers making telephone reservations who get hit with a surcharge, in an effort to drive more business to online systems – and allow campgrounds to operate with fewer desk staff and shorter business hours. Besides, as Bordeaux pointed out, campers who prefer to use the phone rather than go online trend older and are more inclined to complain about prices. “They’re generally paying less if they’re calling you,” she observed, the implication being that there are other, more desirable customers.
Bordeaux is hardly an outlier.
The pricing gospel she delivered has been an increasingly dominant refrain for several years at campground conventions, often underlain by a bemused (and faintly condescending) impatience toward those who don’t understand the new fundamentals. The new class of investors, often coming with either a money management or lodging industry background, doesn’t have those blind-spots. And the rest of the industry is being swept along, even if kicking and screaming, and will console itself with fatter bank accounts and rising property values.
As for the RVers? They, too, will adapt, as they already have to self-service gas pumps, self-scanning checkouts at supermarkets and drive-up windows at fast-food restaurants – all the little ways capitalist society finds to move us along more efficiently, to someone else’s benefit.
In the four months since he sold the Walnut Hills RV Park and Campground, Andy Zipser has written a book about his family’s experiences that goes on sale this Monday, Oct. 11, priced at $4.99 for the ebook version and $14.95 for the paperback. Look for Renting Dirt at your favorite bookseller (including Amazon); or you can order a discounted paperback at his new website and blog, renting-dirt.com, where you can also keep up with his other writing on the campground world.
Related:
Ex-RV park owner has no regrets for selling: Stress was too much
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I can see demand pricing working best at full amenity, vacation destination resorts where the guests arrive and rarely leave the park until they depart. Campgrounds that cater to seasonal guests find out it isn’t the individual and family entertainment that generates their revenue, but the far simpler facilities that allow people to congregate and form seasonal communities. The people who form those communities tend to return year after year and look more for stability including pricing. And for the most part, those communities are not high maintenance – guests as a whole self-police because duh, it’s their home while they are there and they intend to come back.
I will be a full time RV’er in April of 2022. I hold an MBA in supply chain and operations management and work for one of the Big 4 accounting firms. Ms. Bordeaux is looking at the situation in a pure economic manner. However what she failed to do was to walk through Adam Smith’s invisible hand premise… one which declares that when there is money to be made in an industry, there will be more people who will start new business in the industry which I turn will drive competition and will ultimately bring prices down (as well as profits). She also failed miserably to do her homework and realize that there is a massive growing trend in the RV industry… people are buying RV lots where they pay up front and own the property going forward. The total cost is often much cheaper than renting on a night to night basis. Lastly… if you hurt someone (an RV owner) who has been loyally coming to your facility for years… you will probably loose that customer for life, that experience will be shared.
I live in the Black Hills in So. Dak., I have not paid for one night and we camped a lot this year. Boondocking beats the higher campground fees, and the crowds. Hopefully all the trash people leave will not end having these places to go, we gather all we can and sometimes several bags.
Regarding your last sentence, I happen to find all the ways you list how the capitalist society has moved us to benefit “someone” else (not the consumer) as actually benefiting me (the consumer). I could not imagine pulling into a gas station and having to wait for an attendant to pump my gas when I could pump it faster and cheaper. Having to go inside to get my fast food is not my idea of fast food. And when I go to the grocery store to get just a couple of items, it sure is nice that I can checkout myself and not to have to stand in line. I know your list is not exhaustive, but I don’t see how the capitalist society has wronged me. We are not outside the capitalist society; we are capitalist society. Therefore, I believe general statements such as this is dangerous as it leads to misinformation about Capitalism.
As referenced below, they are missing a big part of this ‘ecosystem’. Being part of the workcamping economy, a lot of these vacation destinations rely on the nomad community to provide seasonal staff. If the only campgrounds available to Nomads are rundown parks with majroity permanent residents, the nomads will move on. If there are no decent affordable campgrounds that will provide the monthly discounts for the seasonal RVer workers, then the local attractions won’t have the staff needed to keep their businesses open, or run at full capacity, during the seasonal upswing. Not to mention the other businesses that rely on RV workers, like Amazon Distribution Centers, etc.
This “woman” the article author speaks of would do better working with politicians seeking World takeover! It’s horrible how humans scratch and claw at each other to get ahead. And at the embarrassment of our poor barely surviving planet.
(Camping) in these parks is hardly considered camping anymore..many of the newer models are oversized and gaudy with un necessary amenities like a bar, TV or electric fireplace ( just stay home , then)
The other extreme is the choking smoke from fire pits, and generators..hardly healthy or pleasurable. Most sites are tooooo close together. At any rate, they’re All too costly – just to park on Mother Earth for a few days- which was meant to be Free to all of us. The problem is now there’s too many of Us everywhere and they take advantage This had always been the poorer/ more rugged mans vacation. So it’s been ruined
Just as your da*n investors / real estate greedy have made RV living parks and the mobile home communities into Luxury living
Shameful
There’s 245 million acres of BLM. Obviously you don’t like people I’m sure you can find a place in the middle of that 245 million acres where there aren’t any.
Unfortunately the bulk of the BLM is in the Western half of the country. Those from the east have little choices. Vacation RV’er families from, lets say Maine, don’t have the time to travel to Arizona for a holiday.
There isn’t any or very little BLM land East of the Mississippi. So the East side of the country is screwed.
So true we travel more than camp I hate vacation camp grounds The smoke from camp fires Dogs, loud music and who thought the outside TV was. Good idea at a camp ground.
Boondocking is the only way to go
Yes it is
I totally agree with you RV parks are not camping to me its just apt living changing neighbors every day hardly relaxing
We are on a job in Virginia staying at a rv park. Here is how they charge people. IF you are not making good money it is 300.00 monthly. No full hookups,wifi not available. IF they ask you if your a “pipeliner” and you say yes,,, it goes to 550.00 a month, the reasoning I was told is because 50amp makes the bill higher in the electric side of it. BS, our 30amp was way higher electric bill being a 1989 model, bought a 2019 model and our electric is under a 100.00. I’ve heard so many bad comments on the owner and a few workers here. Sad how people judge rent by your job choice. Not all of us bank money like some of the pipeline workers make. Some are just laborers with no per diem. I Don’t see how it’s legal to charge a rate like that by your job.
This person sounds very greedy and $$ hungry. Does not care about anything other money. Should stay out of the RV park business.
The key word is “BUSINESS”. The business is around to MAKE money.
Wait – he should stay out of business because he wants (needs) to make money? Ok.
It all comes down to money. Now I see campgrounds filled with workers and permanent residents. And with it the deterioration of the site, not to mention no room for travelers. It’s becoming a problem especially in hot tourist destinations.
I’m sure in the future it may change. However, one RV park I booked for next January charges $5 to book online (Probably have a service managing their bookings, so I called). Another campground I tried to book online for May & June (on way to and from our destination) was a KOA and will be going private. We’ve stayed there a number of times. Owner said they were planning on calling repeat customers, she had our info said they will call when they are set up. One campground where we stop in Jan & then again in March have a 2 night minimum and will only take reservations for 1 night a week in advance. They have 400 sites, well spaced, lots of room. In January only a handful of sites filled. Even in March unless it’s near Mardi Gras or a weekend, pretty empty. They have events on many weekends. Lots of amenities for kids & adults. We are booked out on our trips, but not coming home. Should be fun…lol.
Business consultants are really, really good at one thing – promoting themselves. I’ve listened to many over the years and heard some say adamantly one thing and another the opposite. You know your business better than anyone else. I would say listen to what they have to say but follow your instinct.
As more RV parks are purchased by chain RV parks, the numbers crunchers will be in control of pricing and we will see a move toward the “hotel” or “airline” pricing model. This will mean high prices during peak occupancy periods, and low prices during the other periods. However, most RV parks already have at least a two tier pricing based on seasonal, and demands, changes.
With the increase of rver’s and costs going up and up I think we will be forced to end our traveling. The comfort of staying in my own bed preparing our food is not worth the price of a 4 or 5 star hotel. Especially when we are furnishing our own home. The parks are small and most sites are on top of each other, amenities are closed or not available. So prices really do matter in our traveling plans in the future. Home is looking more and more appealing. Also spending the enormous amount of money for solar is not an option for Boondocking for us. It’s sad when you reach the place in life where you have the time and the means, at least we did have, to travel and now see those dreams fade away.
Sad but true😕
I’ve been RVing since the 80’s and it was a beautiful thing. It was something you could afford as a family. Now with the money hungry society we live in, it won’t be long before I hang up my hat on RVing too. Nice hotels are becoming just as affordable.
For those of us who visit a privately owned campground year after year, why not consider approaching the owner and offering to invest in that campground ourselves? Us RVers fork out millions (if not billions) of our money every year for sites, equipment, etc. If we were able, even on a small scale to have others using those private campgrounds to invest even a small amount to improving the infrastructure of our favorite private campgrounds, think of how nice so many of them would be. And they wouldn’t have the urge to sell out to the CamperWorld type vultures.
Taking on investors creates a whole new set of issues for the owner. The only one who will profit from that is the lawyer who draws up the paperwork and collects fees for filing the paperwork.
GREED! pure and simple. It’s happening everywhere. House prices, rents, lumber, grocery store prices, dining out at our favorite restaurants. It seems that everything we buy has doubled or more in the past couple of years except our retirement income.
Its easy to confuse one’s economic system with one’s political system because they’re both required parts of any society. Greed is just the far end of the spectrum for capitalist democracies. Just like government control of everything is the far end of socialist systems. Everything isn’t black and white and luckily we in the U.S. are somewhere in the middle both economically and politically despite what the political parties might want us to believe.
My mantra is that the only thing I do to an extreme is to act in moderation.
Love your mantra!
I agree with you on that .Where is our cost of living raised for the people that is on S/S ? Biden pass out the stimulus check so where is our raise?
Ernie-you already know the answer to that one. SSA COLA’s are annual, always have been and always will be. Stop trying to be the distraction and focus on the issue.
You are 100% correct
It’s been my experience that even popular campgrounds have available sites during non peak times. Those times would be weekdays especially during the school year.
If campgrounds start to follow hotel charge practices than consumer demand will require other hotel charge practices. For instance, 100% refunds for 24 hr notification on cancelation. Most campgrounds have at least a one day charge for such cancelations.
Campgrounds aren’t the same as hotels. All they provide is water and electric. I provide the rest. Imagine a hotel room that only has a plug and a faucet……I still pay an average of $75 a night. No maid service.
I’ve been RVing for almost 50 years, if campgrounds and RV parks continue to raise prices and be over crowded the next 24 months my RV is history. I used to travel for a living and I learned to hate airports, hotels and restaurants, not going to have that environment with my RV also. I’ll stay home thank you very much.
Agreed. I don’t believe any campground owner is “forced to sell”. It’s their business and they can run it how they wish. If the want to sell and take advantage of offers presented to them then that is their business too. Having said this, I believe that the largest problem facing independent owners today is the need for infrastructure upgrades which cost big money. I see many owners selling out to the vested interest simply because they do not have the combined resources of the “McDonaldization” corporate giants. I also believe in another big issue is today’s RV’er providing a source of fuel for this fire with their ever increasing need to be connected with the world around them, 24/7, instead of using the rigs for their intended purpose, which is to “recreate” and step back for a while and relax. Their condos, meetings, and 50 hour work weeks will still be there when they get back.
You answered your own quiry. Being forced to spend $$$ on infrastructure and amenities improvements is a huge part of the changing business costs for RV park owners.
Investor companies are coming in to take over these parks. In fact, KOA has been bought by Thousand Trails, which makes them even less appealing to me. The more they own, the less individual attention for each location.
For all these reasons, we generally avoid these corporate types. We prefer city and state parks, COE campgrounds and National forests.
Juls,
KOA is privately owned by Oscar Tang, just as it has been since 1983. Kampgrounds of America has no connection either financially or via ownership structure to the Thousand Trails organization.