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Buying, selling hotels without walls

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There are lots of reasons to be wary of the institutional investors that are tripping all over themselves to get into the campground and RV park business. They drive up the cost of entry for the mom-and-pop entrepreneurs who have been the industry’s backbone. They jack up prices for campers and RVers, transforming a formerly low-cost form of recreation into an increasingly pricey one. And they tend to homogenize the business overall, chasing after the economies of scale that come through cookie-cutter standardization.

But perhaps the most worrisome aspect of this trend is that many of these investors don’t know what they’re buying. They haven’t been campers or RVers themselves, and they may not know any campers or RVers personally. They basically know only that the campground industry is a still relatively under-exploited segment of the commercial real estate (CRE) market and that they have a chance to get in early. If they don’t really know the business, how hard can it be? How different can it be from other CRE “hospitality” segments?

No difference at all, according to Bob Kaplan of NAI Outdoor Hospitality Brokers, as quoted by Woodall’s Campground Magazine in its current issue. “If you’ve been a hotel operator, then certainly you can figure out how to run an RV park,” he assured senior editor Jeff Crider. “In my eyes, a highly transient park is like a hotel without walls.” Easy-peasy, and in all likelihood just the kind of reassurance Kaplan provides the investors who turn to him for guidance as they wade into this brave new world.

Running a campground requires many skills

For someone who actually runs an RV park, however, Kaplan’s assurance is as nonsensical as declaring that anyone who has grown grapes can figure out how to run a winery. It certainly is possible. It’s just not going to happen overnight, and there’s a good chance there will be some bitter missteps along the way. Just as making the jump from vineyard operator to vintner requires sophisticated new knowledge, from soil chemistry, suitable varietals and fermentation to a host of other variables, running a campground requires—at a minimum—the skills and attitudes of a cruise ship director and a farmer in addition to those of a hotelier.

For example, most campgrounds have amenities and activities that are more common to Norwegian Cruise Lines than to Marriott Hotels, from climbing-walls and laser tag to face-painting, live bands and bingo nights. True, not all campgrounds fit that description: Some truly are just Spartan overnight rest-stops that cater to the traveling public, just as most motels do. But a preponderance of campgrounds market themselves to families, and that means kids in numbers that would set most hotel operators aback. Those kids and families require a level and kind of staffing that hotels don’t experience, a specialized repairs and maintenance budget for all those amenities, and a management sensibility more often found among elementary school teachers than among graduates of the Cornell School of Hotel Administration.

What is a “hotel without walls”?

Even more critically, a “hotel without walls” is another way of saying “outdoors”—with all the blessings and misfortunes that entails. That in turn calls for a farmer’s temperament and outlook, for working with mercurial—and increasingly extreme—weather, with changing seasons and with a campground infrastructure that is far more exposed to the elements than any hotel’s. A hotel with walls doesn’t have to contend with wildlife wandering in, or with guests who start campfires without respecting fire bans, or with diesel fumes and the rumble of generators. A hotel without walls is by definition thrown open to Mother Nature’s unpredictable and uncaring whims, quite unlike the constrained and regulated bounds of a brick, glass and steel fortress.

Possible slow deterioration of a hotel without walls

In other words, a hotel without walls requires more time and effort than most people looking simply for a place to “put their money to work” want to expend. So either they do a lousy job of it or—as Kaplan also noted—they turn to third-party management companies, like Blue Water Development Corp., Advanced Outdoor Solutions or Horizon Outdoor Hospitality, to do the heavy lifting. The ones that go it alone, believing that money is a meaningful substitute for long hours and actual work, tend to pump a bunch of it into their new property to justify hiking rates, even as previous levels of hospitality or maintenance decline. The result: a slow overall deterioration that may not be discernible for several years.

The others? Those are the parks that become buffed-up clones of each other, like so many interchangeable fast-food restaurants. They’ll fill you up, but a few days later you may be hard-pressed to remember what you tasted. And you might end up wondering why some people talk about camping as having been such a special activity.

 PREVIOUSLY FROM ANDY… 

Has RVing slowdown begun?

The fall equinox arrived last week, marking the transition from summer to fall. Now the days get progressively shorter than the nights, sweaters and jackets make an appearance, leaves turn color and drop. The great wheel turns, and with it we cycle into another phase, another set of rhythms and relationships with each other and with the environment. So, too, it would seem, with the camping industry. Continue reading.

Andy Zipser is the author of Renting Dirt, the story of his family’s experiences owning and operating a Virginia RV park, and of Turning Dirt, a step-by-step guide for finding, buying and operating an RV park and campground. Both books are available through bookstores or at Amazon.com.

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bull
2 months ago

Oh Boy the old “If you don’t know anything about my industry you are doomed to fail” BS!

The investors buying these campgrounds are smart real estate investors. The dirt is where it is at for them. Many of these RV parks are located on prime under used and under valued real estate that has been overlooked by local investors because of the current business on the property and their limited capital for investment.

The current crop of RV park buyers have LOT’S of investor money to spend on prime dirt and that’s what many of these RV park sit on. PRIME DIRT!

As is always the case when a new owner comes in and buys a commercial property they will change operations to fit their new business plan of operation for that property. The playbook is to run off the old owner’s and bring in their operator to run the property to their vision.

Change is a way of life and happens with or without you. Learn to benefit from change or become a victim of change. The choice is yours.

Gordon den Otter
2 months ago

My daughter works at Jasper Park Lodge in Canada, which is a set of cabins on a large property. She says that the hotel chain that owns it has a lot of trouble with managing it because all their metrics for cost control, maintenance, and even the number of rooms that can be cleaned per housekeeper per day, don’t work for that property. I can definitely see that trying to run an RV campground using hotel methods is going to have a very steep learning curve!

Seann Fox
2 months ago

As gas prices increase and covid restrictions decrease I can see a lot of people leaving rving now. Just look at the drop in the wholesale prices of RVs previously mentioned in this newsletter. I think in the next year or two you will see a lot of these investor types that bought RV parks will be exiting them very quickly.

Tommy Molnar
2 months ago
Reply to  Seann Fox

You could be right, Seann. But who will buy these parks from the exiting investors? At some point might we run out of folks who truly want into the business?

Jesse Crouse
2 months ago
Reply to  Tommy Molnar

They will sell them off to the highest bidder. More condo and apartment complexes. Where we live they are tearing down commerical properties and putting up so called residential condos and apartments with rents and association fees in the thousands per month.

George McEwen
2 months ago
Reply to  Jesse Crouse

I have noticed that in downtown Baltimore. They are turning old office buildings into fancy apartments with high rents. Yet Baltimore has a lack of low-cost rentals.

Tommy Molnar
2 months ago
Reply to  George McEwen

Probably no money to be made in “low cost” anything!

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