Buying, selling hotels without walls

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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