Fresh competition for RV parks

Amid the frenzy of buying and selling RV parks and the relentless hiking of site fees, it’s easy to lose sight of up-and-coming competitors grasping after the same limited supply of investment and consumer dollars. Two recent Wall Street Journal stories underscore fresh challenges to the RV industry that may take some of the wind out of its sails.

On the recreational front, campground investors should be looking over their shoulders at boat and marina sales. Waterside properties, as the Journal reported Tuesday, got a huge boost in 2019 when the Internal Revenue Service ruled that fees paid for boat slips and boat storage could be counted as real-estate rents, just like other commercial properties. That more favorable tax treatment then got juiced by the pandemic, as consumers realized that boating–just like camping–is a relatively safe way to socialize outdoors, all of which adds up to a revitalized investment opportunity.

Industry analysts say the marina business “resembles the manufactured-housing and recreational-vehicle industries before institutional investors discovered them and drove prices much higher,” the Journal reported. Indeed, U.S. sales of boats and marine products and services were up 14% last year over 2020. Meanwhile, Blue Water, which in recent months has been aggressively adding to its portfolio of RV parks, is moving almost as briskly deeper into the boating sector, announcing Monday that it had acquired two more marinas, in Delaware and Virginia.

While boats and marinas may cut into the RV sector’s recreational business, a similar challenge is emerging on the lodging front. Extended stay hotels, which cater to guests staying a week to three months, “were popular with first responders, nurses, military and construction workers during the early months of Covid-19” the Journal reported Monday. That’s exactly the customer base that was flocking to campgrounds as well, and as the Journal also observed, as the pandemic wore on and Americans began to travel more, those hotels “attracted vacationing families, project managers and information technology workers”–again, precisely the same customers who were filling up RV parks.

The tricky aspect of this development is that the spiraling increase in RV campground rates is starting to put them at a competitive disadvantage. Room rates at extended stay hotels start at less than $50 a night for approximately 300 square feet, including a bathroom and kitchenette–twice the size of most RVs, and without the expense of buying, maintaining and insuring one. A full hook-up RV site for $50 a night is quickly becoming just a memory, and even more upscale hotel extended-stay accommodations–like Marriott’s Residence Inns, which offer even more space and such upgrade amenities as dishwashers–can charge $140 a night and still be an attractive alternative.

The cost of renting an RV site is climbing because RV parks are changing hands at prices that have become unmoored from business fundamentals–mortgage debt has to be serviced, and the easiest, fastest way to do that is to charge the customer more. At some point, however, many of those customers are going to look around and start wondering what they’re getting for their dollar, and whether it’s enough.

And that’s when the bubble will start deflating.

Author: Andy Zipser

A former newspaper reporter who worked at a variety of newspapers, from small community weeklies to The Wall Street Journal, I finished my "normal" work life as the editor of The Guild Reporter, official publication of the union representing newspaper workers. On retiring, I and my wife bought a campground in the Shenandoah Valley and--with the help of our two daughters and their husbands--operated it for eight years, first as a KOA franchisee and then as an independent family-owned RV park. We sold the campground in May, 2021, and live in Staunton, Virginia, a short walk from our grandsons' home.

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