The fall equinox arrives today, 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. After a couple of hot-house years in which RVs and anything to do with them seemingly exploded across the landscape, the first hints of an impending cool-down have become visible, even as broader underlying trends suggest a deeper downturn than many industry participants might be prepared to weather.
In that regard, two sets of recently announced numbers specific to RVs and RVers are especially telling. One has to do with RV wholesale shipments, which now are projected by ITR Economics, which prepares quarterly forecasts for the RV Industry Association, to end 2022 at less than 500,000 units. That would represent a stunning near-17% decline from the 600,240 RVs shipped to dealers last year–and that’s not the end of it. ITR’s mid-range forecast for 2023 predicts another 16% drop, to 419,000 units.
Putting aside the pandemic-blasted sales figures for 2019, that means projected RV shipments for next year will be at their lowest level since 2016. Coming on the heels of last year’s unprecedented construction boom, with RV builders hiring boatloads of new employees and adding assembly plants at a frantic pace, the implications are for a massive disruption of RV-dependent economies everywhere, but especially in Elkhart, Indiana.
The other notable numbers are from KOA, which recently reported a 5.6% increase in short-term registration revenue–even as it reported a 3.4% year-over-year decline in second-quarter occupancy. Moreover, long-term registration revenue for the same quarter was up 6.9%, while occupancy was down 3.3%. There’s only one way to reconcile fewer bodies with higher revenues, and that’s with higher prices, which at the very least should raise questions about the sustainability of such a business model.
Higher prices of all sorts, meanwhile, suggest that the slowdown KOA and RVIA are seeing will only accelerate in the months ahead. The Fed’s continuing interest rate increases, most recently projected to exceed 4.5% by year-end, will further dampen consumer spending, whether it’s for discretionary big-ticket items like RVs or for discretionary leisure activities like increasingly pricey RV sites. And gas prices, to which the RV sector is especially sensitive, may be rebounding after falling from their $5-a-gallon peak, bumping up by a penny yesterday–ending a 98-day streak of declines.
One signal of what’s to come may be getting offered by the investment groups that have been piling pell-mell into campground acquisitions–not that they’re slowing down, by any means. They are, however, lowering their sights, taking more of a long-term view that puts a greater emphasis on getting a foot in the door. As Randy Hendrickson, CEO of United Park Brokers, told Woodall’s Campground Magazine in its current issue, “a few years ago the criteria may have been 200-plus sites in the Sunbelt. [But] investors now recognize that 70-site parks with additional acreage” may be a better option, paving the way for “extracting internal value later through expansion or repositioning.”
The purchase of smaller campgrounds, it should go without saying, also is more easily financed, yet another consequence of higher interest rates. But it also means an unexpected down-market consolidation of the industry, further squeezing out would-be owner-operators.
Yes, winter is coming.
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