RVers adopt a wait-and-see attitude

It is a given that industry representatives will insist the sun is shining even as thunderheads pile up on the horizon—and really, who can blame them? But for everyone else, being lulled by rosy forecasts that ignore storm clouds can result in a good soaking. Or worse.

Having declared a month ago that the 2023 camping season was off to a strong start, which is demonstrably true, KOA went out on a limb by assuring the public that campers “are also starting to make solid plans for the rest of the year.” But “solid” requires some context. As previously reported, a year-over-year comparison of KOA’s surveys actually showed a remarkable softening: fewer than half as many campers had made reservations by February for this season as had in 2022 for that year.

The hesitation continues. KOA today released its March monthly report, flagged with the optimistic headline “Rise in camping continues” and citing strong camping turnout at the start of the year. But again it went a step too far, with senior vice president Whitney Scott announcing in a press release that “we’re seeing more bookings made earlier”—yet KOA’s own figures show that 27% of their survey respondents have booked some or all of their 2023 camping trip thus far this year, compared to 50% at this time last year.

There is, undeniably, strong interest in the idea of camping. KOA’s surveys show that, and certainly this year’s near-record turnout at the big RV shows underscores the point. People are looking and day-dreaming, pressing their noses against the display windows of their imaginations as they conjure visions of sweeping vistas and crackling wood fires—they’re just not committing. They’re keeping their powder dry, whether it’s by deferring RV purchases—dealers have been complaining that RV show interest is not translating into sales—or by merely bookmarking campgrounds and RV parks on their computers for a later decision.

The downturn in RV sales, despite industry efforts to characterize it as a return to pre-pandemic norms, is notably larger than expected. Market-leading Thor Industries—whose flagship labels include Jayco and Airstream—earlier this month posted steeper than predicted declines in sales and profits for its second quarter, contending that the sharp slowdown “is proof that our consumer is being impacted by elevated prices, higher interest rates and inflation.” Meanwhile, Winnebago Industries today reported second-quarter results that actually cheered Wall Street because the hole it’s in is not as deep as they’d expected: sales declined from $1.2 billion a year ago to just $866.7 million, or almost $60 million more than the consensus forecast. But helping plug the hole was Winnebago’s 16.1% increase in boat sales, to $112.9 million—apparently a segment that is not taking on water.

A similar pull-back was reported last month by Camping World Holdings, which posted a double-digit decline in same-store new vehicle sales for its fourth quarter—and which cut nearly 1,000 jobs. That mirrors trends in Elkhart, Indiana, where the great majority of U.S. RVs are manufactured and where the unemployment rate in January jumped to just a hair under 5%, more than doubling over the past year.

All this is more suggestive than definitive, as KOA and other industry leaders will be quick to aver. Americans have bought a lot of RVs in the past couple of years, and they’re going to want to use them. An RVing trip is still one of the cheapest ways for a family to go on vacation. Working away from an office is still a thing, and especially among a younger generation of technologically savvy nomads who have been the single biggest demographic of new RV buyers.

All true. But so are the statistics that show millennials are piling on debt to unsustainable levels, while Americans overall increased their credit card debt in 2022 by a record $180.3 billion—and today’s Fed decision, pushing interest rates to a range of 4.75% to 5%, means additional billions in costs in the months ahead. Moreover, millennials and others with college debt can expect an end to the government moratorium on their payments in a few months, further undercutting their ability to afford even relatively cheap vacations—and those, too, are becoming more illusory. RV parks have done themselves no favors by relentlessly increasing their prices the past couple of years.

Recent events have demonstrated just how quickly an apparently stable financial system can get shaken up. Alert RVers are paying attention to the gathering storm clouds, and park owners would be smart to do likewise, regardless of how many rosy forecasts they hear .

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Camping steak: a lot of sizzle, but . . .

The camping PR machine is kicking into high gear, beating the drums for another blockbuster year and working hard to energize the camping public. “Planning Early is a Hot Trend,” according to the Editor’s Notes in the March issue of Woodall’s Campground Magazine. “2023 Camping Starts Strong,” announces the February monthly report from Kampgrounds of America, its findings summarized by one online industry publication as “an exciting outlook for the outdoor hospitality industry.”

Well, not quite. While the Woodall’s piece asserts that early booking is “key for campers who want to stay at specific parks,” that may not be as true of the overall industry. And Woodall’s underlying analysis is based largely on The Dyrt 2023 Camping Report, which may be an interesting read but is almost entirely retrospective, more focused on telling readers what happened in 2022 than what to expect in 2023. Meanwhile, a closer look at the KOA report is revealing: while the February 2023 survey reports that 26% of campers have already booked all or some of their trips for the season, that’s less than half of the 54% who had done so a year earlier, according to that year’s February report.

Demand, in other words, may be quite a bit softer than industry boosters would have us believe. This has been signaled to some extent by a widely reported decline in RV production last year, with 493,268 units rolling off the assembly line—a 21.5% haircut from the all-time record of 600,240 RVs shipped in 2021; moreover, industry forecasts call for only 419,000 shipments in 2023. Optimists have rallied around the observation that even with last year’s steep decline, RV production in 2022 was the third highest in industry history; they’re less likely to note that the second highest level was set back in 2017, and that production declined each of the two subsequent years—until the pandemic turned everything around.

A second set of numbers RV manufacturers are less likely to quote have to do with retail sales. Indeed, the past decade has seen twice as many years in which more RVs were manufactured than were sold, an overall trend that was snapped in 2019 and 2020 before resuming in 2021. Last year there were 45,550 more RVs shipped than were sold, adding to a surplus of 29,469 in 2021, explaining why many RVers report seeing more RVs in dealers’ lots than in some campgrounds.

Replenishing inventory could be seen as a positive sign in an otherwise expanding market, but there’s little data to suggest that’s the case and a growing body of evidence to think otherwise. Americans’ financial reserves are evaporating as pandemic relief programs run out, ongoing inflation is eroding buying power and housing costs remain stubbornly at record highs. Perhaps most telling: credit card debt is at an all-time high, just shy of $1 trillion, and delinquencies among borrowers are accelerating, thanks to record-setting credit card interest rates nearing 20%.

Other storm clouds include an end to the pause on college student loan payments, scheduled for the end of June—just in time to derail the summer vacation plans of Gen Z and Millennial campers that the RV industry has hailed as a much-awaited shot in the arm. Gas prices, meanwhile, remain a wild card: $1 a gallon higher than a year ago but still at a reasonable level, yet with some indications that they might soon be headed for sharp increases.

Amid all that uncertainty, a campground industry that too readily believes its own rah-rah boosterism could be making some major missteps. One indicator of that is provided in the same Dyrt camping report that Woodall’s cited so uncritically, in a pair of statistics under the heading, “property managers respond to demand.” In 2022, 48.6% took advantage by raising their rates—and 46.4% said they plan to do so this year. Whether campers will swallow such increases at a time when consumers are spending more on food and essentials and less on hard goods remains to be seen, but grumblings about higher prices have already been forthcoming.

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