March madness, campground-style

There’s a different sort of March madness that has nothing to do with basketball: it’s the annual flood of numbers and statistics for the previous year, compiled from various year-end reports and surveys. Some are revealing, some are of dubious value and some hint at truths that may unfold over the next year or so. Almost all get trotted out on behalf of one agenda or another, and all are enough to make anyone’s head spin.

One of the most questionable bits of accounting has to do with the size and economic impact of the outdoor recreation industry. A malleable business segment whose definition will vary from one person to another, it generally eschews any kind of government involvement—until there are tax dollars to be dispensed, at which time various PR engines kick into high gear to extol the importance of outdoor spending to the overall economy, to the health of the planet and to the wellbeing of all Americans. And so as the Outdoor Recreation Act lurches toward Congressional adoption, supporters have been underscoring its importance by claiming that outdoor recreation contributes a whopping $862 billion to the U.S. economy and therefore is not to be taken lightly. The RV Industry Association has chimed in by claiming that its piece of the action has been $140 billion, and of that, $35.7 billion is attributed to RV parks and campgrounds.

Yowza! $140 billion from RVing? Almost $36 billion from RV parks and campgrounds? Sounds impressive as hell—until you realize that the International Dairy Foods Association claims the dairy industry had an economic impact of $753 billion in 2021, or 3.5% of that year’s U.S. gross domestic product. Just for cow juice. Meanwhile, the bottled water industry says it expects its revenues to reach $95 billion this year, a bit more than the $91.4 billion in projected spending this year for beauty and personal care products, and even the justifiably maligned tobacco industry has U.S. sales of more than $100 billion a year. Those 11- and 12-digit numbers start adding up pretty fast, and as you slice and dice the economy into its various products and services, you soon realize that their combined “contributions” to the overall economy are larger than the whole. Since that’s mathematically impossible, could it be that each group of industry promoters has been just a wee bit fast and loose with definitions and numbers?

Realistic or not, though, industry representatives by their very nature will portray their businesses as economically important, growing and vital. In that regard it’s instructive to look at RVIA’s recently released survey profiling last year’s new RV buyers. A key finding: the new buyers are unquestionably younger than in past years, with 65% categorized as millennials and only 3% as boomers. With a median age of 32 and a median household income of $80,900, last year’s buyers were buying RVs priced at an average of $92,415—suggesting either that this is a generation with unexpected wealth or one that is willing, because of its youth, to take on some lengthy financing. The latter seems more likely, but either way, RVIA is intent on letting us know that this is a growth industry with a bright future and not just some fuddy-duddy backwater.

But there are other considerations. While the RVIA survey reports that almost a third of the new buyers expect to be camping at privately owned RV parks, a national survey released yesterday by the National Association of RV Parks and Campgrounds suggests those parks may not be as roomy as needed. Although 48% of campground owners had projected they would add a total of 81,000 new RV sites nationwide in 2022, the actual number was closer to 17,000. Moreover, fewer RV parks anticipate adding new sites this year—only 28%, for a projected increase of 44,000 sites—so given recent history, it’s fair to assume that the actual inventory increase may well be less than 10,000. That won’t go far in relieving the increased demand.

Meanwhile, although ARVC’s study is reasonably helpful in its national overview, its sample size is too small to draw definitive conclusions about various parts of the country—which is a shame, because the numbers it does have hint at significant regional differences. Overall, the study suggests that the campground industry is considerably stronger in the 12-state southern region than in the 13 states west of the 100th meridian, including a larger percentage overall of corporate-owned and franchised operations—and therefore deeper pockets— in the south than elsewhere. It therefore may not be surprising that only 18% of western campgrounds added sites last year, compared to 31%-32% in the rest of the country; this coming year, 50% of southern campgrounds plan to add sites, compared to just 10% in the west.

As mentioned, the sample sizes for each region (66 campgrounds in the west, 71 in the south) are too small to be more than suggestive. But they are in line with another set of regional differences: while only 9% of southern campground owners expect to sell their RV parks this year, that percentage doubles for the western operations. That could mean one in five western RV parks will change hands in 2023, making an an already turbulent industry even more so. On the other hand, a lot of those campground owners may have missed their best window and may end up changing their plans. According to an interview in the April edition of Woodall’s Campground Magazine, RV park prices have fallen from 10% to 30% in the past year, due not only to market conditions but to year-over-year revenue declines.

“Generally, the high interest rates are raising cap rates marginally, which is decreasing the overall value of properties,” Jesse Pine, a broker at NAI Outdoor Hospitality Brokers, told the magazine. “Also, 2021 was a banner year for most owners and in 2022 parks were down 5%-10% in gross income commonly across the country, [which] coupled with higher expenses like rising utility, labor and construction costs, [means] the result was lower than expected net income.”

Up, down, sideways—you can probably cobble together whatever scenario you find most pleasing from all the numbers getting slung around. The only thing certain is that being in the campground business these days means one helluva wild ride.

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More electrifying news for RVers

A pair of webinars this past week, one hosted by the RV Industry Association and one by the National Association of RV Parks and Campgrounds, underscored how seriously the campground world views the oncoming onslaught of electric vehicles. While campground and RV owners remain mostly skeptical, questioning the costs, range, recharging availability and environmental impact of a lithium-based technology, industry leaders are unwavering in their belief that the EV-RV revolution is already here and that the problems others see are either overblown or will be resolved in timely fashion.

“We are really at an inflection point which is amazing,” Ashis Bhattacharya, senior vice president for development and advanced technology at Winnebago Industries, told his RVIA audience. A “wave of electric adoption” is already washing over rental car agencies, delivery services such as Prime, UPS and FedEx, as well as school buses and other municipal vehicle fleets, all of which is normalizing the technology. The paradigmatic shift already underway, Bhattacharya added, is as significant as any ever experienced in the transportation sector.

Meanwhile, said Jay Landers, RVIA’s vice president of government affairs, state initiatives to outlaw internal combustion engines are giving the entire EV sector a kick in the pants. Five states, including California, already have voted to ban sales of new internal combustion vehicles by 2035, and others are looking to possibly follow suit. The state of Washington, which had the country’s sixth highest rate of RV shipments this year, is even more aggressive, adopting a 2030 cutoff deadline. Furthermore, expansion of the EV charging network nationwide is being super-charged by $5 billion in federal funding approved earlier this year.

None of which, all speakers agreed, is to minimize the problems confronting EV in general, and EV-RVs in particular. “The (EV) technology is still more expensive than what it’s replacing,” conceded MacKay Featherstone, Thor Industries’ senior vice president of global innovation. Moreover, he added, “the charging experience is utterly critical” and still inadequate for RVers in particular, both because most RVs need pull-through charging stations to be practical and because they have larger power needs than EV cars.

To their credit, RV manufacturers, frequently criticized for shoveling out hundreds of thousands of RVs without giving a thought to where their buyers might use them, are at least trying to get out in front of this development. And there is little reason to doubt that a society-wide change is coming, and coming hard. EV-RV costs inevitably will come down as sales take off, as they do with any emerging technology. Alternatives to lithium batteries, using less exotic minerals, are being developed, and advances in recycling technologies will further ease environmental concerns. Similarly, ongoing improvements in battery density will continue to expand vehicle range, relieving one of the biggest consumer anxieties about EVs.

The weak link, however, appears to be the RV park and campground end of the product chain. The RVIA webinar inadvertently made that point when its campground representative on the panel—Toby O’Rourke, president and CEO of KOA—was so unintelligible that she had to be dropped from the screen, apparently because she was trying to link in from an airport. (And why O’Rourke, again? Is there no other campground industry representative who can speak to the industry’s issues? Maybe someone from the Yogi franchise, or ARVC, or one of the other large state RV park associations, like Texas or California?)

Subbing in for O’Rourke was Brandi Simpson, her chief of staff, whose faltering contribution was to assert that campground owners are dealing with “a ton of misinformation” about EVs and need a lot of education and guidance. Which, presumably, KOA is scrambling to provide. . .

. . . as is ARVC, which lustily beat the drum on behalf of EV-RVs at its national conference in early November, and again at an hour-long webinar a couple of days after RVIA’s face-to-face. Pitched as “a recap of the best” of the conference for those who might have been unable to attend, the session inexplicably ignored the most contentious convention issue—a proposal to adopt industry-wide “standards”—while devoting the majority of its time to further promoting the idea that campgrounds need to get on the EV bandwagon, starting with the installation of EV chargers.

All of which is undeniably true, but far more nuanced and with many more questions than have been answered to date. For example: both webinars referenced possible tax breaks and federal grants to defray campground costs for installing chargers, while glossing over the reality that such inducements will require making the chargers accessible to the general public, and not just campground guests. Getting equally short shrift were any explanations of the occasionally mentioned “partnerships” that campgrounds might have to accept, whether with public utilities or third-party providers, to deal with licensing and infrastructure issues, since electric sales are typically a utility monopoly and EV chargers require robust additional power supplies.

(On a related note: one of the biggest frustrations for many KOA franchisees has been the parent company’s insistence on taking a 10% cut of all site fees—including any electric charges, even though campgrounds are legally prohibited from making a profit from reselling electricity. To the extent that EVs will increase electricity consumption at RV sites, that means even more unearned money transferred from franchisees to corporate headquarters.)

By ARVC’s calculations, electric metering of RV sites can reduce energy consumption by a third.

Indeed, the whole issue of who is going to pay for the extra electricity consumed by EV-RVs, and how, is still being sidestepped at the national level, quite possibly because there is no one answer. That, by itself, may become the biggest impediment to mom-and-pop campgrounds rushing into this brave new world. It’s notable, for example, that while ARVC now has an online “EV Toolkit” to help its members understand how to accommodate the new technology, the only guidance it provides for covering their costs is the vague advice to “consider billing for shorter stays, especially [campers] with unique equipment (large class As, EVs, electric golf carts, etc.), automatically billing those campers for the electricity they use. “

Presumably these and other issues will get resolved, sooner or later—once the industry stops talking around them. The RVing public, meanwhile, should brace itself for still higher costs, as a new electric sensibility starts percolating through the camping universe. Just as computerized reservation systems have introduced demand pricing and all kinds of add-on fees, the electrification push ultimately will result in all RV sites getting electric meters. Or as ARVC’s EV Toolkit asks, in a prominently displayed screen, “You don’t give away ice, candy bars or firewood, why give away electric?”

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At last, numbers to confirm crowding

If you’ve been having a hard time finding a place to park your RV, it’s not your imagination. In what may be the first comprehensive effort to inventory the nation’s supply of campgrounds and camp sites, the RV Industry Association today released a survey in which the number one finding–ta-da!–is that campgrounds during peak season are basically full.

No surprise, right? Yet while the study’s conclusions are unremarkable, what’s interesting are their underlying data and the fact that it’s taken this long to assemble them. KOA, The Dyrt and others have been taking the pulse of campground demand, and ARVC periodically samples the universe of private campgrounds, but an overall understanding of the supply side of the equation has been so primitive that the industry hasn’t been able to agree on even how many privately owned campgrounds there are. (CHM Government Services, the Massachusetts-based consulting firm that did the RVIA’s legwork, cited four sources that had a 40% spread in campground census numbers.)

CHM eventually settled on 12,290 private campgrounds, of which 12,118 have RV sites. Those campgrounds, it further concluded, have 1.4 million RV sites, yielding an average of 116 each. Yet apparently more than a third of the private RV sites can be considered “primitive,” since only 63% have water and electric hookups; roughly half (51%) also have sewer connections.

Public campgrounds, meanwhile–comprising federal, state, county and municipal facilities–outnumber their private counterparts, at 15,119, but because on average they’re significantly smaller, have a total of only 607,014 camp sites. More to the point, fewer than half of the public camp sites–264,861–can accommodate RVs, and of those, only 30% have water hookups and a mere 8% have sewer connections. That latter statistic is especially telling at federal campgrounds, among which just 11.3% have dump stations.

Smushing all those numbers together and contrasting them with camper demand in 2020, the RVIA report concludes that overall campground occupancy during the summer was 76%, and 54% for the year overall. Keeping in mind that these occupancy figures are an aggregate that doesn’t distinguish between weekends and mid-week, summer and winter (for the annual rate) or by region, that suggests that yes, RVers overall would have had a helluva time finding a camping spot–and even more so if they needed utilities, especially sewer hookups.

The space crunch, according to Margaret Bailey, CHM’s project manager for the survey, has been a significant factor behind the recent explosion of boondocking. Dispersed camping, she said, “is partly a choice but partly a default” because of a lack of alternatives. And while some significant amount of funding has recently been devoted to public campgrounds, that money “is going to fix what’s broken” and not to expansion. Any growth in RV sites, she added, “has to come on the private side.”

An RVIA spokesman said he hoped the report will further encourage investors to view campgrounds as more than just a niche market. Campgrounds, he noted, are just another segment of the hospitality industry, comparable to hotels. Indeed, one of the study’s more telling observations is that the national hotel industry had a peak season occupancy of approximately 70% and annual occupancy of 66% in 2019, the most recent year of normal operating conditions.

In other words, you stand a better chance of booking a hotel room this summer than of landing an RV park reservation.

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Cognitive dissonance, part 2

The article in Woodall’s Campground Management that I mentioned in my previous post, regarding efforts by California campgrounds to “stay on top of” the wildfire situation, includes an interesting aside that underscores why we seem incapable of making any headway against extreme weather-driven calamities.

Interviewing Dyana Kelly, president of the CampCalNOW RV Park and Campground Alliance, the article notes that a “recent win” for the trade group was an exemption from a state rule that would have required Class A diesel pushers to participate in an annual emissions inspection and maintenance program. First unveiled this past March, the rule drew an instant and sharp response not only from CampCalNOW, but also from ARVC and RVIA, two national trade groups that declared their mission was to “protect the public” from “overly burdensome” regulations on motorhomes.

The new regs, which remain applicable to commercial truckers, create a smog-check program to ensure that diesel engines in the state have properly functioning emissions controls. Improper control systems, it should go without saying, add to the atmosphere’s greenhouse gases, which further increase global warming and thus exacerbate California’s drought and the wildfires it promotes. In other words, a campground industry that idealizes the environment for recreation is simultaneously doing its damnedest to block efforts to protect that environment from its own depredations.

There’s no question that California’s motorhome owners would have been somewhat inconvenienced by having to trundle off to an emissions inspection station once a year. And there’s also no question that some of those owners would have been hit with the financial costs of repairing or upgrading equipment that failed the smog test. But keeping any equipment in working order is the cost of ownership, and that cost should be borne by the actual owner, not by the broader public–which is what unchecked polluters are imposing. “Protecting the public” should mean all of the public, not just the motorhome-owning portion of it.

Instead of knee-jerk opposition to any regulatory attempt to control the external costs of private actions, the campground industry’s lobbyists and trade groups would do everyone a service by acknowledging reality and working toward alternatives. In Europe, for instance, which is hard at work on eliminating all diesel engines, the RV industry is years ahead of the U.S. in moving to alternative power sources. German-based Erwin Hymer Group, as one example, is developing not just electric motorhomes, but travel trailers–powered in part by roof-top solar panels–with electrified axles that reduce the amount of power needed by tow vehicles. How cool is that? And how not American. . . .

Ironically, Erwin Hymer was acquired by Thor Industries a couple of years ago, which might lead one to think such cutting-edge technology would quickly show up on this side of the Atlantic. Guess again. Apparently, it’s easier simply to lobby for the status quo, regardless of the greater social cost that entails, and celebrate successful obstruction of change as a “win.”

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