There are basically three types of RV parks in the U.S. today: “overnight”, “destination” and “extended stay”. Each has a different niche, and all niches are not created equal, so the question is which of these three is best positioned going forward? Here would be our analysis.
Overnight
This type of RV park is geared towards serving RV owners who are driving between their home and their ultimate destination. They are typically located on busy interstate or state highways and normally have good visibility and easy road access. Amenities are not heavy, as the purpose is to house travelers for just a night or two. The problem with this segment is that – even prior to the quarantine era –there has been a shift in RV user habits to spending less time on the road and more time in one stationary location. Since overnighter RV parks are based on travelers, since has diminished the demand. During the pandemic, many people who had wanted to go to destination sites have found them sold out, and have retreated to overnighter properties, who have availability. Going forward, watch for some of these properties to be converted to more of a “destination” feel with the addition of man-made amenities to create the interest in longer stays, coupled with price competition. Also watch for greater use of park models to give additional traveler options and to tap into the Air BNB segment.
Destination
The “destination” RV park business model is all about customers coming and staying for longer periods of time in order to access and take advantage of the many attractions in the area. These properties are also typically stuffed with amenities to augment the big attractions, such as pools, lakes, trails, mini-golf, outdoor sports, etc. With the average RV user spending 23 nights per year inside an RV park, this is the group that the destination RV park owner targets – and studies show that these customers are typically driving 250 miles or less to get there, so their road time has diminished by a large percentage over the past decade. With the quarantine, these are the properties that have flourished the most, as they are where people want to isolate yet enjoy outdoor activities. Look for this to continue to be the most active and successful segment of the industry, as it is 100% aligned with all major U.S. megatrends.
Extended Stay
These type of RV parks are geared towards customers who may stay for months, years, decades – even a lifetime. They include the category of “snowbird” properties that offer winter havens for northern folks during the cold winter months (South Texas is the leader in this category), as well as those who want to retire full time in their RV in one spot. These properties have not really been impacted by the quarantine as the customers were already well ensconced before any of the events of March. Long term this segment is well-placed for the U.S. megatrend of 10,000 Baby Boomers retiring per day.
And the winner is…
All three categories of RV parks can be solid investments, but the greatest strength is in the destination and extended stay categories. That being said, an overnighter property that can be transitioned to a more activity-rich environment with better marketing and use of social media can always be a good buy. In all cases, it’s important to do strong due diligence, and to negotiate a price that is a win/win and allows you to make a solid risk-adjusted profit. The quarantine has definitely helped RV parks out with greater occupancy but also taught millions of Americans about the benefits of the outdoors.
Conclusion
RV parks are a superior investment when properly analyzed and vetted. The national quarantine has created opportunities with some older mom and pop operators who no longer want to work in a business that caters to the public. The future is bright despite the national health issues and RV parks are well positioned with all major American trends.