America is filled with a plethora of massive shifts in consumer sentiment, demographics and economic cycles, all of which were labelled “Megatrends” back in the 1980s. However, RV Parks have the advantage of escaping the wrath of the most damaging of these shifts, while benefitting from virtually all of the good ones. In this RV Park Mastery podcast we’re going to explore how this occurs.
Episode 139: Megatrend Teflon Transcript
In the 1980s, there was a book that came out, and it was called "Megatrends" by an author named John Naisbitt. And the concept of megatrends was that you have these enormous seismic shifts in America based on consumers and their desires and the economy. And you don't dare get on the wrong side of them because they can crush you. And if you're on the right side of them, kind of like a boat with a sail, that wind will blow you into a very profitable future. This is Frank Rolfe of the RV Park Mastery Podcast. We're going to talk about those megatrends and the simple fact that RV parks seem to be immune to most of them. So RV parks pretty much are like Teflon. These bad things, these bad cycles don't typically come back to haunt them. And yet there's positives in many of these cycles that many other niches of real estate or the economy don't share. So let's go over what some of these giant megatrends are and how RV parks came to be insulated from their power. So let's start off with the megatrend of the economy. We know that the economy moves in cycles, typically measured in about seven-year cycles.
And so let's just look at that for a moment. So you had the cycle of dot-com, right? And then almost exactly seven years after the dot-com bust in the year 2000, you had the Great Recession in 2007, right? And if you go backwards from 2000, you have the Texas savings and loan crash. It's like all the way since American history, about every seven years we crash. And then suddenly in 2007, we stopped having this cycle. And it's not because it went away; it's just pent up. It's going to be brutal when it finally is unleashed. When it happens, we don't know. It could happen in 2026. Some think it's going to be powered by the AI phenomenon, over-bubbly expectations from that. But here's the weird part about RV parks and the economy. When it finally does break, when we have that big old recession, RV parks are fairly well insulated from the recession. And here's why. A huge number of people who have RVs, whether they use them recreationally or live in them full-time, are retired. They're not a part of the economy anymore.
They don't care if there's massive job layoffs. They don't care if the unemployment rate goes to 70% because they're not seeking employment anymore. They're on Social Security, they're on pensions, they're on money in the bank, and they're on savings and a CD. So basically they're immune from what happens. And then a lot of people who own RVs, well, they look at the RV as the least expensive form of vacation they can get. So when times are tough, they think to themselves, "Well, I'm going to go on vacation and this is my cheapest way, so I'm still going to go." So as a result, RV parks are fairly immune to these various economic cycles. So when the next recession hits—and we don't know when—but the RV park industry is pretty well positioned for that. And then you have overbuilding. You know, in a lot of segments of real estate, overbuilding is commonplace. You have it where people build way too many apartments in some hot market. They used to build way too much retail, way too much hotel. And if you look up the overbuilding cycle, this is a much longer cycle than recessions because the typical overbuilding cycle in America has been running about 19 years.
So it takes about 19 years for us to horribly overbuild America in some niche, way too much construction, and then we get back to healthy again, and that cycle is 19 years. But in the RV park industry, we don't have overbuilding. We never have had overbuilding. People just don't build that many new RV parks. Why? Because it's very hard to get financing, if there's any financing to build an RV park. And it's not a niche that most people even work on. So even though you can see way too many construction cranes building way too many high-rise apartment buildings in some cities, you never have that kind of overbuilding with RV parks. So once again, it's pretty much immune to overbuilding. I've never seen a time in which we had overbuilding of RV parks. And then you have your population shifts. This is a big one in America. I'm a baby boomer. You're a baby boomer if you're born between 1946 and 1964. And boomers used to be the most dominant segment of the U.S. population. They were a little over two-thirds of the entire population. Today, they've shrunk to only one-third.
Today, both millennials and Generation Z, they both outnumber baby boomers. So it means the population is getting significantly younger. Now, the first time the millennials outnumbered baby boomers was 2019. And by 2035, Generation Z's are going to outnumber millennials. In 2024, Generation Z's outnumbered boomers. So we are no longer the dominant thing. We are now in the minority. We are just basically less than a third of the U.S. population. So what does it mean? Means we're getting younger is what it means. But again, RV parks have been able to navigate this very well because the majority of RVs being sold today are not to boomers, but to young people. The RV industry has done a phenomenal job of public relations over the years. They chose exactly the right venues to advertise and market themselves. You see them at all those hip events that Generation Z and millennials love, different outdoor outings, things like that. So the RV industry may be even stronger with young people than it ever was with the older. So once again, RV parks are pretty much Teflon when it comes to the population shift. And then you have the subject of obsolescence.
Now, the typical obsolescence cycle in American real estate has been running 30 years. It takes 30 years for an office building to go from being a glamour class A building to a lesser class B. It takes 30 years from a prime retail corner to no longer be that much interest to people. Takes 30 years for a really, really nice brand new apartment building to become just kind of a so-so grade B apartment. But once again, RV parks have been able to escape this obsolescence simply because when you're in the RV park business, you're just renting spaces to people. It's their actual product that could be obsolete. If you look at old photos of RV parks, and I mean really old, back to the 1940s and '50s, they look nothing like today. But when you look closer, maybe that old postcard, what do you see that's actually different? It's not the grass, it's not the street, it's not the trees. It's the actual RVs themselves. So over time, the way we escape obsolescence with RV parks is the fact that that's not our deal. We just rent land. It's the RVs that come and go that have changed dramatically in the modern era.
And I'll define the modern era from 2000 and on. RVs have really reached kind of their state of the art. I'm not sure how they can really improve on them anymore. And a lot of people have now traded in or sold and bought new, the more modern variety of unit. So the units look nothing like they did. And if I was to say that there's not obsolescence in RVs, I would be dead wrong. We all know that. We can see it. We can look at the old units and say, "Oh, this isn't nearly as good as the new ones." But we're insulated from that because we are adaptable. We could have those new units come in and replace the old ones and that's fantastic. And we look like an all new RV park and we didn't do anything about it. It was just our customers and their own pocketbooks that bought those newer units and replaced the older ones. The bottom line is that RV parks are very well situated to survive almost any megatrend in America that it can throw at it. Even the COVID crisis, if you recall, was great for RVs.
People were told, "Hey, get out of the city, go to more rural area, go where there's not a lot of people around, be more outdoors." Great boon to the RV industry. So time and time again it has escaped almost every bad megatrend in a very great way. This is Frank Rolfe with the RV Park Mastery podcast. Hope you enjoyed this. Talk to you again soon.