Getting started: RV parks
Nation's parks bustling as gregarious baby boomers hit the open road
NEW YORK (CNNfn) - Owning a recreational vehicle (RV) park is one of those businesses where you adopt a lifestyle more than you stick to a business plan. You have to love the camping lifestyle. You had best be comfortable in the outdoors. And you absolutely have to be one of those people others call a "people person."|
RVers talk. They pull their trailers into a space at any park in the United States and they start chatting with the other RVers who are spending the night. One of the favored subjects is the parks they have been to where the help or the owners were rude. They tell each other where not to go.
Likewise, they like to tell each other where they should go if they haven't yet been there. More than any form of advertising, word of mouth among RVers can make or break a park. Again, you had better be a people person.
Other traits are also desirable for RV park owners, such as making sure the park is always clean and that the amenities are in working order. If you have a clean park, with nice amenities and a friendly staff and owner, you can make good money.
Good time to get in
In the past several years, the RV park industry has been a busy one. The boomer generation has caught on to the joys of RV vacations much as their parents once did. Many parks now offer Internet access and cable television to suit the slightly more upscale taste of the boomers. A few now even have food delivery service, full-service restaurants and health clubs.
"It's a good business and you can make good money," said David Gorin, president of the National Association of RV Parks and Campgrounds, a trade association in Falls Church, Va. For a well-run park, at least 20-to-30 percent of gross revenue will be profit, said Gorin. Most new park owners can expect to see a profit in short order, as well.
Terri Caillier is one of those owners who bought a park four years ago in central Washington state, and was turning a profit almost instantly. The previous owners sold the Riverbend RV park to Caillier and husband, Joe, and word quickly got out on the RV circuit that new owners with cheery dispositions were in charge of the park in Twisp, Wash.
Winning the good will of the RVers wasn't that hard, said Caillier. Spot some campers getting together to play games and give them a T-shirt to give away as a prize. When a RV club pulls in, make sure you contribute, free of charge, ice cream sundaes to their pot luck dinner.
"Say you spend $500 on freebies; when you add it all up, you are going to get it back tenfold in more business," said Caillier.
In four years, the Cailliers have increased revenue at the park by more than 80 percent.
Word of mouth: the ultimate marketing tool
Like the Cailliers, Daniel Herbertson bought the American RV Park in Albuquerque, N.M., from an existing owner. There is good reason to take this path, because building a park from the ground up these days can be extremely expensive and the permitting process can take up to three years to complete.
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The ARVC estimates the cost of building a new park at between $15,000 and $20,000 a space. That's an awful lot of money, considering most new parks have as few as 150 spaces, said Gorin.
The cost of buying an existing park is much less, and Gorin said most of the deals are structured so that the buyer can make a 10-to-15 percent return on his investment in the first year.
The problem for most owners is they want to make improvements when they buy an existing park. That can be costly, said Gorin, depending on the state of the park when it changes hands.
Modern RVs are much more sophisticated than RVs that pulled into parks even five years ago. Many are outfitted with satellite technology, computers and televisions.
Modern travelers, too, have different expectations than earlier RVers and like a lot of amenities. To keep up with the times, park owners now have retail outfits where they sell t-shirts and sweatshirts and provisions. Most have upgraded game rooms and pools and offer ancillary services such as RV repair.
Gorin said many owners are eager to add amenities these days because such amenities are great sources of additional revenue. In some parks, they are more lucrative than renting the spaces.
Herbertson attributes his good fortune to excellent timing and understanding his customers. An avid camper himself, Herbertson understands well what customers want from an RV park. Neatness counts, as does the continental breakfast he serves and the top-shelf amenities such as cable television and a brand new clubhouse.
As for the timing, Herbertson said he has definitely benefited from the resurgence of interest in RV vacations.
"It's a growing industry," he said. "Sales growth in the RV industry has been in the double digits for the past five years and that means there are more people out on the road."
Can you rely on growth in the industry to keep a park full and profit high? Herbertson, whose park was profitable the first year he was in business, doesn't think so.
Herbertson put up billboards along the Interstates when he took over the park and they brought in some business. As with other park owners, Herbertson quickly learned that while advertising can help your business, it is extremely important to have a good reputation among the tight-knit RVers community.
"The most important thing is to have the proper attitude, being people friendly and imparting that to your help," said Herbertson. "People are always talking to each at the parks. The word of mouth business is really strong. When you have a reputation it really travels."