RV sales are at an all-time high in dollars of revenue, and RV park occupancy has never been higher. It’s been this way, year after year, for over a decade. So that begs the question “has the RV park industry ever had a recession?” This chart shows the answer. There was a decline in RV sales – and RV park occupancy – in the period immediately following the 2007/2008 Great Recession when RV sales fell from $14.5 billion in 2007 to $5.1 billion in 2009.
What happened the last time?
The root of the 2007/2008 Great Recession is well established. Americans went on a debt binge collateralized by housing prices that were unsustainable and when the debt load unraveled, it left the country feeling poor and the American consumer with zero confidence. As a result, all buying and borrowing basically shut down, and that included money for RVs and RV park overnight costs, not to mention gasoline and amusements.
How things have changed since then
There are two main demographic shifts that have changed since 2007. The first is the age of the Baby Boomers (those born between 1946 and 1964). In 2007 they were hard at work. But now, more than a decade later, they are retiring at the rate of 10,000 per day. Every time a Baby Boomer retires, it shuts off their dependence (and potential risk) on employment, and it also marks a period in which they are going to focus on recreation – of which RV travel is a primary feature for many. The other big shift is the rise of the Millennial generation and their interest in RV travel. In 2007, this age group was mostly in high school or college. Now they represent the new labor force – and the largest segment of the U.S. population. Millennials have proven to be huge fans of RVs and RV parks, and have grown to the second largest sector of RV park users. Millennials view RV parks, not as a luxury, but as a cost-efficient way to travel and bond with family and friends. They also have little exposure to home values (most don’t own homes) and are big fans of living frugally (with little debt). These two megatrends didn’t exist in 2007/2008 and give the RV park industry a much stronger base to work from.
Identifying the future risks
So what are the future risks to RV park occupancy and revenues? They would include:
- Extremely high gas prices that would cause sticker shock to filling up the tank on an RV.
- The end of the Baby Boomer retirement cycle and the rise of their mortality rate.
- A sudden shift in Millennial interest in RV travel.
- A recession/depression so strong that Millennials have to sell off their RVs and stay at home.
- The invention of a new alternative to RV park travel that offers a more rewarding experience.
The odds of those factors happening and the net impact
Higher gas prices are certainly a constant risk, thanks to endless upheaval in the Mideast. However, the U.S. has become a net oil exporter so the days of the 1970s oil embargo are now over. The big issue is that such spikes in gasoline prices are temporary, so the net impact on RV parks is short. In addition, many RV users will just spend more time in one spot as to save on gas, which will not negatively impact RV park occupancy at all. The end of the Baby Boomer retirement binge (10,000 retiring per day) does not end for another decade, and their mortality does not accelerate for another decade beyond that. The Millennials show little interest in changing their taste for frugality, and a recession will only tighten that resolve. Additionally, their appetite for bonding with friends and family in an outdoor setting is unlikely to decline. Finally, there is really no technological breakthrough that will change the nature of travel or the simplicity of RV park usage. That’s the benefit of a low-tech business.
Conclusion
While there are certainly risks to any business, the odds of a negative impact to RV park usage is small and short in duration. Times have changed significantly since 2007/2008 and in a positive way for RV park owners. The next Great Recession will have a huge impact on America, but not nearly as large on the RV industry.