RV Park Investing Newsletter

Christmas is here – and what better Christmas present for many Americans than a new RV? I dropped by the local RV sales center on I-55 recently, just to see what was going on. And the place was packed with shoppers looking for deals on everything from $10,000 travel trailers to $100,000+ motor homes. One thing that impresses me about the industry right now is how far things have come in terms of the product, the pricing and the presentation. In the RV sales centers of old, the place looked like an abandoned grocery store, the offerings were anything but well-manicured, and the prices were not that compelling. The modern RV sales center has taken its clues from the best of the single-family developers, with models that are clean, well-lighted and furnished, interiors and exteriors that are attractive and modern, and prices that seem like bargains. This improvement in the professionalism of the sales function is probably part of the resurrection in RV sales – which are up 70% since 2009. The way we look at it, the more RVs on the road, the more RVs in the parks.

RV sales are up an amazing 70% since 2009. In a world in which people make a big deal over a 5% increase, what has fueled the giant rise in sales stats? There are many reasons for this growth.

Baby boomers

One of the biggest reasons that RV sales are soaring is simple demographics: the baby boomers – the biggest segment 0f the U.S. population – are finally reaching retirement age, and many are buying RVs as part of their retirement. There are 10,000 baby boomers retiring per day in the U.S., and that’s why the RV dealerships are full of customers.

Better mileage

Higher gas prices hurt the RV industry – until the engineers came up with ways to make the mileage better. Now that many RVs are getting the same mileage as SUVs, people are not afraid of the gas bill from operating them, and are taking existing RVs out on the road more. The fact that gasoline prices are now retreating does not hurt, either.

Better designs

One of the biggest differences between RVs of the past and new ones being produced is the quality of the interior designs. For decades, RVs tended to have a “utilitarian” design which was lacking aesthetics, which has now been replaced with a “luxury” appearance that is more in-line with the cost. Have you ever compared the interior of an expensive German automobile to that of a basic American car? Well, many manufacturers were producing $100,000 motor homes that had an interior that was less detailed and attractive than a Chevette. Now, the interior of virtually all travel trailers, fifth-wheels and motor homes look like a million bucks. This has led to much happier spouses who are not as resistant to the purchase. RV designers are taking the cues from home developers and using the latest in design techniques to make RVs seem larger and more compelling.

Lower pricing

The pricing on new RVs is truly astounding. Sure, there are models at every dealership that cost more than the average house. But there are also smaller models that seem like a whole lot of RV for the money. I was in an RV dealership in which they had a knocked-out travel trailer for only $14,995. The new pricing structure is attracting many more potential RV buyers – and many of them will upgrade their purchase once they get to the dealership.

Awareness

The RV industry has been benefitting from a great deal of exposure to the public through positive mentions in everything from magazines to cable T.V. programs. I saw an article on the benefits of RV travel this year in a range of publications from Town & Country magazine to the Neiman Marcus catalog, and even a cable TV special on RVs. This type of awareness campaign builds interest from people who might normally not even consider RVs as an option.

Hotel pricing

Although it’s not the key driver in the decision to buy an RV, the rising prices of hotels has aided the industry, as it has made the cost differential more attractive for the RV. If you go on hotels.com or other travel websites, you’ll notice that the price of just about all hotels now exceeds $100 per night, while RV overnight pricing remains $20 to $30 per night. This is just one more reason that customers are making sense of buying an RV.

Conclusion

The RV industry has been benefitting from many factors, some they earned and some they didn’t. The industry is just in the right place at the right time regarding the baby boomer demographic, as well as retreating gasoline prices. But it has definitely earned the renewed sales that come as a result of better mileage, pricing and design, all of which have added greater U.S. awareness of the product. And that’s why RV sales are up 70% since 2009.

O.K., that’s not a quote from the movie. But there’s no question that RV’s are becoming more luxurious every day. The new show “Rock my RV” with Bret Michaels demonstrates how mainstream the quest for RV luxury has become. With models than now exceed $1 million and even $2 million, there is no doubt that RVs are crafting a new spot in American desire for high-end products. Can you imagine how large Gatsby’s RV would have been? They would probably never have been able to engineer a way for a chassis to support it.

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