If you watch the news right now you will come to the conclusion that the world is coming to an end – which is pretty accurate. Recession is certainly on its way to the U.S. and investments should all be currently graded by their resilience in tough economic times. And one of the best of that group are RV parks, which are well positioned to survive whatever the economy throws at them. In this RV Park Mastery podcast we’re going to review what makes RV parks a safe bet in both good times and bad.
Episode 87: Why RV Parks Do Fine In Recessions Transcript
If you watch TV right now, things look pretty bleak. We have the highest inflation in 40 years. We just had the fastest increase in interest rates in 40 years. We have massive workforce problems, you have the UAW strike, you have the UPS almost had a strike there, it's just a complete train wreck when it comes to the US job market. We have the highest crime in history, we're so high right now in crime, I don't think it can even be measured. We've got a huge border problem, people are pouring across the border and no one's doing anything about it. And there's every reason to believe the aggregate of all these things is going to lead us to one of the greatest recessions in US history. This is Frank Rolfe with the RV Park Mastery podcast. We're gonna talk about what happens to RV parks when we in fact have the big recession that everyone is talking about. Let's first talk about the likelihood of the recession. If you look at all the recessions of the past and how long it was between the recession and the next recession, you'll see it runs kinda like this, it's typically a span of about six to eight years. Well, that's all fine and dandy, but right now, since the last recession we had was 2007, 2008, it's been about 13 years since we've had a recession, and you have to ask yourself, is that because our leaders are that good? Are they just so good at managing the business known as America that we're not gonna have recessions ever again?
Well, you know the answer to that is clearly no. Not even in the league of great leadership right now. So we certainly will have a recession, there's no doubt about it. The only question you have is when exactly. I recently read the forecasting of 10 of the major economics groups that do most of the economic models for the US, and every single one of the 10 predicted a recession by the end of next year. They just had trouble predicting what quarter it would start. So it's a pretty good sign that a recession is definitely on the books. So then what happens with RV parks when the recession hits? It's a very reasonable question and a very reasonable concern.
Well, let's just break that data into bite-sized pieces. Now, the first thing you have to know about RVs is that people typically use RVs because they're affordable. You probably have seen the ads on TV right now urging you to go buy an RV. There are only $5 a day. So for $5 a day or 150 a month, you can get a whole lot of different RV options. And when you travel in an RV, your typical nightly cost is maybe around $30. But if you stay in a hotel with the rates have gone up in hotels post-COVID, you're looking more like about 150 to 200. So the first thing about RVs are, it's all about price.
So if people are gonna use RVs and stay in RV parks because it's less expensive than a hotel to travel, then that would mean that a recession would cause people to use RVs more. Correct? Makes complete sense. The corollary would be, if people had unlimited budgets, if wages were going up skyward, if inflation was zero and we all felt really, really economically secure, you would theoretically maybe have less RV use because everyone would just say, "Hey, let's just go to the Four Seasons and spend 500 a night." But that's not what recessions are about. So the first reason why RV parks will prosper even when times are bad, is simply affordability. The fact that it is a very reasonably priced way to travel. The next reason that RVs will do well, even in the recession, is that people already own them. You've had the largest RV sales in history over the last few years, absolutely pinning the meter on all prior forecasts of sales. Why is that? Because you had a whole new entrant come into the scene. You had the old baby boomers, they were big fans, but the millennials are bigger fans than the boomers were. So people have bought a lot of RVs.
I live in Missouri, if I go up Interstate 55 from down in my small town of Ste. Genevieve up to St. Louis, I pass an enormous RV storage place, it's like a mini storage for RVs. There's hundreds and hundreds of them there. Now, what are they gonna do? Well, the average person uses their RV two weeks a month. I'm sorry, a year. Not a month. That would be impressive. So those RVs that they already own that are sitting there, those things are going to get out on the road at some point during the year, and people will stay in them for at least 14 days. Since they're already own them, they're gonna use them.
It doesn't matter if it's good times or bad times. When times are bad, people like to increase their recreation, they hate their job, they hate everything they see going on around them, they wanna relax. And in this case, they already have the tool to do it, it's already there, it's already paid for. It's gonna cost them a fraction of what it costs otherwise. You can have RV sales stop tomorrow dead in their tracks, not another RV sold ever again, and you can still have all the RV parks full, simply by the shared number of RVs that are out there on the road right now.
Another reason RV will do well even in the recession is people really, really like them. You saw during COVID, a huge reaction. People were told, finally, hey, go in the out of doors. That's a safe place to be. You can't catch COVID when you're outside. So many people started experimenting going outside, and what happened is, they actually liked it. The RV park experience is all about being in the out of doors. It's also all about kind of communion with nature and some degree of privacy, which again, people prefer in a post-COVID world.
So when it comes to activities during the recession, going outdoors is very important to people today, and people really, really like RVs. Finally, you have a huge portion of Americans that are using RVs now to live in full-time. You see a lot of baby boomers, I know many personally who sold their home, and now they travel America in an RV. They have no home to come back to. They sold the home, they bought the RV with cash, and then they put the rest in the bag. And the interest on what they have in the bank basically pays for them to just be in the great outdoors every day of the year. And what do you think happens when you have a recession, what do people do? They go buy a more expensive house? No, they downsize. There's 10,000 baby boomers per day retiring in the US, that is a huge number of people. And as they retire, the first thing they do is they look at everything they owned and they try and remove things that aren't important to them and cut back on things so that they can afford to live comfortably in their retirement.
And the RV fits that model. In fact, when times get rough, when we hit the next recession, you're gonna have a whole bunch more baby boomers who are entering retirement who say, "You know what? With all the inflation on the cost of the utilities and the insurance and everything else on this house, and how much my house is worth, since home prices have gone up so much during COVID, I'd bee an idiot not to sell it. I just live in this RV that I already own, or that RV I saw in the ad that I can go buy." I don't know the percentage of Americans who live in RVs full-time in retirement, no one has that scientific data, but I know it's a lot. I see it, I feel it. We see in our own RV parks. It's a definite growing trend, and as the recession hits and things get even worse, I think you'll see that trend even grow more. And don't forget, all of those millennials who also love RVs, who are now suddenly able to work from afar, they don't have to go into the office. So where are they going to go? Well, many of them are gonna follow the same path as the boomers, live in that RV full-time out in the RV park, out where it's nice, nice weather, nice scenery, great outdoors, and then they just commute from their laptop to the office and never go in.
Again, I think you'll see a whole lot more of that growing into the future. The bottom line to it all is that the RV park industry is incredibly well-positioned for both good times and bad. There are a few forms of real estate that are truly contrarian. Office isn't, retail isn't, lodging isn't, self-storage isn't. But RV parks are. And RV parks have stood the test of time now for almost a century, and always done well, you'll not find any mention at all of a great RV park crisis. There's never been one. They always do well even in bad times.
This is Frank Rolfe with the RV Park Mastery podcast. I hope you enjoyed this. Talk to you again soon.