Last week, we attended Kampground of America's annual convention in Savannah, Georgia. For anyone unable to attend but interested in our observations, we have outlined five of our key takeaways below:
1. There is growing interest from institutional investors... but listing prices based on future potential are limiting transaction volume...
Asking prices - particularly those on marketed properties - suggest a disproportionate allocation to the property's potential future value. Said differently, many buyers believe that a property's purchase price should be a reflection of the cash flow that the property generates TODAY, while many owners believe the purchase price should also reflect any value that may exist TOMORROW. The complication here seems obvious: if a buyer pays for potential upside, then it is no longer upside, it is added risk. The risks of creating potential future value are not priced appropriately in today's market. We heard variations of this feedback from several investor/owners throughout the convention.
2. There is a growing diversity of accommodation types... though RV's still reign supreme...
Many owners are incorporating experiential accommodations - from tepees and wall-tents to cabins and covered wagons - into their product offering. Doing so has generated demand from guests who had not previously considered their campgrounds and has allowed those campgrounds to achieve higher average nightly rates. All good news. Additionally, newly developed RV spaces appear to be capturing demand and are being easily absorbed into the system's supply. However, after years of rate growth, it appears that the market may be beginning to reach a temporary peak.
3. There was notable discussion around a potential recession... but what does that really mean?
The topic of an impending economic slowdown was discussed by everyone from senior management to a keynote speaker and leading economist. RV sales are down year-to-date, but the cumulative number of RVs owned is at an all-time high. The last recession, which is widely accepted as disastrous, had a minimal effect on camper nights within the KOA system. However, not all recessions are created equally and the factors that lead to one can and will be different from the next. There was, appropriately, limited guidance on when the next recession may occur or what the potential impact would be on our industry.
4. Small businesses require grit and persistence... we continue to admire those who put in long hours... it's not easy work!
While the tools used to operate campgrounds have become more effective, no tools can replace the hard work put in by the best of the best on-site owners. Operating a great campground requires great owners, and we were humbled to meet many of them at this year's events.
5. Revenue management is on its way... better late than never...
Campground technology is still far behind the technologies available within the hotel industry. But the gap between the two is narrowing. New tools are being introduced that will have a positive impact on campground revenue management. KOA presented a number of revenue management enhancements within the K2 platform. We are eager to begin using the new reports to drive additional revenue at our properties.