A Beginner’s Guide to Running a Profitable RV Park Business
The RV park industry is rapidly growing, inspiring an increasing number of investors and entrepreneurs to embark on their own campground business adventures. By becoming owners of an RV park, they expect to combine the benefits of an outdoor lifestyle with the satisfaction of running a profitable business.
While these goals are certainly achievable, it is important to acknowledge that the journey ahead for any aspiring RV park owner is not short of challenges. So before you take the leap, we would like to help you have a clear picture of what you might expect.
The robust condition of the industry is unequivocal. The global camping and caravanning market is expected to reach a total revenue of 117,647.7 million USD by 2030, with a compound annual rate growth of 10.4% in the period 2023-2030.
With its vast landscapes, diverse natural attractions, and sublime natural sceneries, the North American geography provides enormous opportunities for new RV park businesses to bloom. In fact, the same report cited above predicts that, during that same period, the US camping and caravanning industry will surpass the global average, growing at a CAGR of 11.2%.
Unlike other recreational investments and niches of the travel industry, the RV park business has proved resilient to the ongoing economic turmoil. In fact, among other factors that we will discuss later on, affordability is one of the main reasons why the number of RVers keeps growing every year.
In the current state of the industry, supply is struggling to keep up with the demand, which means RV parks offer entrepreneurs great potential for profitability. But for newcomers, this rapid growth may be deceptive.
Some people may believe that building a successful, profitable campground is a straightforward process: you just need to build or buy a park, put a price on it, then promote it. The reality, of course, is not that simple. Building and running a profitable RV park actually requires careful business planning and a lot of hard work.
The challenges of campground ownership include choosing the right location, investing in amenities and infrastructure, developing a strong business plan, staying up to date and adapting to changing market conditions, and handling the various everyday tasks that are required to properly manage and maintain a campground.
In the end, taking the leap and building your RV park business certainly has the potential to be a life-changing, overall rewarding decision, granting you the opportunity to earn good money while simultaneously improving your lifestyle.
The aim of this guide is to give you a comprehensive overview of the journey you will undertake as you embark on the exciting adventure of becoming the owner of a profitable RV park business.
1. How the RV Park Industry Works: Understanding the Causes for its Growth
As in any other field, the first goal of an entrepreneur should be to gain an in-depth understanding of how an industry works. But in this particular case, the changes that the industry has undergone in the past few years are so radical that anyone willing to enter should begin by taking a close look at its most recent evolution.
Not long ago, traveling around on a home on wheels was mostly associated with retirees with a lot of free time to fill in. Middle-class baby boomers and members of the Silent Generation largely represented the main target of the RV park industry for a long time.
But most recently, the industry has experienced a huge transformation, as younger generations and more diverse groups of campers came into play. In the US, from 2015 to 2021, the share of millennials among campers grew from 34% to 40%. In the meanwhile, Gen Z members came to be 13% of the total number of campers.
The reasons for the current campground boom are plenty. As a whole, the campground industry is aligned with many rising trends. Entrepreneurs should acknowledge these trends and discover how to use them for the benefit of their business.
As mentioned above, the search for budget-friendly holiday options is one of the forces driving the market growth. Other tendencies fueling the industry are the increased interest in outdoor activities, the growth of trends such as remote work, digital nomadism, “workation”, and “glamping”, and the quest for more sustainable traveling experiences.
Now that you have an idea of the current state of the industry, we can explore the more personal aspects of the business. So the second step is to carefully evaluate the compatibility between campground ownership and yourself.
2. Does the Campground Business suit you? Understanding its Challenges and Rewards
Despite all the rewards that this business may offer, building and running an RV park can be an emotional, psychological, and physical challenge. The best way to be prepared for it is to have the clearest possible picture of what you may expect.
Below we will explore some of the most relevant aspects of the experience of a campground owner. The aim of this quick overview is to help you answer a few crucial questions such as: Is this business the right fit for me? Will it meet my expectations? Will the gains for me and my family be bigger than the losses? Will I be up to the task? Will it make me feel happy and fulfilled?
So let’s take a look:
It’s a seasonal business
The peak camping season in North America begins by the end of May and lasts until mid-August. Of course, there are upsides and downsides to this. During the summer season, you will have to deal with a huge load of work. But this also means that you will have plenty of time for yourself, especially during the autumn and winter.
Outdoor lifestyle (but busy)
Most campground owners love the outdoor lifestyle and spending time surrounded by nature. While managing an RV park business, you’ll get plenty of these, but be aware that, for the most part, that time will be spent doing maintenance tasks, managing your employees, or attending to the needs of guests.
Upfront expenses are high
Initial investments for an RV park are relatively high, which means making a profit will take some time. Preparing the land to accommodate guests, building the campground sites, and developing amenities are some of the costs that you will have to take into consideration.
Consider everyday tasks
As the industry grows, the expectations of guests also change. So in order for your business to stand out, you will need to rise up to the challenge of being a great host. Also, you will have to manage your employees and keep up with the maintenance of an infrastructure that includes septic and electrical systems, water supplies, and more.
It can certainly be a profitable business
Despite the initial investment being high, the profit margin of a campground is usually about 30%. Once your business is on the move and you start gaining your customers’ loyalty, your annual profit can reach more than US$100k after a relatively short period of time.
Of course, the rewards and challenges of being a campground owner can be explored in much more depth. But if you feel like, in general, the aspects outlined above fit your personality, your expectations, and your financial possibilities, then you are ready to move on and start picturing where you want your RV park to be located.
3. Choosing a location
No matter their demographics, what most RV campers are looking for is a change of scenery. They want to breathe fresh air. They want to trade the noisy soundscape of the city for the harmonious sounds of nature. So an RV park business should start by figuring out how to meet this basic demand.
Where your campground is located will depend upon a number of very particular factors. Many campground owners begin by building a few RV sites in their family-owned acreage. Others may have the opportunity to choose the location of their park among a wider set of options.
There are, of course, a few geographical elements that can contribute to making a campground stand out. For example, campgrounds that are located nearby attractions such as national parks, state parks, natural landmarks, or other tourist destinations are more likely to attract campers.
Ideally, an RV park should be easily accessible, but at the same time away from noise and agitation. Properties that are close to highways and have easy access to the road have better chances of attracting visitors. However, a certain amount of seclusion is also necessary in order for guests to distance themselves from the stress of everyday life.
Finally, when you choose a given location, you should also take yourself and your family into account. After all, it should be a place where you can imagine yourself living for many years.
This is also important business-wise. If you feel comfortable with the place in which you are living, you will probably be a better host, more capable of making your guests’ experience much more pleasant.
Even if all of the above are important, the truth is the location of your campground will be highly determined by a crucial factor: money. So let’s take a look at the different strategies with which an aspiring RV park owner can secure funding for their future business.
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4. Funding your RV park business
As we said, the initial investment to build a campground can be relatively high.
To begin with, you have to consider the cost of the land, which can vary widely across North America. Then there is the preparation of the land with the roads and equipment that will allow you to receive your guests. Finally, the building of sites and the amenities usually represent the biggest part of the cost.
There are also other minor costs which include business licenses and permits, setting up a website, insurance, and others.
We will elaborate further on the importance of developing different types of amenities to differentiate from the competition. But there are a few amenities that are absolutely basic for any functioning campground.
A sewer or septic system
Both of them meet the purpose of providing your guests with a safe and efficient way to dispose of waste. Regardless, septic systems have a few advantages over sewer lines, since they use less energy, have a smaller environmental impact, and reduce the threat of leaks.
A water system
Make sure your guests have access to a reliable source of water for drinking, cooking, and cleaning.
Hookups are absolutely essential for RV camping since they will allow your guests to connect their vehicles to services like electricity, water, and sewer or septic systems.
Other common amenities that can be found at most campgrounds are picnic tables and fire pits. Also, and especially as more millennials and centennials become RVers, the importance of providing a robust WiFi connection has gotten bigger.
These are the basic costs that you should bear in mind when seeking funding for your RV park business. There are many different ways to raise the capital you need, and you will need to build a fundraising strategy that suits the needs of your business.
In the US, the most common sources of financing are personal savings, bank loans, and guaranteed loans from the Small Business Administration (SBA). Most recently, an innovative solution such as crowdfunding has allowed entrepreneurs access to a low-risk funding option.
But no matter what your financing source is, developing a business plan with accurate financial projections will be essential to understand the profitability and long-term viability of your business.
5. Developing and Executing your RV Park Business Plan
A business plan contemplates many of the concepts that we have discussed above.
It begins with thorough market and industry research. Then, it moves on to analyzing how to procure the real estate, equipment, materials, and human resources that you will need to build and run your RV park. Finally, it includes the financial projections and forecasting for as many years ahead as possible.
A well-designed business plan should function as a guide for you through the launch process and then help you keep focused on your business goals as you move on. But the need to plan ahead stretches way beyond the day of your opening. As a campground owner, you will keep facing several business challenges as you grow.
A 2023 survey revealed that simplifying reservations management, improving marketing capabilities, and gaining better access to financing to build new amenities are among the most important needs of RV park owners these days.
At Roverpass, we have created a variety of solutions that are aimed at giving owners the tools they need to properly tackle these challenges. Let’s take a closer look at each one of them.
Sharpening marketing skills
For many aspiring campground owners, marketing can be a remote, vaguely obscure activity. But developing a strong marketing strategy is a huge part of building a successful RV park business. With the right set of tools, you can increase your RV park exposure and gain a strong online and marketing presence without the need to become a marketing expert.
Taking this particular need into consideration, Roverpass developed the Marketplace, where you can add your RV park or campground listing for thousands of users to see just by filling out a simple form. Marketplace allows you to show your potential guests what is unique about your place and highlight attractive sites nearby.
The latest changes in the industry have motivated many campground owners to review some of their traditional ways of managing some crucial aspects of their business, including reservations.
Incorporating campground reservation software helps businesses manage reservations with much more ease. Roverpass Reservation Management System provides tools that simplify and streamline the whole process.
Accessing funding to expand amenities
As the demand for RV parks grew and diversified in recent years, so did the competition. So to differentiate themselves, RV parks today need to make an extra effort.
Last year, the first-ever Campground Industry Market Analysis published by the RV Industry Association, determined that campground amenities were a key factor in the retention of RVers. So beyond the basic features of a campground outlined above, you will need to plan and develop amenities that will allow your campground to stand out.
Of course, this doesn’t mean that you just have to randomly and blindly add amenities to your campground. You do want to create an environment with the capacity to meet the demands of different types of guests, but you also need to take your target market into consideration.
Preferences vary widely depending on the profile of the customers. One thing that will help you plan wisely is asking some questions upfront, such as: Are you catering mainly to backpackers or to families? Do you want your campground to accommodate guests with pets? Are you mainly targeting a particular demographic or age group?
For example, if you are aiming at families, you may want to add a pool or a play area for children, two amenities that are highly (and increasingly) valued by campers. Or if you want your RV park to be able to accommodate guests with pets, you can build a dog run and create a dedicated space for pets to play and exercise.
Access to funding is key for campground owners to be able to plan for new amenities and therefore adapt to the changing demands of the market. Using the Roverpass Capital Lending service, businesses can gain access to loans in a very straightforward and flexible manner.
Ready to kickstart your profitable RV park business?
From Anchorage to the Florida Keys, campgrounds and RV parks are blooming across all of North America, attracting an increasingly diverse community of visitors. Fueled by RVers of all ages looking to enjoy affordable vacations, surrounded by nature but provided with comfortable amenities, the RV park market keeps growing by the day.
By all accounts, there has probably never been a better time to enter the business. In its current state, the market offers campground owners a significant potential for revenue. Furthermore, demand is likely to keep growing steadily in the upcoming years, as the trends that we described above are expected to keep growing as well.
Many of the topics that we have addressed in this guide are essential to the campground industry and to the business experience of many campground owners. So if you want to explore any of them further, we strongly suggest you to keep reading our blog.