The Future Remains Bright
Pent-up demand and a desire to reconnect with nature have driven consumers to campgrounds and RV parks over the past five years. The COVID-19 pandemic fueled a new generation of campers who used work-from-home policies to travel domestically. The influx of new campers has increased demand for luxury facilities and amenities often provided by competing rental properties and hotels. Campsites and RV park owners have responded to shifting consumer preferences by constructing more amenities, larger / higher quality RV sites and adding glamping options.
According to IBISWorld, over the past five years, revenue has increased at a Compound Annual Growth Rate (CAGR) of 4.3% to $10.7 billion, including a 4.4% boost in 2023 alone. Adults under 45 comprise a key customer segment for campgrounds and RV parks. According to Kampgrounds of America’s camping report, a third of new campers in 2022 were millennials. As consumers in this generation become more established in their careers, they have more disposable income to spend on vacations, driving them to campsites and RV parks. Peer-to-peer rental sites have encouraged this age group to begin camping or traveling via RV since rentals are more accessible than purchasing an RV outright. Millennials have recently overtaken baby boomers to become the largest generation in the U.S., providing campsite and RV park operators access to new markets. This demographic shift will provide organic growth for park owners moving forward.
Rising disposable incomes are anticipated to mitigate volatile oil prices to encourage road trips to campsites and RV parks over the next five years. A growing interest from younger consumers in camping and RV travel will fuel occupancy rates at campsites and RV parks. To attract campers with a larger budget, park owners will continue to offer more luxurious facilities and amenities to stave off competition from hotels and rental properties. Online accommodation booking sites continue to threaten profit for campsites and RV parks, but peer-to-peer rental sites will ease some of this competition by making camping more accessible.
Looking forward, campground and RV park revenue in the U.S. is forecast to trend upwards at a CAGR of 1.4% to $11.4 billion over the next five years:
Performance
Overall performance in the market is marked by robust historical growth, more stable future growth and generally level profit margins:
The following graph displays the annual revenue in billion dollars (blue solid line) and the percentage change in revenue from the previous year (red dashed line) for the industry from 2010 to 2023, with projections from 2024 to 2028.
Demand
The dip in revenue in 2023 is in line with the weaker sales of RV units compared to the record breaking year of 2022. One industry trend to analyze historical demand / predict future RV demand is the number of shipments made by manufacturers. The RV Industry Association (RVIA) tracks these statistics, and the historical shipment statistics can be seen below.
Following is the current year, most recently available month by month RV shipment history:
Results for the RV Industry Association’s April 2024 survey of manufacturers found that total RV shipments ended the month with 34,197 units, an increase of 9.5% compared to the 31,216 units shipped in April 2023. To date, RVs are up 9.4% compared to the same timeframe last year with 120,138 units shipped through April.
The new forecast projects 2024 RV shipments to range from an 11.8% to 15.8% increase over 2023 levels. Interest rates could move lower in 2024, making RV financing more attainable for consumers. Receding inflation and rising incomes will also provide a more favorable environment for discretionary items such as RVs. Overall, demand is still outpacing supply, and the industry outlook is positive in the near and long term in most major metrics.
Supply
While there are no comprehensive data sources which track the existing campground / RV resort supply in a detailed way by segment, it is clear that the past few years have seen robust growth in the addition of new supply. New developments have predominantly been good to very high quality RV resorts, filling unmet demand in markets with older and outdated offerings. After several years of robust growth and development, some markets will need monitoring to determine how quickly the new properties gain renters and reach stabilization. Many areas in the south and southeast, particularly Texas, have seen strong development levels, particularly due to the lack of zoning regulations. Those states with the highest barriers to entry for zoning and infrastructure such as California, Washington and Colorado have seen less growth. Each market should be analyzed carefully for these dynamics.
Occupancy and Rates
Historical occupancy rates for RV parks in the United States can vary depending on several factors, including location, time of year, and broader trends in travel and tourism. Generally, occupancy rates have been on the rise due to increasing popularity in RV travel, especially in scenic or tourist-heavy regions. Here’s an overview of the historical trends:
- Seasonal Variability: Occupancy rates typically peak during summer and holiday seasons when travel is most frequent. In popular destinations like national parks or coastal areas, occupancy can be near 100% during peak seasons.
- Regional Differences: Regions with year-round mild climates, like Florida, California, and parts of the Southwest, tend to have higher and more consistent occupancy rates throughout the year compared to regions with harsher winters.
- Growth Trends: Over the past decade, there has been a general increase in RV park occupancy rates. This growth has been attributed to factors like the increasing popularity of RV travel among different demographics, improvements and expansions in RV park facilities, and a growing trend towards domestic travel.
- Impact of Events: Special events, such as music festivals, sports events, or large public gatherings, can lead to temporary spikes in local RV park occupancies.
- Economic and Social Factors: Economic conditions, gas prices, and trends in leisure and travel behaviors (like the rise in remote work and “workstations”) also influence occupancy rates over time.
National surveys have shown slightly upward trending occupancy rates over time, with an average centering around 69%. However, this includes monthly and seasonal renters, which can drive up the average rates compared to a strictly transient park / resort. Discussions with owners and operators across the country indicate that occupancy trended slightly downward in 2023, although this varies across markets. This trend is expected to reverse in the short-term.
KOA’s monthly February 2024 report shows a surge in 2024 travel bookings, especially among Gen Z, highlighting a trend towards early planning for outdoor activities. There’s a noticeable shift towards road trips, reflecting a preference for adventure. The report indicates the continuing trend of integrating road trips with camping, noting a 10% higher preference for road trips over traditional camping activities. This preference highlights a broader enthusiasm for exploration and adventure, with 59% of campers favoring road trips and 49% opting for stationary camping. This underscores a deeper integration of road-tripping into the camping experience, reflecting a dynamic approach to travel and adventure.
Travel demand has surged significantly beyond last year’s figures, with 64% of campers already making reservations for upcoming trips. This proactive booking behavior starkly contrasts with non-camping leisure travelers, of whom only 29% have made similar arrangements. Among these bookings, camping trips are the most popular (54%), followed by hotel stays (46%).
Gen Z campers and individuals who began camping during the COVID-19 pandemic lead the early booking trend. Key motivations for these bookings include family reunions, birthdays, and celebrations during major holidays such as Memorial Day and the 4th of July. While booking windows have shortened, with more last minute trips planned, this is a positive sign of momentum for 2024.
Sage Outdoor Advisory Industry Outlook
The overall economic and demand drivers for the RV resort and campground industry are positive. Sage Outdoor Advisory is confident that the long-term growth in the industry is sustainable, due to the following factors:
- The Gen Z segment continues to grow in participation in camping and RVing. This population values remote work (one study indicated 55% prefer it) and are the largest age demographic to own pets. This group will be a major driver for growth, but not necessarily for the highest priced options. This group will also be the most interested in adventure travel and the most eco-conscious.
- The second population group that has been a mainstay in the industry and continues to grow is the 65 years and over group. This group, on average, will be the target market for higher end resorts with more amenities and sites to accommodate larger rigs.
- Most companies have implemented their “return to work” policies in 2023. It is unlikely that significant changes are ahead that will impact the number of people who can travel and work remotely in the future.
- Wholesale shipments of RVs have returned to pre-pandemic levels after an enormous post-pandemic spike in 2022. Normalized growth is anticipated over the next few years.
- Domestic RV travel is once again competing with international vacations; however, 2023 marked a return to the pent up international travel. For some, this took the place of what would normally be a domestic RV trip. This trend is anticipated to continue into 2024 but normalize thereafter.
- A reduction in interest rates (without a recession) could further boost demand, making RV ownership more affordable. If the rates decrease by a few hundred basis points, RV shipments will likely grow and in turn, demand.
The industry has seen record new development and expansion over the past few years, which is causing concern regarding oversupply in some markets. Sage Outdoor Advisory has the following insights into this dynamic:
- Continued new development in oversaturated markets may drive down occupancy and rates. Rate decreases tend to lag occupancy decreases. Some markets may see some rate decreases in 2024, where occupancy declined in 2023.
- Markets with a high barrier to entry (zoning regulations, environmental regulations, access to water) continue to be generally undersupplied. The immediate outlook for these markets is stronger.
- Repositioning older, outdated campgrounds in the right location will continue to be one of the lowest risk development strategies available, particularly in markets with a high barrier to entry.
- Further segmentation of types of campgrounds and RV resorts is expected to continue as this market matures. A simple survey of the number of RV sites does not provide a full picture of the supply landscape. Understanding the target market for a business and its competitive supply is critical, particularly as it pertains to the growing demand segments mentioned above.