Understanding Business Valuation
If you’ve ever wondered how much your glamping business is truly worth, or what it could potentially be valued at in the future, you’ll find valuable insights in the latest episode of the Unique Hospitality Podcast. In this informative solo episode, host Connor Schwab dives into a critical yet nuanced aspect of outdoor hospitality: understanding business valuation.
To provide expert perspectives, Connor sits down with two leading industry professionals:
- Bob Kaplan, founder and managing broker at NAI Outdoor Hospitality Brokers, specializing in RV parks, campgrounds, and glamping properties nationwide.
- Shari Heilala, founder and president of Sage Outdoor Advisory, an experienced appraiser and consultant who has nearly 20 years of expertise in outdoor hospitality, resort feasibility, and the glamping sector.
Together, Bob and Shari unpack the key elements that shape the value of a glamping property, examining both theoretical appraisal methods (used primarily by banks) and real-world market valuation (what buyers are truly willing to pay).
Key Insights
1. Appraisals vs. Market Realities
Shari clearly outlines the traditional appraisal methods, cost, income, and sales comparisons, but emphasizes that these appraisals are often theoretical. Bob complements this perspective by providing real-world brokerage insights into what buyers genuinely value and how they evaluate opportunities.
2. Understanding Cap Rates in Glamping
Typical capitalization rates in the glamping industry range from 8% to 12%, with stable, well-established properties in desirable locations often falling closer to 9–10%. The discussion highlights how location, uniqueness, growth potential, and revenue streams like lodging versus food and beverage significantly influence these rates.
3. Facing the Reality of Seasonality
Seasonality plays a crucial role in valuation. Businesses operating only 4–5 months per year, particularly with canvas-based accommodations, often face valuation challenges. In contrast, year-round, hard-walled accommodations tend to offer greater stability and appeal to more significant institutional investors.
4. The Importance of Entitlements
The presence of entitled expansion land can be a substantial hidden asset. Even if the land isn’t immediately developed, having approvals in place significantly increases buyer confidence and can considerably elevate your business’s sale value.
5. Preparing Your Business for Sale
Bob and Shari stress the importance of early preparation, ideally 1–3 years before selling. Essential steps include:
- Cleaning and organizing financial records
- Demonstrating consistent occupancy and strong demand
- Securing entitlements for future development
- Delegating operational responsibilities to ensure the business isn’t owner-dependent
- Clearly outlining future growth opportunities for potential buyers
6. Multi-Site Expansion Strategy
For entrepreneurs aspiring to grow a glamping brand, the episode offers valuable strategic advice. Successful brands like Under Canvas, AutoCamp, and Postcard Cabins (formerly known as Getaway) were attractive acquisitions because they had replicable business models across several locations. If your goal is to sell a portfolio, aim for sites with at least 50 units and annual revenue exceeding $1 million per location.
Final Thoughts
Your glamping business is much more than a passion project, it’s an investment with significant potential value. Understanding how appraisers and buyers assess your business is crucial whether you’re currently operating or considering a sale.
This podcast episode provides essential insights and practical wisdom for anyone serious about maximizing their glamping business’s worth. It’s a highly recommended listen for professionals in the outdoor hospitality industry.