Why Buying an RV Park is a Safer Investment Than a Fast Food Franchise or Traditional Business Acquisition 

Investing capital to create a new stream of cash flow or to replace your day job income frequently involves the predictable process of considering options like commercial real estate or purchasing an existing business or franchise opportunity. While all of these options have their individual merits, there are many compelling reasons to examine buying an RV or “Glamping” Park as a superior investment compared to acquiring a business through a franchise or broker. Here’s why:

RV Parks Are Backed by Tangible Real Estate Assets, Unlike most other Business Opportunities

Real estate has long been recognized as a reliable investment, a sentiment championed by historical figures from the last century like America’s first millionaire, John Jacob Astor, to contemporary magnates such as Warren Buffett, David Durst, Sam & Richard LeFrak, Sam Zell, and Barbara Corcoran of Shark Tank fame.  Real estate ownership is has historically been considered a strong and predictable hedge against inflation. Additionally, it has proven to be a reliable foundation of transferable wealth preservation throughout history. RV Parks are fundamentally real estate investments, they offer the benefit of tangible assets. In contrast, purchasing a traditional operating business convenience store or fast food franchise often entails significant capital, acquiring leased space, depreciating equipment, and supporting the cost and liabilities of a workforce—questionable assets that collectively hold minimal sustainable or transferable value.

Resilience in Economic Downturns

RV Parks benefit from several supportive recession-resistant nuances, they enjoy consistent demand driven by two main demographics: retirees, and younger RV owners, as well as the underlying real-estate value, which is often further enhanced by continuous capital improvements made to the land.  Retired Americans typically have stable income sources less affected by economic fluctuations, while younger RV owners prioritize their recreation and fun vacation time, often regardless of their economic conditions. Conversely, many more traditional businesses heavily depend upon prosperous economic times for their continued survival. During recessions, such businesses frequently face declining revenues and potential insolvency.  If we examine the recent 2019 Pandemic, RV parks reported record bookings and saw the market outperforming resale value appreciations. New Market sector developments such as “Glamping” have also driven participating park attendance numbers to new record performance.

Favorable Lending Conditions

Financial institutions favor lending to RV Parks due to the security provided by the underlying land value. This preference makes securing financing for RV Parks acquisitions easier compared to many other similarly priced businesses, which often lack substantial underlying assets that can be used for collateral. Consequently, business acquisitions frequently require all-cash purchases or seller financing, often under unattractive terms. Notably, even the U.S. Government supports RV Park financing through the SBA and the Department of Agriculture.

Higher Rates of Return through Strategic Leverage Results in Predictable Returns

The strategic use of leverage can significantly enhance returns on RV Parks. Achieving a cash-on-cash return of 20% only requires a three-point spread between the loan interest rate and the cap rate. A one-point spread yields a 10% return, while a two-point spread results in approximately 15%. This leverage effect boosts internal rates of return, a benefit not typically available when purchasing other businesses and franchises, which generally results in much lower realized investment returns.

Glamping and the Advent of New Market Opportunities

Glamping, a portmanteau of “glamorous” and “camping,” refers to a style of camping that combines the experience of outdoor living with the luxury and amenities typically associated with upscale accommodations. This travel trend has grown significantly in popularity over recent years, catering to those who seek to enjoy nature without forgoing the comforts of a hotel or resort.

The glamping phenomenon has significantly impacted the revenue production of many RV parks by attracting a broader and more diverse clientele, offering higher-margin accommodations, and enhancing the overall guest experience. Here are some key ways in which glamping has contributed to increased revenue for RV parks:

The glamping market is increasing, with some sources predicting a compound annual growth rate (CAGR) of 10.20%–15.14% from 2023–2031

Key Characteristics of Glamping

1. Luxurious Accommodations
   • Variety of Structures: Glamping accommodations come in many forms, including safari tents, yurts, treehouses, cabins, airstreams, pods, domes, and even tiny homes. These structures often feature amenities like heating, air conditioning, and private bathrooms.
   • Comfortable Furnishings: Unlike traditional camping, glamping setups often include comfortable beds with high-quality linens, furniture such as chairs and tables, and sometimes even full kitchens and living spaces.
2. Modern Amenities
   • Private Bathrooms: Many glamping sites offer private bathrooms with hot showers, flush toilets, and sometimes even bathtubs or outdoor soaking tubs.
   • Electricity and Wi-Fi: Glamping sites typically provide electricity for lighting, charging devices, and running appliances. Wi-Fi access is also commonly available, allowing guests to stay connected.
3. Unique and Scenic Locations
   • Natural Settings: Glamping sites are often located in picturesque environments such as national parks, forests, mountains, beaches, and vineyards. These locations provide a serene backdrop for guests to enjoy nature without sacrificing comfort.
   • Exclusive Access: Some glamping accommodations offer exclusive access to private land, giving guests a sense of seclusion and privacy.
4. Enhanced Experiences
   • Outdoor Activities: Glamping sites often offer a range of outdoor activities such as hiking, fishing, kayaking, horseback riding, and wildlife viewing. These activities allow guests to engage with nature directly.
   • On-Site Services: Many glamping sites provide additional services like guided tours, wellness activities (yoga, spa treatments), and gourmet dining experiences, enhancing the overall guest experience.
5. Sustainability and Eco-Friendliness
   • Eco-Friendly Practices: Many glamping sites prioritize sustainability by using eco-friendly materials, implementing water and energy conservation practices, and offering locally sourced, organic food options.
   • Minimal Environmental Impact: The structures used for glamping are often designed to have a minimal impact on the environment. For instance, many are built on raised platforms to avoid disturbing the ground.

Benefits of Glamping

1. Accessibility
   • Appealing to Non-Campers: Glamping makes the outdoors accessible to people who might not be interested in traditional camping due to its perceived discomfort or inconvenience.
   • Family-Friendly: Glamping is often more suitable for families with children or older adults who require more comfortable accommodations.
2. Comfort and Convenience
   • No Equipment Required: Unlike traditional camping, guests do not need to bring their own tents, sleeping bags, or cooking equipment. Everything is provided, reducing the logistical burden of the trip.
   • All-Season Availability: Many glamping structures are designed to be used year-round, offering climate control and weatherproofing that traditional camping lacks.
3. Enhanced Experiences
   • Unique Stays: The variety of unique accommodations provides memorable experiences that differ significantly from standard hotel stays.
   • Connection with Nature: Glamping allows guests to immerse themselves in natural surroundings while still enjoying modern comforts.

Market Growth and Popularity

• Rising Demand: The demand for glamping has surged as travelers seek unique and experiential vacations. This trend is particularly popular among millennials and Gen Z, who prioritize experiences over material possessions.

Industry Growth: The global glamping market has been growing rapidly, with significant investments in new glamping sites and innovations in accommodations. This growth is driven by the increasing number of travelers looking for sustainable and eco-friendly

Resulting Effects

Glamping provides a perfect blend of outdoor adventure and luxury, catering to a diverse range of travelers who desire the beauty of nature without sacrificing comfort. With its growing popularity and expanding market, glamping represents a significant shift in how people approach outdoor travel and vacationing, offering unique, sustainable, and memorable experiences.

Expanded Customer Base

• Attracting New Demographics: Glamping appeals to a wider audience, including those who might not typically consider traditional camping or RV stays. This includes urban dwellers, families, and luxury travelers seeking unique and comfortable outdoor experiences.
• Appealing to Millennials and Gen Z: Younger generations, particularly Millennials and Gen Z, are drawn to experiential travel. Glamping’s blend of nature and luxury fits well with their preferences, leading to increased bookings.

Higher Revenue Per Night

• Premium Pricing: Glamping accommodations, such as luxury tents, yurts, and cabins, command higher nightly rates compared to traditional RV sites. This allows RV parks to increase their revenue per night significantly.
• Added Amenities: Glamping often includes amenities such as private bathrooms, high-quality bedding, and unique features like hot tubs or fire pits, justifying higher prices and enhancing guest satisfaction.

Increased Occupancy Rates

• Year-Round Appeal: Glamping structures are often designed for year-round use, extending the booking season beyond the traditional camping months. This increases occupancy rates throughout the year.

Event Hosting: Many RV parks with glamping options host events like weddings, corporate retreats, and family reunions, which attract group bookings and additional revenue streams.

Enhanced Guest Experience

• Improved Amenities and Services: The demand for glamping has driven RV parks to upgrade their facilities and services, leading to higher guest satisfaction and repeat visits.
• Social Media and Marketing: Glamping sites are often highly Instagrammable, providing free marketing as guests share their experiences online. This visibility attracts new customers and boosts bookings.

Revenue Diversification

• Additional Services: RV parks with glamping options often offer additional services such as guided tours, outdoor activities, and gourmet dining experiences, further diversifying and increasing revenue streams.
• Merchandise Sales: Offering branded merchandise and glamping-related products can also contribute to revenue growth.

Case Studies and Industry Data

1. KOA North American Camping Report: The 2020 report by Kampgrounds of America (KOA) noted that 31% of leisure travelers were interested in trying glamping, and 63% of campers had already glamped or were interested in doing so. This interest translates into increased bookings and revenue for RV parks offering glamping options.
2. Industry Reports: According to a report by Arizton Advisory & Intelligence,
3. THE U.S. GLAMPING MARKET IS EXPECTED TO REACH USD 1.30 BILLION BY 2029 FROM USD 561.42 MILLION IN 2023, GROWING AT A CAGR OF 15.14% DURING THE FORECAST PERIOD.
4. The U.S. Glamping Market Size, Share, & Trends Analysis
5. This growth reflects the increasing popularity and revenue potential of glamping accommodations within RV parks.

Conclusion

The glamping phenomenon has positively impacted the revenue production of RV parks by attracting a broader range of customers, enabling premium pricing, increasing occupancy rates, enhancing guest experiences, and diversifying revenue streams. As glamping continues to grow in popularity, RV parks that incorporate glamping accommodations are likely to see continued financial benefits.

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References

1. KOA North American Camping Report, 2020.
2. Arizton Advisory & Intelligence, Global Glamping Market Report, 2020-2025.
3. National Association of RV Parks and Campgrounds (ARVC) industry data.

The Net 

RV Parks present a compelling investment opportunity, combining high returns with the safety of land ownership. Their resilience in both favorable and adverse economic conditions further enhances their appeal. In comparison, buying a franchise or traditional business often lacks these advantages, making RV Parks a more attractive option for investors.

Third-Party Verification

1. Real Estate Stability: Real estate’s role as a hedge against inflation and a wealth preservation tool is well-documented. According to a report by the National Association of Realtors, real estate consistently appreciates over time and offers a stable investment compared to other asset classes.
2. Economic Resilience: The RV Industry Association highlights that the RV market continues to grow, even during economic downturns, due to the sector’s appeal to retirees and vacationing families and the human predisposition to entertainment.
3. Favorable Lending: The Small Business Administration (SBA) confirms that RV Parks are eligible for its loan programs, providing easier access to capital for investors.
4. Higher Returns with Leverage: Financial studies, such as those published by the Urban Land Institute, demonstrate how strategic leverage in real estate can significantly amplify returns compared to non-leveraged investments.

These points underscore the advantages of investing in RV Parks over traditional businesses and other real estate investment sectors, providing a robust, high-return investment opportunity backed by underlying real estate.