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ARVC: High Qualify RV Parks Defy the Recession

Posted By RVBusiness On December 14, 2009 @ 1:17 pm In Breaking News | No Comments

arvc2.giARVC logofBetween 2000 and 2005, as real estate prices rocketed to unprecedented levels, developers pulled out their wallets and encouraged owners of RV parks and resorts to sell their properties because they wanted to replace them with shopping malls – all more lucrative uses of these properties, or so they thought.

As the real estate market has tumbled, however, many developers have not been able to get very far with their plans, and several of the RV parks and resorts they acquired have not only survived, but prospered during the current economic recession, according to a release from the National Association of RV Parks and Campgrounds (ARVC).

In fact, one lesson that developers have learned is that high quality RV parks and resorts are more economically resilient than hotels, shopping malls or condos, particularly when investments are made to improve these parks.

“Camping is a recession-proof business,” said David L. Berg, ARVC chairman, adding that most of the nation’s campgrounds, RV parks and RV resorts have reported stable to slight increases in income this year, despite the recession.

Berg cited his own campground as a case in point. The park, Red Apple Campground in Kennebunkport, Maine, scored an 8.5% increase in business compared to last year, while hotels and motels in his area saw their business drop by as much as 25%. “Camping is more family oriented and more reasonably priced than other travel and tourism options,” he said, adding, “The state of affairs of our economy has not hurt the camping business at all.”

Developers, on the other hand, have mistakenly assumed that land is always more valuable when it’s used for hotels, shopping malls and condominiums. While this kind of thinking may apply to poorly maintained RV parks, in resort destinations, high-quality RV parks and resorts remain economically resilient, even when times are tough.

Consider the story of Emerald Desert RV Resort in Palm Desert, Calif., one of the top winter vacation destinations in the country. Several years ago, Scottsdale, Ariz.-based Taylor Morrison bought the park with plans to replace it with high-end housing. But the recession pulled the rug out from under the real estate market before Taylor Morrison could finish its project. And while Taylor Morrison had converted portions of the RV resort to housing, the rest of the resort remained standing, including all of its RV sites, clubhouse and other core buildings, which prompted the company to put the RV resort back on the market.

La Jolla, Calif. based SunLand RV Resorts bought Emerald Desert last summer and plans to keep as a resort. “I’ve had my eye on this property for 20 years,” said Reza Paydar, SunLand president and CEO. “It is very valuable. There is nothing like it.”

SunLand, in fact, has already invested more than $1 million in improvements to the 251-site property and plans to operate it as a year-round luxury RV resort. It’s newly designed 1,200-square-foot lobby features a custom designed floor mosaic and reception desk with inlayed stone. Luxury furnishings are also being added to the newly designed fitness center and swimming pool area.

Meanwhile, the economic downturn has given La Pacifica RV Resort in the San Diego, Calif. suburb of San Ysidro a chance to assert its economic resiliency. An investor purchased the property several years ago with the idea of re-selling it to a housing developer. But as the real estate market tanked, the investor’s plans evaporated and he wound up selling the property to another investor, Bart Thomsen, who plans to make improvements and keep La Pacifica as an RV resort.

“The park is in very good condition already. But we’re absolutely intent on making it an even better place,” Thomsen said. “We’re putting money into fixing up the bathhouse and clubhouse and investing in better utility pedestals and making improvements to its streets. We’re planning on it being an RV park for the long haul.”

Developers’ plans to convert RV parks and resorts to other uses have not only been put on hold by the recession. In some cases, local residents and businesses and city officials have discouraged them from replacing RV parks and resorts, which they value as important pillars of a tourism economy.

Consider Holiday Cove RV Resort in Cortez, Fla. A few years ago, the property was purchased by an owner who wanted to replace it with condominiums, but the developer ran into opposition from local residents, businesses and city officials. “They claimed the plan was out of character for the community and they were concerned that residential use wouldn’t support the local businesses that are geared primarily to the tourist and vacation business,” said David Gorin, who recently purchased park from the developer. “The previous owner was simply unable to get the zoning and planning commission to approve his plan. He fought with them for five years and then gave up and sold the property to us.”

Gorin and his business partner have since invested $1.4 million improving the property and making it into a high quality RV resort.

These investments in RV parks and in RV park improvements are paying off because camping and RVing enthusiasts have shown a consistent willingness to pay for parks that offer high quality facilities, amenities and service, said Linda Profaizer, ARVC president and CEO. RV parks and resorts are also aided by the fact that they offer the nation’s most affordable vacation option, she said.

John Grant, owner of San Diego-based Park Brokerage Inc., said growing consumer interest in camping and RVing is also helping RV parks and resorts to retain their real estate and business value during the worst recession since the Great Depression. “RV parks are holding on to their value because people are downsizing their vacations, taking their RV or tent and going camping,” he said. “This translates into higher property and business values for parks.”

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