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KOA Franchisees Outperform U.S. Economy

Posted By Sherman Goldenberg On November 17, 2010 @ 9:44 am In Breaking News,News In Focus | No Comments

Pat Hittmeier, KOA president

Pat Hittmeier, KOA president

Despite the nation’s challenging economic environment, business for most of Kampground of America Inc.’s 460-plus parks is relatively good right now. In fact, it’s real good in some cases. That much was evident at KOA’s Annual International Convention at which some 500 people – representing 220 parks – gathered Nov. 7-10 at the Westin Savannah Harbor Golf Resort & Spa in Savannah, Ga.

How so many entrepreneurial franchisees like Steve Jewell, of Spartanburg NE/Gaffney, S.C. KOA, managed to so gracefully avoid the more dire effects of the Great Recession is hard to figure.

So far, however, that appears to be the case.

“Our business has been strong this year and last year right through the rather low period that other people experienced,” said Jewell, a convention attendee who does “huge” repeat business. “We’ve experienced continual growth over 29 of the last 30 months with increases over 10% — and as much as 18% to 19% — from the previous year.”

By the same token, Al Johnson’s 10 KOAs are all posting revenue gains. “We had a banner year for our company, which was chasing a really good year last year,” says Johnson, whose South Dakota-based Recreational Adventures Co. has benefited from both good weather and economy-seeking campers.

Neither Jewell nor Johnson was doing paid testimonials for KOA, but they well could have because their remarks are consistent with the company’s own impressive report: KOA’s core business saw strong growth during the company’s summer camping season, with same store revenue up 6% and camper nights up 4.5% over 2009, according to an “annual report” distributed by the company at its upbeat convention.

KOA President Pat Hittmeier says the company experienced year-over-year gains in each of the first 10 months of 2010, while destination locations near major attractions and “along-the-way parks” that feed those major markets did particularly well.

KOA’s total revenues are up about 8  1/2 percent in this, the second consecutive year of strong gains compared to the “poor” results posted in the recessionary summer of 2008. “We are still just a fraction below where we were in 2007,” Hittmeier told RVBusiness. “So we are very close to that benchmark, which was an excellent year.”

In fact, Hittmeier says KOA had surpassed 2009’s total year-end camper nights by early November.

“As consumer confidence and the jobs market come back, we are looking for a record-breaking year in 2011 for the summer,” adds Hittmeier. “The part that is a little disconcerting is the winter business, that which takes place between Nov. 1 and April 30. It has been down multiple years in a row. There are two parts of that — the short-term traveler and the extended stay snowbird.

“The snowbird business has stayed pretty stable — down a little bit, up a little bit,” he continued. “But the traveling market in the wintertime period has taken a big hit. That group has gone down repeatedly since the 2006-07 winter. Last year, we thought it would stabilize. It didn’t. It’s about 25% of what it was in 2007. We are hoping this year that it will turn around and that that particular retiree market will come back.”

KOA, in turn, expects to finish 2010 with a total count of about 470 parks, 26 of them company owned, the rest operated by independent franchisees. Hittmeier says KOA usually adds through conversions of new parks as many as 20 to 25 parks a year and loses through attrition anywhere between five and 15 parks in a average year.

Cultivating a Lucrative New “Lodging” Business

Looking ahead, the so-called “lodging” market remains a big target of KOA’s as the company continues to spearhead a trend toward rustic looking, wood-clad cottages built by three preferred providers: Cavco Park Homes & Cabins, Goodyear, Ariz.; Thor’s Breckenridge division, Nappanee, Ind.; and General Coach of Hensall, Ontario, Canada, all three of which had units on hand at the Georgia convention.

In fact, Hittmeier says there’s now a total of about 5,000 “roofed accommodations” in the KOA system – the goal being to add another 1,700 by 2015.

“We added about 400 roofed accommodations last year — most of those being park model types with full-service kitchens and bathrooms,” said Hittmeier. “Our lodge nights were up 35% in October, so we are starting to see some shoulder season business from these lodges, which is something we didn’t experience from our camping cabins (small dwellings lacking kitchen and bathroom facilities).”

These fully equipped recreational park trailers are called “Kamping Lodges.”

The next phase in KOA’s ongoing push into the lodging arena – a rather bold step that represents a definite departure – is a move toward the traditional hotel/motel field. As a matter of fact, the company-owned properties department has developed an operational manual specifically for lodging. “We are going to go more deeply into the linen market and hit the hotel/motel market head on,” says Hittmeier. “It’s a big jump because there’s a lot of work behind it relative to commercial laundries and taking on some systems.

“Anytime we have more than 10 lodges on a property, we are going to go to that model.”

The biggest challenge related to all that, he agrees, is to get the word out to the North American public that all of these lodges exist and that a young traveling family – or a family visiting an area for a soccer tournament — can opt to stay in a pretty little pine-sided cottage at the KOA instead of the Marriott Courtyard.

“The people who are staying in our lodges rate the experiences at the highest level,” said Hittmeier, now in his second year as KOA’s president. “They rate us higher than people who stay in RV sites, and of course, they pay the most amount of money. We know we’ve got a good product. The people who stay in them are first-time visitors to KOA as well, so they are not RVers. It is a new market, a primarily family market.

“When we get critical mass of enough units out there, I think we’ll start to see an even stronger draw and awareness,” said Hittmeier, adding that about 200 KOAs currently operate lodging accommodations.

Jim Rogers, KOA CEO

Jim Rogers, KOA CEO

“The hotel industry is coming toward us,” adds KOA CEO Jim Rogers. “They’re not changing your sheets anymore. They’re trying to put in a breakfast in the morning, trying to get you to socialize, but you still worry about going next door, knocking on the door and getting shot. That’s not what’s going to happen in this (campground) environment. These little buildings give you a sense of ownership — it’s a cottage, it’s a chalet, it’s a cabin, it’s yours, it’s reasonably priced. And you get something that you won’t get from a hotel.

“Now you’re (the park operator) in hospitality. We are moving toward them and they’re moving towards us. But we win because we’ve got 22 acres to go play on.

The problem is that nobody knows we’ve got them. We put it in our directory last year, but that was talking to our own campers. The people who are noticing our lodges are paying the most and have the highest satisfaction, return and value.

“And they are demographically diverse. We are seeing the African-American, Asians and Latinos use these products and loving them. That takes you beyond even the hotel component. It reaches you into a whole new strata of incremental business.”

Unprecedented Focus on The Company’s KOA.com

Another significant focal point for KOA right now is its revamped www.koacom website. This is no ordinary website, not for the $900,000 that the company recently invested in it — in addition to the $1 million KOA typically injects into its web operations on an annual basis.

One of the revamped website’s new features is geo-coding, which allows the site to know where an online user is located, and display campgrounds and special offers in that area.

“The old version of koa.com was already the most visited camping website in the world, with more than 1.1 million visitors each month,” said Lorne Armer, vice president of marketing for KOA. “But it was time for an upgrade, and the new koa.com offers our guests an enhanced online experience as they plan their camping trips, discover what there is to do near our campgrounds and make their reservations.”

The new site allows park operators to manage their own content and also features Google Mapping, a familiar online technology that allows users to quickly navigate state and provincial maps, zeroing in on just the right locations.

“The new KOA.com, which was produced by our partners at Genex in Los Angeles, will allow campers to spend time discovering some of the wonderful locations we have at KOA, so they do all of their trip research efficiently in one easy-to-navigate location,” said Armer. “They will have real-time access to more than 60,000 of North America’s best recreational vehicle sites, tent sites and accommodations such as our new Kamping Lodges.”

Hittmeier says KOA had planned to launch the revamped website in May, realizing its growth potential, especially among first timers. But building 10,000 pages and integrating the company’s Kampsite reservations operating system was quite a test.

“It was a little more complicated than we thought,” explained Hittmeier. “Instead of a nine-month period, it turned into more like a year-and-a -half launch period. And once we got into the middle of summer, we thought there was no way we could launch this when we are doing about $40 million in reservations through koa.com. Our campground owners would kill us if we launched a brand new website in the middle of their season. So, we waited until just a couple of weeks ago to launch it.”

Keynote Speaker Preaches The Power of Instant Feedback

Keynote speaker Fred Reichheld, a customer service guru who authored the groundbreaking book “The Ultimate Question – Driving Good Profits and True Growth,” told the assembled attendees that he had studied several companies that had experienced exceptional growth like Chick-Fil-A, Southwest Airlines and Enterprise Rent-a-Car.

Fred Reichheld, KOA convention keynote speaker

Fred Reichheld, KOA convention keynote speaker

What he found was a singular dedication to treating customers well and an ability to quickly measure their success and “make good things happen with what they learned.”

And that’s the kind of responsive approach KOA is trying to emulate.

Reichheld’s measurement tool, the Net Promoter Score, simply asks customers to rate their stay immediately after departure, and guests are asked if they’d likely recommend the business to a friend. The low scores, or “detractors” are subtracted from the top scores, or “promoters” to arrive at a “net promoter score.”

Reichheld’s new scoring system, providing KOA owners with immediate customer feedback on a daily basis — allowing them to quickly check progress and correct service problems as they occur — was adopted by the KOA system this summer as a means of helping operators improve service to campers.

He said sharing immediate customer feedback with employees is a great way to insure everyone – the owner, customer and employee – can win.

As part of its new “Rate Your Stay” feedback loop, KOA guests get an automatic e-mail from KOA thanking them for their business and asking them to rate their experience and add verbatim responses if they so choose. Consequently, KOA owners received over 120,000 immediate, catalogued responses from guests so far, allowing them to take quick action on operational issues.

“This response in addition to the verbatim feedback, comes back to our KOA owners immediately,” says Hittmeier. “Each morning they can open up their responses and we provide an organized list of where their score are at, verbatim, ranking them by site types, and so forth. So, they can manage their business on a daily basis. They use this to reinforce good service practices with their staff. It’s a real good tool that will help us move those service scores up.”

“We’ve continued to refine and focus our quality process where now, we wake up in the morning and see what our customers said about us yesterday and we respond to it,” Rogers explained. “We are able to make a phone call if they are disappointed. We are dealing with one guest at a time to make sure their stay at KOA was satisfactory to them.

Rogers Addresses Financially Strapped Public Park Sector

In what amounts to a real turnaround for the RV park and campground arena, Rogers is appealing to the private park sector to take heed of the sorry current state of public parks faced with critical budget cuts.

“The public sector is in a world of hurt,” he maintained. “I don’t care if you are at the federal or state level. They represent 8,000 campgrounds. We have 8,000 commercial campgrounds. They have 8,000 very distinguished specific locations that Americans enjoy, as do our visitors. So, you have to begin to ask the question: Are there any things that we’re doing on the commercial side that can be of assistance to the private side. That’s where the doorbell is being rung.”

Although KOA isn’t interested in any concessionaire relationships, he adds, they’d like to figure how KOA franchisees near public facilities can be of assistance or can “create an opportunity to take park rangers and teach them the free enterprise system.

“They are at a clear dead end,” said Rogers. “What we are hearing from the Forest Service is that they can’t find anybody (entry-level personnel) in the channel. They are retiring all these people and there’s nobody to replace them.”

So maybe, he argues, the private sector can help.

“We’re here in the state of Georgia,” added Rogers. “Their park budget was cut 30% and they lost a referendum in California for an $18 million license fee that would have collected $500 million. They are threatening to close 126 parks. If this feeder system gets sicker and then closes, the commercial campground business is in trouble.

“So much of what you get is that entry point (for first-time campers) in the state parks. You’re going to lose that beginning point. If you take all the KOA campers and aggregate their camper nights, 20% of those are spent in public facilities. They’re on their way to a location. They stay with us on the way, but they are going to Yellowstone. If a state park is closed or doesn’t provide the service they want, we’re going to lose the traffic in between.”

While the private park sector is opposed to using public funds to build new parks to compete with them, Rogers observed, everyone needs to be careful not to forfeit in the current budget crises tens of thousands of camper nights. “We need to be more robust by putting our heads together to see if there’s a new paradigm that we can operate under,” he noted. “If we do, I think we’re going to find those state and national parks are going to upgrade their services and increase their rates and better service the camping public. We’ll all benefit from that.”

KOA Honors Franchisees At Savannah Convention

KOA's Jim Rogers (left) and Pat Hittmeier (right) congratulate

KOA's Jim Rogers (left) and Pat Hittmeier (right) congratulate Michael and Kristi Kuper of the Thunder Bay, Ontario, KOA, recipients of the Franchise of the Year Award for 2011.

KOA honored a number of franchisees with awards. The top honorees were Michael and Kristi Kuper, owners of the KOA in Thunder Bay, Ontario, recipients of the Franchisee of the Year Award for 2011.

The Kupers, who first met as teenagers and worked together on the campground with Kristi’s parents, won the award during the convention’s first day.

The Kupers purchased Thunder Bay KOA in 1998 from Kristi’s parents, and have worked tirelessly for the past 12 years to added new features and improvements for their camping guests. Their efforts have led to a KOA President’s Awards every year, as well as three KOA Founder’s Awards.

The award was presented by Hittmeier and Rogers as well as last year’s winners, Sam and Renee Scialdo Shevat from the Herkimer Diamond, N.Y., KOA.

Along with a large bronze statue by Billings artist Mike Capser titled “Always Welcome,” the Kupers will be the one-year guardians of the “Dave’s Hammer” traveling trophy. The trophy includes a well-used hammer once owned by Kampgrounds of America founder Dave Drum, who founded KOA in 1962.

Other award recipients were:

  • David and Helena Johnson were honored as KOA Rising Stars for 2011. The Johnsons are the owners of the Willits, Calif., KOA. The award goes to a KOA franchisee who has been part of the KOA system for five years or less who demonstrates extraordinary dedication to guest service and support for the KOA system.
  • Rob Althoff and Marianne Bartels won the KOA Work Kampers of the Year for 2010. The couple was nominated for the award by Kathy and Stuart Marshall, the owners of the Montpelier Creek, Idaho, KOA.
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