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Park Model Builders Broaden Their Market

February 17, 2011 by · 1 Comment 

Cavco Industries park model

Cavco Industries park model

With 67 RV sites, cottonwood trees, rock climbing walls and a three-acre fishing lake stocked with trout and catfish, Rancho Jurupa Park in Riverside, Calif., lives up to its billing as “a perfect setting for a quick escape from the city.”

Operated by the Riverside County Regional Park & Open Space District, it’s also one of a growing number of government-run parks investing in park models as rental accommodations.

“We did a feasibility study and a master plan, and one of the features that was called out was cabins for folks who want to get outdoors and have a nice recreational experience, but don’t have a camping unit themselves,” said Scott Bangle, general manager of park district.

Riverside County just installed six Silvercrest/Western Homes Division park models at Rancho Jurupa Park, and the county plans to add more park models to other county parks in the future. “I could see having a handful of units at every park,” Bangle said. “(They) will be part of our inventory at all of our major regional parks someday.”

Riverside County, of course, isn’t the only government agency that’s investing in park models as rental units. Phoenix, Ariz.-based Cavco Industries Inc. just delivered 25 park model cabins to Lassen National Park in Northern California, and the company is in discussions with other California counties about purchasing parks models for use as rental accommodations, said Tim Gage, vice president of Cavco’s Specialty Division.

“We believe that the government campground parks are a marketplace that hasn’t been fully explored at this point,” said Gage.

Private parks, for their part, have been stepping up their investments in park model cabins in recent years. But despite the significant purchases of park model cabins as rental units by Kampgrounds of America Inc. (KOA), Leisure Systems Inc. (LSI) and operators of independent parks, North America’s private campground sector is still a long way from being saturated with rental accommodations.

In fact, the KOA system, which purchased 317 park models last year, is now waiving royalty fees on park model income for one year on any new units that its franchisees purchase this year.

“The idea is to encourage more KOAs to invest in lodging,” said Mike Atkinson, director of lodging for the Billings, Mont.-based franchisor, adding that park models are “becoming an absolute necessity to grow your campground income.”

Necessity or not, park models accounted for 1,168 of KOA’s 1,530 fully equipped (with bathrooms) rental accommodations systemwide in 2010 and generated over three times as much income as typical RV sites. “Park models have the longest short-term occupancy and you get over three times the money,” Atkinson said.

Atkinson added that most people who could be potential campground accommodations guests have not even been exposed yet to the concept.

Of course, Atkinson cautions that simply purchasing park models doesn’t turn into immediate revenue hikes because they have to be marketed. He says it typically takes three years for them to reach their marketing potential.

Pinnacle Park Homes units in campground setting

Pinnacle Park Homes units in campground setting

Nevertheless, some park operators find that these ordinarily rustic-looking units outperform their expectations.

Scott Cory, managing partner of Ventura Ranch KOA in the mountains southeast of Santa Barbara, Calif., installed four Cavco park models at his park in June of last year. It was the first time his park offered accommodations and he found that his guests responded very favorably to his investment.

“Lodging is the biggest ‘wow’ factor we’ve done at our park,” he said, adding that he plans to purchase six more park models this year. He also complements his park models with glamour tents and teepees.

Manufacturers, for their part, are increasingly rolling out more park model rental options, not only to accommodate rising demand for rental units, but to make up for recent declines in sales to consumers who traditionally purchased park models and placed them on leased campsites for use as their own private vacation cottage.

“We’re looking at doing more rentals because more and more campgrounds are realizing the benefits of having park models versus transient RV sites,” said Tyler Steele, vice president of Canterbury RV in Goshen, Ind.

“Listening to the needs and desires of campground owners and then turning that input into an affordable and profitable cabin design has been a crucial key to our growth,” said Andy Davis, sales manager for Pinnacle Park Homes in Ochlocknee, Ga.

Some park model manufacturers, however, still focus most of their attention on producing units for consumers who want to buy them for use as vacation cottages that they can place on leased or purchased campsites in campgrounds, RV parks or resorts.

“We’re probably about 10% for campground rentals, while 90% of our production is for retail sales,” said John Soard, general manager of Fairmont Park Trailers in Nappanee, Ind.

Chariot Eagle cabin

Chariot Eagle cabin

Joe Follman, sales manager for Chariot Eagle Inc. in Ocala, Fla., added that park operators that rent or lease sites to park model owners can benefit from having a steady income stream. “I think there’s still a lot of room to grow in this industry, both in the Sunbelt and up north,” he said. “There’s still plenty of business out there. We’re such a small percentage of the RV business.”

A continuing roadblock is the availability of financing, both for consumers and parks that want to purchase park models for use as rental accommodations.

“You can show how quickly they can be paid off, and how it’s a great investment to put cabins in. But the lenders are just not buying aggressively,” said Dick Grymonprez of Athens Park Homes in Athens, Texas. “If we could get financing, all of us would be building more cabins. I can’t tell you how many campgrounds tell me, ‘If you can get us financing, we’ll buy six.’ I can’t tell you how many roadblocks we face getting them financed.”

But there is money out there. Parks are continuing to purchase park models. And, increasingly, manufacturers say that the best sources are local lenders rather than nationally known lenders that have little knowledge or experience with the park model product.

The same approach can also help consumers find sources of financing for park models they’d like to purchase as private vacation cottages. “We’re recommending that dealers work with their local banks and educate them about the lack of defaults in the park model world and why it’s a good business model for them,” said Steele of Canterbury RV.

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