Phoenix-based Cavco Industries Inc. is helping create a market for campers who don’t want to pitch a tent, tow an RV or buy or rent a pricey cabin.
The company’s main business is making manufactured homes, but it has developed a small but steadily growing niche of making recreational park trailers that can be purchased for about $35,000 and up, or rented at affordable prices, according to the Arizona Republic.
Cavco is even producing a solar version and recently installed what it claims to be the first solar-powered park-model cabin that can be operated off an electrical grid at a KOA campground.
Officials with Kampgrounds of America Inc., the world’s largest camping company, credit the little units with expanding its customer base, bringing in more minorities and “jump-starting” a new camping segment that wants an affordable camping experience with some comfort.
“They opened up camping to an entirely new market for us. There’s a level of camper out there who wants the comfort and is willing to pay for it,” KOA spokesman Mike Gast said.
Jim Rogers, president and CEO of KOA, predicts that the commercial-campground industry will become more aggressive over the next five to 10 years in buying units like these.
The 400-square-foot lodges that Cavco makes for KOA are rented for $75 to $150 a night and come with bathrooms and full-service kitchens, and can sleep four to six people. “We call it Marriott camping,” Rogers said.
KOA and Cavco came together about eight years ago. The 48-year-old KOA, headquartered in Billings, Mont., had been renting smaller “Kabins” and “Kottages” for several decades to give customers alternatives to tents and RVs. But most of those units don’t have bathrooms and kitchens. KOA found them to be expensive to maintain and buy.
And for about the past dozen years, 45-year-old Cavco had been making smaller 400-square-foot versions of its manufactured homes as second homes. They are called park models because they designed for RV parks.
Cavco proposed the idea of making more rustic-looking park models for camping. For several years, the two companies tested various materials and the durability of the homes.
Gast said of a typical Cavco lodge: “It looks like it belongs in a campground. It either has cedar or log sides. It comes in on wheels. You add a porch, and all of a sudden you’ve got a cabin in the woods.”
The company bought 250 last year and expects to buy an additional 300 this year, he said.
The lodges have proven to be popular with customers.
“We can’t get enough of them fast enough,” Rogers said of the lodges. “That’s the future of camping in the U.S. It’s looking very good for Cavco Industries as a result of the popularity.”
The bulk of KOA’s business is renting tent or RV spaces, and only about 15% is its lodging business, Gast said. But rentals of the Kabins, Kottages and now lodges have been growing because they offer affordable vacations at a variety of locations.
“We found out last year that camping is hotter than we thought. We had our best summer in 48 years. We did a lot of surveys, and it was the affordability and the desire for a quality affordable vacation close to home that really rang true to customers,” Gast said.
Rogers said Cavco is KOA’s main supplier but it hasn’t been able to buy all its lodges from Cavco because of the cost of freighting them from a plant in Goodyear, Ariz.
Cavco hopes to resolve that issue by starting production at a Fleetwood Enterprises Inc. plant at Rocky Mount, Va., that Cavco acquired last year.
Cavco and other makers of manufactured homes have been struggling during the recession because would-be buyers are having trouble getting financing. Cavco last year lost $3.37 million, after making a profit of almost $500,000 the year before.
Cavco sells about 750 to 1,000 park models a year, and about half of those are recreational types such as the KOA lodges, said Tim Gage, a Cavco vice president.
“The rental market is kind of an up-and-coming market,” he said, and has been expanding every year for the past five yeas.
Cavco has been going to RV industry conventions and seminars to promote the recreational units. Now, it is pushing into solar-powered units for remote campgrounds or campsites that don’t have electrical connections.
Its first “off grid” park-model cabin was installed at a KOA campground in Herkimer, N.Y., to be used as a rental cabin and to showcase green-living practices.
It has solar panels on its roof that can produce two kilowatts of power. It also has a backup propane generator, bamboo floors, axles and tires made of recycled materials, recycled-lumber composite decks, and energy-efficient heating and cooling. Even its furniture was made from recycled milk jugs and recycled hickory wood.
Last year, Cavco delivered its first solar-powered park model to Sacred Rocks Reserve and RV Park near San Diego but that one is connected to an electrical grid.
“One reason for solar is to stay ahead of the game of what everyone else is doing,” Gage said.
The National Association of RV Parks and Campgrounds (ARVC) is considering changing some of the duties of association and CEO after the current president and CEO, Linda Profaizer, retires at the end of this year.
“Our current president and CEO has vast responsibilities and we may consider some realignment of duties going forward,” said ARVC Chairman David L. Berg. “We are looking at all staff positions and responsibilities within the organization and may restructure some positions.”
Berg talked about staffing and other initiatives underway at ARVC in an address to members of the Texas Association of Campground Owners (TACO), who had gathered at Guadalupe River RV Resort in Kerrville for TACO’s annual spring meeting and convention. Their convention began Sunday and ends today (May 18).
In a subsequent interview, Berg cautioned that no final decisions have been made about the approach ARVC will take to replace Profaizer, who retires Dec. 31. “We want to make sure that our selection process enables us to recruit the best possible candidate for this position,” he said.
In his address to TACO members, Berg also said that ARVC is heavily promoting the GoCampingAmerica website with both print and online advertising initiatives.
He also said ARVC is continuing to take steps to improve communication with its state affiliates and that the national association hasn’t given up on the idea of having TACO become an affiliate of ARVC once again. “We’d like to have you back in the family,” he said, adding, “We (ARVC) need to improve our communication and treat the states as equal partners.”
Berg also lauded former ARVC Chairman Jeff Sims, also in attendance at the meeting, for his volunteer work reaching out to non-ARVC member parks to educate them about the merits of ARVC membership. As of mid-May, Sims had personally visited more than 400 parks at his own expense.
Monday’s TACO meeting also included a presentation by Bob MacKinnon of Murrieta, Calif.-based GuestReviews. “Texas has strong participation in the (GuestReviews) program,” he said, adding that Texas parks had an average score of A-minus in overall guest satisfaction.
Monday’s activities included a tradeshow with roughly 40 vendors, including Topeka, Ind.-based CrossRoads RV, Phoenix, Ariz.-based Cavco Industries Inc. and Athens Park Homes of Athens, Texas, each of which had park models on display.
The day’s activities also included a seminar on Wi-Fi marketing by Frank Drew of Austin, Texas-based TengoInternet and a seminar on “Expanding Your Park” by Kathy and Tony Palmeri of Jellystone Park Camp-Resort in Estes Park, Colo,. and Leisure Systems Inc.
The campground business has been the most resilient sector of the travel and tourism business throughout the recession. But it’s not just because campgrounds offer the most affordable vacation option, according to The Daily Exchange, Waterloo, Ontario.
“Campgrounds increasingly offer rental accommodations, so they’re no longer solely dependent on tent campers and RV owners,” said Linda Profaizer, president and CEO of the National Association of RV Parks and Campgrounds (ARVC), adding that roughly a third of America’s campgrounds now offer park model rental accommodations.
But most campgrounds aren’t building their own rental accommodations from scratch. In most cases, they are ordering factory-built cabins and cottages, which are being delivered to their parks just in time for the camping season.
Many of them look like miniature log or cedar-sided cabins. But these 400-square-foot units are actually recreational park trailers or “park models,” and are technically classified as recreational vehicles.
“They’re completely turnkey,” said William Garpow, executive director of the Recreational Park Trailer Industry Association (RPTIA), which represents park model manufacturers. “All the campground owner has to do is hook each unit up to the utilities and they’re ready to rent.”
And, perhaps best of all, since “park models” are technically classified as recreational vehicles, they do not require building permits in most jurisdictions, so campgrounds can literally order them over the phone and have them delivered to their parks within a matter of weeks.
“Manufacturers construct these units in factories to conform with approximately 500 safety requirements contained in the National Safety Standard for recreational park trailers,” Garpow said.
Industry insiders see the campground industry’s increasing investments in park models and other rental accommodations as a shrewd business move, particularly given rising fuel costs and the dramatic decline in towable and motorized RV sales in recent years as a result of the recession.
“To a certain extent, the campground industry has insulated itself from the economic downturn by installing rental units,” Profaizer said.
Indeed, by providing rental accommodations, campgrounds are drawing not only tenters and RVers, but anyone who would normally stay in a hotel or motel while they travel.
“With park model cabin rentals, we can appeal to families who don’t have to worry about going out and purchasing an RV or having a tow vehicle or whatever the case may be. They can just get in their car and come to one of our parks,” said Rob Schutter, COO of Milford, Ohio-based Leisure Systems Inc., which franchises Jellystone Park Camp-Resorts.
Campgrounds have been gradually investing in park model cabins and other rental accommodations for many years. But the focus on rentals has intensified in recent years.
In fact, the competition for campground business has become so fierce that park model manufacturers are facing increasing competition from RV manufacturers, who are now marketing some of their own products as rental accommodations for campgrounds.
For more than 13 years, in fact, the Breckenridge Division of Damon Corp. in Nappanee, Ind., was the only Thor Industries Inc. subsidiary that produced rental accommodations for campgrounds. Now there are four Thor subsidiaries vying for a piece of the campground rental business, with Topeka, Ind.-based CrossRoads RV, Goshen, Ind.-based Keystone RV Co. and Jackson Center, Ohio-based Airstream Inc. each competing for a piece of the campground accommodations business along with Breckenridge.
Some of the major campground chains, for their part, are busy working out exclusive arrangements with leading park model manufacturers, which are building custom-designed rental units for their parks.
Phoenix, Ariz.-based Cavco Industries Inc., for example, is building units for Kampgrounds of America Inc. (KOA), while CrossRoads RV recently landed an agreement to build custom designed park models for Yogi Bear’s Jellystone Park Camp-Resorts. Another RV resort developer, Memphis, Tenn.-based RVC Outdoor Destinations, is working with Athens Park Homes in Athens, Texas, to furnish its resorts with park models.
But while some see the growing demand for rental units in campgrounds as a result of rising fuel costs and declining RV sales, it also reflects significant sociological changes taking place across the United States, Profaizer said.
“Families are increasingly time deprived and the dynamics of the summer vacation have changed,” she said. “People are camping closer to home because they don’t have as much time off to take extended trips across the country. Oftentimes, both parents are working and their kids are often involved in extracurricular activities, which limit their ability to travel.”
In addition, she said, many families are finding that it’s easier and more convenient to rent a cabin for a weekend getaway than to spend their limited free time packing, setting up and taking down tent camping equipment. For others, she said, having a cabin rental gives them an opportunity to experience camping in the great outdoors even if they don’t have an RV.
Schutter of Leisure Systems said campgrounds are also finding that park model rentals are particularly appealing to women, especially mothers. “In our particular system,” he said, “one of the major decision makers is Mom. And Mom finds all the comforts of home in these units. That’s a big selling point.”
Thomas Heneghan, CEO of Equity LifeStyle Properties Inc., also said park model accommodations have wide market appeal. “In today’s economy,” he said, “the park model extends the outstanding value and experience of the outdoor lifestyle to families who are either unfamiliar with tent camping or RVing or who prefer the conveniences offered by staying in a park model.” He added that park models “allow one to have all of the comforts and conveniences of home with the ability to have a change of scenery and reconnect with family.”
Park model manufacturers, for their part, find it behooves them to pay attention to campgrounds and their growing accommodations needs.
“Many of our manufacturers are literally racing to get these units in place in time for the summer camping season,” said Garpow of RPTIA, adding that the pre-summer rush can be a nail-biter for campgrounds, many of which have already booked the park models they have ordered for this summer.
Such is the case at West Glacier KOA in Glacier, Mont., which just received six park model cabins in late April. “We’re hooking them up to septic and electric utilities right now,” said park co-owner Theresa McClure, adding that five of the six units are already booked May 14, when the park opens for the summer camping season.
“It’s just crazy,” McClure said of consumer demand for park model cabins, which KOA markets as Kamping Lodges. “We could probably put in 12 and they’d all be booked.”
Later this month, the Kampground of America (KOA) campground in Herkimer, N.Y. is going to start renting out the nation’s first park trailer to achieve “Emerald” status from NTA Inc., a Nappanee-based company that specializes in certifying “green” manufacturers.
Phoenix, Ariz.-based Cavco Industries Inc. received the Emerald status for the Herkimer park trailer in late April after proving that the unit met NTA’s highest green standards.
Indeed, the Herkimer KOA unit, believed the first “off-grid” park trailer in the country, features numerous green features, including solar panels capable of producing 2 kilowatts of power, bamboo flooring, LED lighting, recycled axels and tires, recycled lumber composite decking, on-demand water heating, energy efficient heating and air-conditioning.
But while this unit may demonstrate one company’s efforts to prove how green it can be, in reality, park trailer manufacturers in Elkhart County, Ind., and across the country are increasingly seeking green certifications, not only for their products, but for their manufacturing processes.
And several consulting engineering firms are helping them obtain their green certifications. In the past year, TR Arnold & Associates in Elkhart has certified Elkhart-based Trophy Homes Inc. and Forest River Inc. as well as Middlebury-based Woodland Park as green manufacturers, while Athens, Texas-based Athens Park Homes also met NTA’s requirements for green certification. Elkhart-based Country Log Cottages, for its part, has also obtained green certification from Anderson, Ind.-based BIS LLC, as has Chariot Eagle Inc., an Ocala, Fla.-based park trailer manufacturer.
Olin Wenrick, president and CEO of Trophy Homes, said consumers are becoming increasingly educated about the merits of green products and it may eventually get to the point where manufacturers are at a disadvantage if they aren’t able to tell their customers they are green.
“It’s coming. So why not start now?” Wenrick asked. “It at least tells people out there that I’m trying to do the right thing for the environment.”
In Trophy’s case, it already was. Trophy had already adopted environmentally friendly manufacturing practices, such as recycling its construction waste, so it was relatively easy for the company to get green certified, Wenrick said.
Dave Burrows, national sales manager for Middlebury-based Woodland Park, said his company also achieved green certification with relative ease.
“We didn’t really have to change anything,” he said. “We had been manufacturing to green standards for quite a while. There was just not a certification process or a verification process for our industry.”
But TR Arnold & Associates, NTA, BIS and other consulting firms have tried to fill that void, and park trailer manufacturers are finding it’s worth their time and effort to seek green certifications.
Burrows, in fact, said Woodland Park’s dealers applauded its green certification. “Basically, the dealers looked at it as a move in the right direction. They looked at it as another tool for them to sell our product. And my Canadian dealers absolutely loved the thought of a green product.”
Mandy Leazenby, TR Arnold & Associates’ green program manager, said her company looks at several criteria before determining whether a company’s manufacturing operations can be green certified. “We look at indoor air-quality, resource efficiency, energy efficiency, water efficiency, operations and maintenance and innovative practices,” she said. “We also look at the attitude of the company and the extent to which they recycle materials during the construction process.”
But while obtaining “green” certification has been relatively painless for several Elkhart County manufacturers to achieve, selling “green” units is another matter, said Wenrick, adding that his company’s green status hasn’t yet translated into increased sales.
That day may come, however.
In fact, while many consumers may not yet be ready to purchase an “off grid” green park trailer with all the bells and whistles, such as solar panels with backup generators, consumers are showing interest in purchasing park trailers with energy and water saving features, such as LED lighting, low flow faucet and showerheads and energy saving appliances.
Dick Grymonprez, vice president of marketing for Athens Park Homes, which achieved its green certification last year, said his company is seeing increased demand for instant hot water heaters.
“Some people just focus on solar panels, but there are different shades of green,” said Leazenby of TR Arnold & Associates, adding that there are many green features in today’s park trailers that are very positive features for consumers, such as units with low-VOC paints and finishes as well as formaldehyde-free carpets, wall materials and flooring.
Phoenix-based Cavco Industries Inc. is the largest park model manufacturer in the western United States and Mesa-based RV Traders has consistently been its largest dealer, a distinction that recently prompted Cavco to name RV Traders its “Dealer of the Decade.”
But while RV Traders co-owners Ken Dugwyler and Jack Crays are obviously pleased with Cavco’s recognition, they are equally enthused about the timing of Cavco’s announcement, which coincides with a sharp upturn in consumer demand for park models after two years of lagging sales, according to a news release.
“The park models really seem to be reviving this year,” Dugwyler said, adding that RV Traders’ sales are up 30% over 2009 figures.
RV Traders, which has locations in Mesa and Apache Junction, sells both park models as well as travel trailers, fifth-wheels and toy haulers. But Dugwyler said park models, which are used as seasonal cottages in RV parks and resorts in Arizona and throughout the Sunbelt, have withstood the economic downturn better than towable RVs and, consequently, have helped his dealership weather the recession.
“The demand for everything declined in the past couple of years. But the regular RVs suffered considerably more than the park models,” Dugwyler said, adding, “We’re definitely doing a lot better with park model sales this year than the past couple of seasons, especially last year. Our RV business is improving as well.”
RV Traders has been involved in the park model business in Arizona since its inception in the late 1970s. Dugwyler said demand for park models has grown in Arizona and across the Sunbelt because park models offer Snow Birds an attractive, roomy and sturdy alternative to travel trailers, fifth-wheels and motorhomes.
Unlike towable or motorized RVs, park models are 400-square foot cottage-like units with full size kitchen appliances, showers and interior furnishings. Park models are also better insulated than towable or motorized RVs, which makes them more comfortable for use as a seasonal dwelling.
“Park models are technically classified as recreational vehicles, but they are sort of a hybrid between a factory-built home and an RV,” Dugwyler said. “They are approved by zoning laws to go into RV parks, but they are built more like a small home.”
And while RV Traders initially sold park models almost exclusively to Snow Birds, Cavco’s decision to broaden its product offering to include cabin-style park models has helped open up a new market for working professionals, families and retirees who want to have a weekend or seasonal getaway cabin in the mountains of northern Arizona, the Rockies and the Pacific Northwest.
“Our geographic reach is growing every year,” Dugwyler said. “We’re shipping units to California, Oregon, Washington and Colorado. We’ve even sold some units in Montana and Wyoming.”
And because RV Traders is also a full-service RV dealership, it can accept towable RVs and motorhomes as trade-ins for park model units.
“We resell just about every park model we take in trade for a new one,” Dugwyler said, adding that older park models are typically sold for use in some of the more economical RV parks.
Cavco, for its part, is pleased that RV Traders continues to enjoy market success. “They’ve been our number one dealer for sales and customer service ever since we signed them on,” said Tim Gage, vice president of Cavco’s Specialty Group, adding, “We fully expect that RV Traders will continue to grow with us in the years ahead.”
For 14 years, roughly 80 employees at Fleetwood Enterprises Inc.’s 135,000-square-foot factory in Rocky Mount, Va., produced nothing but manufactured homes.
And while most of them retained their jobs after Phoenix, Ariz.-based Cavco Industries Inc. acquired the company last fall, the seasoned team of employees had to learn a new product: a custom designed park model for Kampgrounds of America Inc. (KOA) East Coast franchisees, according to a news release.
But after seven months of intensive training, including specialized training sessions for key production employees at Cavco’s park model factory in Goodyear, Ariz., the Rocky Mount employees succeeded this month in producing Cavco’s first “Kamping Lodges” for KOA’s East Coast franchisees, with the first unit being delivered to the KOA in Allentown, Pa.
“I’m very impressed,” said Mike Atkinson, KOA director of lodging. “It’s a daunting task to go from a manufactured home plant to a park model plant, especially when you try to put KOA specifications into the mix. It’s the toughest park model you can build because it’s so far outside the norm of what park model companies do.”
The units include tongue and grove interiors, specialty floor materials, and composite siding. The walls are glued together instead of nailed together and the dormers in the rooflines have to be trimmed out. “It takes real craftsmanship to build a KOA unit,” Atkinson said.
Atkinson, who visited the Rocky Mount plant this week, credited Tim Gage, vice president Cavco park models, Dave Blank, vice president and general manager of Cavco’s Goodyear, Ariz., operation, and Tom Satterwhite, general manager of the Rocky Mount factory, for developing the teamwork and training necessary to produce a high quality product for KOA franchisees.
Several Fleetwood employees spent time training at Cavco’s park model factory in Arizona, but the job was made easier because Satterwhite had already created a culture of teamwork at Rocky Mount.
Satterwhite, for his part, said all the accolades go to Cavco’s park model experts. “We just executed the plan they put together,” Satterwhite said, adding, “I think all our people in the plant are just glad KOA selected us as their lodge provider and glad we have the opportunity to work with Cavco.”
For more information on Cavco’s Kamping Lodges, park models and other specialized living units, contact Tim Gage at (602) 763-5488 or visit www.cavcoparkhomes.com. For more information on KOA’s use of park model cabins as Kamping Lodges, contact Mike Atkinson at (406) 248-7444 or e-mail him at firstname.lastname@example.org.
The first “Kamping Lodge” park model manufactured for Kampgrounds of America (KOA) has rolled off the production line at Fleetwood Homes in Rocky Mount, Va., according to The Franklin News-Post, Rocky Mount.
Cavco Industries Inc., the Arizona-based company that purchased Fleetwood’s manufactured housing business in August 2009, is supplying KOA Inc. and its franchisees with park model Kamping Lodges.
The lodges also are being manufactured in Litchfield, Ariz., and in its Texas operation.
Tom Satterwhite, production manager of Fleetwood, said production in the Rocky Mount plant began the first of March.
KOA has 475 campgrounds throughout the United States.
“We sent our production people to Phoenix for training in February. Each group stayed a week. Tim Gage, vice president of speciality sales, and Dave Blank, general manager of the Litchfield plant, came here to help get us started,” Satterwhite said.
The plant’s approximately 85 employees took a break Thursday morning (March 18) to pose for a picture with the first lodge to roll off the production lines.
When Cavco announced the purchase of the Fleetwood plant in Rocky Mount, the company said that acquisition of the facility will enable Cavco to serve “hundreds of KOA franchises in the eastern section of the United States.”
“The first unit is being sent to Allentown, Pa., but we will be shipping the lodges as far north as Herkimer, N.Y., as far south as Naples, Fla., and as far west as Townsend, Tenn.,” the general manager said.
The Rocky Mount plant will save East Coast franchises money in shipping costs, Gage pointed out.
The first lodge produced is 28 feet long and more than 11 feet, wide. The lodges are shipped complete with furniture and bedding. It is set up to sleep four to six people.
Tongue-and-groove wood is used on the interior.
Satterwhite and Luis Figueroa, production manager, explained that lodges come with an option of a 5-foot-long front porch.
The different models are constructed using the same floorplan. There are two bunk beds and a bathroom at one end of the lodge and a larger bedroom at the other end.
There also are several other options including a loft with a ceiling fan.
Cavco has said that camping in a Kamping Lodge is like “roughing it” in a vacation home. Satterwhite explained that some of the models come without a stove as outdoor gas grills are used instead.
The company worked with KOA to develop a custom line of floorplans designed specifically for KOA customers.
While the lodges being produced in Rocky Mount are to fill KOA orders, Satterwhite said Cavco, in the future, will be selling to dealers who in turn will sale to the public.
Satterwhite said that since the local facility was purchased by Cavco, the plant has been closed for only five work days.
“Three of those were due to the big winter storms and the other two was because of lack of production work,” Satterwhite said.
KOA franchisees purchased more than 200 Kamping Lodges from Cavco in 2009, company officials have said.
Cavco is a leader in manufactured homes, park models and camping cabins. It is a primary supplier to campground and RV park owners and developers for rental homes, lodges and resale models.
Cavco Industries Inc., a builder of park models for the campground industry and manufactured homes for the retail market, Thursday (Jan. 28) announced financial results for the third quarter and first nine months of its fiscal year 2010 ended Dec. 31.
Net sales for the third quarter of fiscal 2010 totaled $36,369,000, up 45% from $25,093,000 for the third quarter of fiscal year 2009. The third quarter 2010 results include the Fleetwood Homes operations which, as previously reported, were acquired during the second quarter of the current fiscal year.
Net loss attributable to Cavco stockholders for the fiscal 2010 third quarter was $1,030,000 compared to net income of $110,000 reported in the same quarter one year ago.
For the first nine months of fiscal 2010, net sales decreased 12% to $79,341,000 from $90,632,000 for the comparable prior year period. Net loss attributable to Cavco stockholders for the first nine months of fiscal 2010 was $2,642,000 compared to net income of $1,481,000 last year.
“The financial results of our operations during the third fiscal quarter ended December 31, 2009 are reflective of the difficult market environment. Low margins and a lighter production schedule resulting from the holidays were compounded by seasonally depressed sales volumes that characterized the period,” said Joseph Stegmayer, chairman, president and CEO.
He continued, “Wholesale and retail financing availability continues to be a key challenge for the factory built housing industry. However, our collaborations with wholesale lending companies have provided, and continue to supply, much needed inventory financing to the retailers of Cavco and Fleetwood brand homes. In addition, we are working alongside our industry peers to encourage favorable legislative action on behalf of the mortgage financing needs of potential homeowners. While some progress has been made in this area, such as increased loan limits for government backed home-only loans, a meaningful positive impact in the form of increased home orders at our factories has yet to be realized.
“We are pleased with the transition and integration of Fleetwood Homes and the exemplary efforts of the people comprising the combined company. As a newly expanded organization, we continue to aggressively pursue traditional and niche markets where our diverse product lines and custom building capabilities provide our company with a competitive advantage. These efforts, coupled with our national presence, have positioned us well to seek out and develop varied sales opportunities.”
Publisher’s Note: KOA Chairman and CEO Jim Rogers is arguably the industry’s most relentless marketeer. A former Harrah’s Entertainment Inc. executive, he has etched KOA’s yellow brand into the American psyche and now looks to change the face of KOA’s 463 parks — and American campgrounds in general — with the infusion of more and more sedentary camping “cabins” and “lodges.” Here are the highlights of an interview conducted during KOA’s Nov. 17-20 convention at The Woodlands Waterway Marriott in the Houston suburbs.
RVB: The general atmosphere of your convention was pretty positive, given all of the headwinds that the American economy has faced recently.
Rogers: KOA has just come out of its strongest summer in 47 years. If you take camper nights and registrations for the period of June, July, August and September, we’ve just exceeded anything we’ve done in the past. Where we hurt in 2009 and anticipate hurting this winter and probably early 2010 is in the Snowbird markets that are more dependent on a fixed-income lifestyle. What we did not see last year in America is the transient Snow Bird.
So, we had the resident Snow Bird that headed into Texas and Arizona and committed to three or four months, but the people who were going down and spending a month here and there did not show up. And that’s what we don’t have any certainty about.
Having said that, the cruise lines are indicating very strong advance reservations, which to me is the same market that we look at for this transient Snowbird. But it’s hard to predict that. Again, we anticipate the 2010 summer will be as strong as 2009′s was, if not a little better.
RVB: Looking back at September of 2008 and the economic meltdown that occurred then, could you have imagined that you’d be sitting here now coming off a near-record 2009, with gains anticipated in both camper nights and revenues?
Rogers: No. We went into our plan for 2009 very concerned. The surprise was that we quickly became the affordable (lodging) option. America traded down. They traded down everything they’ve done, and we exceeded expectations. They’ve gone to Costco more aggressively than they did previously, as they did with the camping alternative. If people were going to take a vacation, instead of staying at a Marriott or going to Europe, they decided to go camping again.
There were record tent sales last year in the United States. People found a different way to get outdoors. And, again, we continue to see people staying closer to home – even though Yellowstone Park, a distant destination, posted a record year.
And when they went to a KOA campground, they didn’t find their grandfather’s campground. They found the latte machine, they found (park model) lodges that had a bathroom and kitchen in them for $125 and a swimming pool and they were surprised. They were hooked. We continue to see 14-15% of our campers are first-time-ever campers. And among the first-timers, 50% are families. That’s great news for us that we are bringing in new people to experience KOA and the campgrounds that we’ve got. That’s going to play well long-term.
RVB: So, what do you really think these newbies are looking for in terms of camping accommodations?
Rogers: Anyone who has an investment in an RV brought their gear out of the garage this year. They might not have used it for a while. But our greatest growth will be a double-digit increase in camper nights in the lodge business — the 400-square-foot park model that offers a kitchen and a bathroom and a deck out front. That’s where our greatest growth is, and that’s why we’ve developed the new models with three suppliers, General Coach, Cavco Industries Inc. and Thor’s Breckenridge division.
RVB: What, in your opinion, is behind this evolution to more sedentary – or “destination” — styles of lodging?
Rogers: A lot of things are. Initially, it was this trend toward staying closer to home. People didn’t want to spend the gas or didn’t have the RV and they wondered what to do. In the process, people began to realize that these accommodations were there.
If you talk to our franchisees, they’re going to tell you they had 20 requests (for park model “lodges”) that exceeded what they could fulfill.
At the same time, the lodge customer gives us the highest satisfaction rating by 10 points. If you ask our lodge customer what they think of the experience, they are way above the average. They have the highest intent to return and they tell us they get the best price value. And they are paying the most for the experience. It’s all there. What a future!
RVB: What’s the demographic profile of a “cabin” or “lodge” customer?
Rogers: They skew more to families and first-timers and people who drive up in a car. It’s basically a customer who is right now using a motel or hotel. That’s where we’re going. We are learning from our Australian friends (Big 4 Holiday Parks, with whom KOA has a marketing partnership), who have 32% of their inventory in cabins and lodges.
You are going to see KOA on Travelocity, Orbitz, hotels.com. You talk about a new market and what we’ve got to offer; we’ve got to get the inventory out there.
Plus, KOA is going to produce a million directories in 2010. We intend to mail 400,000 to our Value Kard holders, and in the middle of the directory is a five-page, full color lodge brochure. You are going to begin to realize there is indeed a different offering in that experience. The fact is, with a motel, you get a room. What we are going to tell people is that this is a social activity.
RVB: To what extent do you anticipate expanding your lodge business?
Rogers: We’ve got 4,000-plus cabins (smaller units without water), but we only have about 1,000 lodges (generally park models with full facilities) among our 56,000 sites. That’s about 10% that are currently this type of accommodation. We’ve got to increase that inventory to go out to the market and grow this segment of our business – tremendously.
In the next three to five years, we hope that gets closer to 15-20% of our total inventory. It won’t happen that fast. That’s an aggressive goal. We are going to lead the charge at our 25 company-owned properties.
RVB: Needless to say, this would be a huge shift in the basic character of a so-called RV park or campground if it actually occurred to the extent that you’re describing it.
Rogers: There’s no question that the mix is dramatic. We have RV inventory with full hookups that is going unused that is getting $40 to $45 a night, and we put in a unit and we get $150 a night using the same real estate using the same hookups and the demand is right there behind it.
RVB: Do all of your lodges exude that “rustic” look that we’ve seen so much of lately?
Rogers: KOA has a team that has gone to the manufacturers, CAVCO and Breckenridge and General in Canada, and designed eight different models that run from a studio model that is probably 199 square feet to the big baby, which is 400 square feet. They all have bathrooms and kitchens and they all have concrete siding that looks like wood. They look like something from New England. Most of the inventory will be a log-side perceived look. That reinforces the cabin look that we’ve created. This is where we have an incredible growth opportunity.
By no means are we going to say adios to the RV industry. But we see the ability to be more diverse to whom we appeal to and we’ve got to reorient how we meet the demand for the supply that is out there.
RVB: So, do you also see growth in the entry-level type campers who, in some cases, prefer tents?
Rogers: We’ve definitely seen an increase in our tenter business. But the problem we’ve had is that over the last few years, we’ve reduced the inventory of tent sites. It’s a matter of figuring out what we have, and, ultimately, we see the tenter converting to a lodge or cabin.
RVB: With regard to private parks, many states are under extreme economic financial pressure. Your thoughts on all that?
Rogers: We all have to realize that public parks are as diverse as commercial parks. And we need to make sure that national parks still draw people for vacations and do a good job of taking care of them.
The more localized experience, the state parks that are indeed in dire shape, I think they will continue to be in difficult shape, and, hopefully, American campers will consider the commercial option more so than they have in the past.
The states need to find a new economic engine.
The other thing is that campers are coming to expect a certain level of services and the states aren’t going to be able to provide that.
So, some people who are partial to public parks have now begun to try the commercial side, and they’re pretty happy. They are more entertained and they are staying closer to home. They are staying longer and they expect a little more. Fishing for four days isn’t going to keep them entertained. They need something else going on. So, while I want public parks to continue to operate, I know that some of the business is going to swing over to us.
For the past nine years, Cavco Industries Inc. has been supplying Kampgrounds of America Inc. (KOA) franchisees with park model “Kamping Lodges” manufactured at its factories in Arizona and Texas.
But as a result of Cavco’s recent acquisition of Fleetwood Homes, the company now has the ability to efficiently service hundreds of KOA franchisees in the Eastern part of the country through an 80,000-square-foot manufacturing plant in Rocky Mount, Va., according to a news release.
“By Feb. 1, we will have the first Kamping Lodges available at our Virginia facility,” said Tim Gage, vice president of Cavco’s specialty division, adding that the Rocky Mount facility will save East Coast KOA franchisees significant sums of money on shipping costs.
Mike Atkinson, KOA’s director of lodging, said Cavco’s Virginia plant will help KOA franchisees keep their costs down as they continue to move into the accommodations business. KOA franchisees purchased more than 200 Kamping Lodges from Cavco in 2009, and more purchases are expected next year.
“Over 50% of our franchisees will have a lodge with a bathroom by the end of this year, and we expect to see continued purchases of these products,” Atkinson said.
While the location of Cavco’s Rocky Mount facility helps KOA franchisees from a pricing standpoint, equally important is Cavco’s continuing ability to tailor products to KOA’s needs. “If we need to modify a spec or really do something outside the box, they are our ‘go to’ guys,” Atkinson said. “They understand us. They really understand our business.”
Atkinson said that the key for KOA franchisees is to purchase only lodges of impeccable quality because lesser quality lodges don’t have the durability for rental use. “That’s the key,” Atkinson said. “To put high-quality, long-lasting Kamping Lodges in your campground.”
For more information on Cavco’s Kamping Lodges, park models, and other specialized living units, contact Gage at (602) 763-5488 or visit www.cavcoparkhomes.com. For more information on KOA’s use of park model cabins as Kamping Lodges, contact Atkinson at (406) 248-7444 or e-mail him at email@example.com.