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Industry Cautiously Optimistic for ’09 Prospects

March 20, 2009 by · Leave a Comment 

Ted and Kay Watts have been cruising the USA in their 300-square-foot recreational vehicle for 15 years, motoring up to eight months a year while keeping a permanent home in St. Charles, Mo.

“Our goal is to see all the national parks and historic sites in the U.S.,” Kay Watts says while hooking up her RV at Cherry Hill Park here.

But, according to a report in USA Today, with the economy reeling the two are meeting with their financial planner in April to determine whether they can continue to travel as much, given the drop of their retirement accounts. “As long as we’re healthy, we’d like to continue,” Ted Watts says.

Times are rough for the RV industry. Tightening credit and a lack of financing options are keeping new customers on the sidelines. Shattered consumer confidence is forcing many RV owners to cancel extended trips.

For years, RV dealers could do no wrong. The number of units sold grew for five consecutive years until 2007, and there are now 8.2 million RVs on the road.

But in 2008, when gas prices hit $4 a gallon and the recession gained strength, RV shipments fell 33% from 2007 to 237,000 – and could drop to 130,100 in 2009, according to the latest forecast from University of Michigan economist Richard Curtin.

The industry’s woes were brought to the forefront last month when President Obama pitched his economic stimulus plan in Elkhart County, Ind. “The RV Capital of the World” has seen its unemployment rate spike to more than 15% this year largely due to the industry slowdown.

The downturn does mean that RV prices – which range from $10,000 to $400,000 – are “easily down 25%,” says John Mancinelli of the Recreation Dealers Cooperative Association, or REDEX, the largest dealer cooperative.

Campgrounds are offering incentives to get families to stay longer and urging budget-conscious travelers to try local spots. Mike Gast of Kampgrounds of America, which runs one of the largest U.S. campground networks, says its bookings are down about 6% this year and rates will remain flat for many locations in 2009.

KOA runs a yearly May promotion that lets all customers paying for Friday night to stay Saturday for free. This year, it will run the promotion in August as well for loyalty program members.

“Our members are telling us their reservations are coming in pretty good. They were expecting a down year,” adds Linda Profaizer, president of the National Association of RV Parks and Campgrounds (ARVC).

But in a year when maintaining the current level of business is considered solid growth, industry officials are cautiously optimistic.

Like the rest of the industry, El Monte RV, a rental company in the Los Angeles area, relies heavily on bookings from in-bound Europeans, and their early reservation volume, though down slightly from a year ago, has been “relatively good,” says Joe Laing, an El Monte executive.

Still, it’s too early to tell. A vast majority of customers book within 30 days of travel, and the busy summer season is still a few months away. “It’s worrisome and we’re seeing customers are waiting longer to make advance reservations,” Gast says.

USA Today reported that the industry is also hoping to benefit from the country’s newfound sense of frugality by pitching RVs as a cheap way to travel. “People are economizing. But the good thing is that we seem to have become part of (that),” Laing says.

Time is also ripe for purchasers who can qualify for financing or are willing to bring larger down payments, says Steve Richardson, owner of Riverside, Calif.-based Richardson’s RV Centers. Apart from deep discounts, some dealers are even offering a free moped or car as an incentive.

Phil Comploier, a retired electrician who lives in his 263-square-foot RV and splits time mostly between College Park and Fort Lauderdale, wants to trade up to a larger vehicle. But if he trades it in at a dealer, he “may have to take a beating.”

“It will all depend on how my 401(k) looks,” he says.

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