As winter approaches, campsites quickly fill up at The Springs at Borrego RV Resort and Golf Course in eastern San Diego County, Calif.
The 90-site low desert resort, located minutes from the scenic grandeur of Anza Borrego State Park, is a popular winter nesting ground for Snow Birds from all over the Pacific Northwest and Canada.
“We would love to build another 110 sites and think we could do so for about $1.2 million,” said Dan Wright, the park’s general manager.
Trouble is, Wright can’t get a loan. “Everyone we have talked to tells us that financing for RV park construction and development is non-existent at this time,” said Wright, who also serves as president of the California Association of RV Parks and Campgrounds (CalARVC).
The problem isn’t limited to RV parks and resorts. Despite the billions of dollars in bailout funds that the Bush and Obama administrations have provided to the banking industry during the past year to make credit more available, bank financing remains difficult for any small business to obtain, according to the National Association of RV Parks and Campgrounds (ARVC).
Federal Reserve Board Chairman Ben Bernanke acknowledged the problem last month in a widely quoted speech to the Economic Club of New York, in which he stated that banks’ continuing reluctance to lend is “limiting the ability of some businesses to expand and hire,” effectively delaying the nation’s economic recovery.
From Wright’s perspective, the banks’ unwillingness to lend to profitable businesses is costing millions in lost revenue, not only for his business, but for the community of Borrego Springs, whose restaurants, stores and fuel stations depend to varying degrees on the snowbirds who spend the winter at his RV resort.
“We track every reservation request that we cannot fill,” Wright said. “Since the beginning of 2008, we have turned away over 8,000 nights’ worth of business due to a shortage of campsites. But even with numbers like these, lenders still can’t bring themselves to provide us with a loan. It makes no sense.”
Ken Jeffries, one of the owners of Angels Camp RV & Camping Resort in Angels Camp, in the Sierra Nevada foothills, is facing a similar scenario. The park, with 63 RV sites, 14 tent sites, five cabins and a camp office and store, is in desperate need of expansion to accommodate growing numbers of camping enthusiasts. In fact, between Jan. 1 and July 29 of this year, the park had to decline 513 nightly reservations for lack of space, Jeffries said. But despite the obviously strong demand for campsites at the park, the owners have not been able to obtain even a relatively small loan.
“We need $50,000 to put in 19 more campsites, but the banks are real tight for some reason,” Jeffries said. “The interest rates are down, but they won’t loan any money. Of course, it doesn’t do any good to have low interest rates if they won’t loan the money. I feel the small business man is being squeezed terribly.”
Frustrated with the lack of credit, Jeffries and his partners are paying for his park’s expansion on their own. “We’re taking the money out of our own pocket and are doing the expansion ourselves,” he said. “It’s very difficult to do this, but we have no choice. We’re losing business by not expanding our park.”
Harriette Groth, co-owner of SunBasin RV Park in Ephrata, Wash., said she also is losing business because she has not been able to obtain the $350,000 to $450,000 in loans she needs to make needed improvements to her park. She’d like to put in more campsites, create more pull-through sites, and build a new bathhouse and showerhouse, but can’t find lenders willing to refinance her existing loan and provide her with capital for improvements, let alone provide her with a second loan for improvements. As a result, her improvements are limited to relatively minor cosmetic improvements, such as new signage and landscaping.
John Grant, owner of Park Brokerage Inc., a San Diego company that specializes in RV park sales, said the scarcity of loans is hard for RV park and campground operators to swallow, particularly given the resiliency of the camping business during the recession. “All businesses need access to capital to expand, to improve their facilities. But there’s just no commercial real estate capital available for RV parks and campgrounds,” he said.
Ed Mayer, who has developed four successful RV resorts in Florida in the past six years using the Elite Resorts of America brand name, said he is now seeking financing from private investment groups after failing to obtain loans from conventional lenders. “Everybody is scrambling to find money,” he said. “I’ve dealt with small banks, medium banks and large banks and I’m getting the same answer across the spectrum.”
Mayer said many lenders simply have no experience working with the RV industry and don’t want to take any chances investing in a market segment with which they have little or no experience, despite the financial successes RV parks and resorts have enjoyed throughout the recession. He conceded, however, that while there are many successful, high quality RV parks and resorts across the country that are worthy of loans, there also continue to be sizeable numbers of neglected parks. “Some RV parks are in the hands of people trying to get out of the industry and they’ve allowed their parks to deteriorate,” he said.
By anyone’s standards, 2009 has been a tough year for the U.S. economy.
But while most Americans have tightened their budgets in response to job losses, difficulties obtaining credit or simply because of economic uncertainties, campgrounds and RV parks have remained economically resilient, according to a news release from the National Association of RV Parks and Campgrounds (ARVC).
“We are very grateful for the level of business we’ve had,” said Jayne Cohen, president of Adventure Bound Camping Resorts in Center Harbor, N.H., which owns and operates nine RV resorts in New Hampshire, Massachusetts, New York, New Jersey, Pennsylvania, Tennessee and Arizona. “When we closed down our November numbers, we were even with last year in revenue.”
That’s a significant accomplishment, Cohen said, not only in this economy, but given the fact that most of her company’s parks are located in areas that suffered unusually cold and wet weather last summer. “We strongly feel that if we had not had bad weather, we would have been ahead of last year’s figures,” she said.
Most of the nation’s campgrounds, in fact, reported business levels that were stable or slightly ahead of last year’s figures, and most private park operators expect their business levels to remain steady or experience continued growth next year.
“I’m very optimistic and very grateful for how we finished out this year,” said Mark D. Anderson, president of Camp Chautauqua Camping Resort in Stow, N.Y. “Our reservations are looking very good for next year. We’re already just about full for Fourth of July weekend. And to be almost full at this time of year is pretty good.”
Across the country, Harriette Groth of SunBasin RV Park in Ephrata, Wash., said she is already receiving reservations for Memorial Day weekend next year. “Two groups have already called in for reservations for Memorial Day weekend. We feel that’s encouraging,” she said.
David L. Berg, ARVC chairman, said he is also optimistic about the level of consumer interest in camping next year. “I think we’re looking across the country to an improved camping season next year,” he said. “The state of the affairs of our economy has not hurt the camping business at all.”
Revenues at Berg’s own park – Red Apple Campground in Kennebunkport, Maine. – were up 8.5% this year, compared to last year, and Berg expects the upward trend to continue.
“Our reservations for next year are at least as strong right now as they were a year ago,” said Jim Ozburn of Falcon Meadow RV Campground in Falcon, Colo. “I really think the camping business is going to get better. As long as gasoline and fuel behave, those who do the most traveling will still do it.”
Ozburn added that he, too, is already receiving reservation requests for next year, which he finds encouraging.
Carolyn Strong, co-owner of Sundermeier RV Park and Conference Center in St. Charles, Mo., is also receiving reservations for next year, including reservations from large rally groups. “We had a tremendous increase in business this year,” she said, adding that as of mid-December her park was already running about 10% ahead of its business levels in both 2007 and 2008.
Some Sunbelt parks are also reporting strong reservation levels for this coming winter. “Right now, we just finished the best November we’ve ever had, and our advance bookings from now through March are probably 20% over last year,” said Doug Shearer, who opened Parkview Riverside RV Park in Concan, Texas, in 2001. He expects this winter to be the best winter season he’s ever had.
Some park operators remain cautious, however.
Bruce Aljets, who owns Yogi Bear’s Jellystone Park Camp-Resort in Sioux Falls, S.D., experienced a 17% jump in business this year, despite the recession. “I don’t know what to expect next year,” he said. “Being in South Dakota, we generally lag behind the rest of the country. But I’m going to hope for the best.”
Cohen of Adventure Bound Camping Resorts, for her part, said her company is optimistic but cautious about the future. “We’re very enthusiastic and we’re very pleased with the results of this year. But we’re not taking anything for granted, either.”