By Andy Zipser
Owner, Staunton/Walnut Hills KOA
The KOA convention and its mix of inspirational speeches, practical workshops and rekindling of old friendships ended in November. So, too, did the convention trade show and the opportunity it presented to buy new amenities, games, basic provisions, store stock and whatever else someone fancies will appeal to the camping public — including that priciest item of all, a deluxe cabin or lodge. Or two or three.
Few things a campground owner will purchase cost more, but there are sound reasons to invest in such accommodations — to a point. Yet the hype surrounding cabins grows each year, and with it the inducements to splurge on ever more lavish facilities.
If KOA repeats in 2017 the pattern of the past two years, it will forsake its 8 percent royalty on rentals of a new unit in its first year. Independence Bank continues to promote its “go with the flow” financing, eliminating loan payments in the off-season. The manufacturers themselves will offer various deals and convention specials.
Small wonder, then, that the KOA inventory of cabins is exploding and in all likelihood now exceeds 3,000. Last year, according to KOA, 96 campgrounds bought 320 new cabins, or an average of more than three apiece. Some of that buying may be explained by branding criteria, but Journey KOAs are not required to have any deluxe cabins, Holiday KOAs need only two and Resort KOAs could not comprise more than a small portion of the 96 buyers. So what else explains the buying frenzy?
Look no further than the often-dangled lure of increased revenues, starting with KOA’s contention that cabins have “proven themselves to be moneymakers for KOA owners.” On average, KOA reports, a deluxe cabin pulled in $11,000-plus in 2015, or just under $125 per camper night.
Those are jolly numbers, and all the more so when contrasted with comparatively paltry camper-night revenues for RV or tent sites. But taking money is not the same as making money, and top-line growth taken in isolation can be enormously misleading. A hard look at the numbers, as well as some other, non-financial considerations, should give any campground owner pause.
For starters, consider the basic cost of these upscale camping accommodations. Cavco models, for example, built on a chassis so they can be towed to your campground, run $30,000 to $35,000 for 330 square feet, or roughly $100 a square foot, which in some parts of the country exceeds housing construction costs.
Prairie Kraft cabins, of notably superior construction, sell in basic kits (which means you assemble them yourself) for roughly the same price, but that includes just the shell. Bathroom and kitchen fixtures come extra, as indeed does electrical wiring, unless you opt for a package that clocks in at nearly twice the kit price.
Now add shipping costs; site preparation, set-up and skirting; construction of a requisite deck or patio; “interior décor,” to use KOA’s phrase, which includes dishes, cookware and a flat-panel TV—add all that and you’re looking at another $5,500 to $11,000 upfront. Then there are the ongoing costs, such as insurance, estimated by KOA to run $250 to $500 a year.
Taxes and licenses will vary by jurisdiction, but one significant difference may arise according to whether the cabin is taxed as personal property (Cavco on wheels) or real estate (Prairie Kraft fixed-site dwelling).
Factor in the cost of linens, laundry, cleaning time and supplies, as well as replacement of trashed or stolen equipment. And don’t forget KOA’s 10 percent cut for royalties and advertising, as well as the revenue lost to Value Kard Rewards, estimated by KOA at 4.1 percent of all deluxe cabin revenues.
Do that and all of a sudden annual gross revenues of $11,000 per unit don’t look nearly as enticing. Instead of a three-year pay-back for the initial purchase you’re looking at a minimum of five, and that’s barring any major unexpected outlays.
Contrast that (for example) with the cost and return on upgrading a regular RV site to a very important kamper (VIK) or patio site, which runs around $5,000 and pays for itself in little more than a year, and you may conclude there are better ways to spend your money.
Just as one example, our four VIK sites, for which we charge $60-$62 a night, averaged $10,435 in revenues in 2015, compared with $6,410 for adjacent non-VIK sites. That’s admittedly less than the $14,000 generated by our two most “deluxe” cabins, but at a fraction of the investment cost.
But cabins carry another, less easily quantified cost that is comparatively minimal for RV and tent sites: they require more care more often. Siding has to be stained every couple of years, roofs eventually have to be replaced, mold and mildew must be guarded against. And depending on where you’re located, finding — and retaining — reliable housekeepers can be a never-ending struggle. The work isn’t enticing, the pay is hardly grand and the jobs usually are seasonal, which means anyone in serious need of full-time employment is going elsewhere.
Here in the Shenandoah Valley, where the state unemployment rate is 3.7 percent and the minimum wage is $7.25 an hour, we start our housekeepers at $9 an hour and still have a hard time keeping employees who will show up when they’re supposed to and do what they’re assigned.
Now we’re debating whether to recruit foreign workers, but going that route carries its own additional expenses, not least of which is the cost of providing decent, safe and sanitary housing.
Finally, there’s an intangible aspect of cabin mania that is worth discussing but rarely mentioned: the way it shapes our perception — and the public’s understanding — of the nature of camping itself. Perhaps nothing underscores this dynamic as clearly as a couple of items in recent KOA annual reports, starting with a 2015 graph about “key reasons for camping” that had 55 percent of respondents agreeing that
“camping allows me to reconnect with nature and the outdoors.”
Contrast that with a quote in the 2014 report, attributed to a KOA camper, who declared: “Of all the camping I’ve done in my life, none has ever included air conditioning or a flat screen TV with cable! With new deluxe cabins, KOA is really taking camping to a whole new level.”
The question is whether that “whole new level” is one we want to embrace and how it speaks to the desire to “reconnect with nature and the outdoors.” Cabins certainly have a place at most RV parks, as do tent sites. We want to welcome campers at all price points and at all levels of accommodation.
But, when cabins start defining who we are as a franchise, we get the kind of discussion that went on recently in one of the online owners’ groups, about campers who were requesting “smoke-free” areas because they were bothered by their neighbors’ campfires.
Flat panel TVs and campfires: can’t we all just get along? Maybe, but not without some prior thought and discussion about what we’re trying to accomplish.
Andy Zipser is the owner of Staunton/Walnut Hills KOA and can be reached at email@example.com.