Naturally, as an outdoor hospitality business owner, you want to take advantage of every opportunity to maximize your revenue. One way to do that is by adding on to your park. But how do you know when or if it’s time to do that? It’s a good question, so we asked Joe Moore, CPO, OHC, founder and owner of Moore’s Campground Consulting, for some guidelines to use when making that decision. Moore, who has more than 45 years of experience in the industry, was formerly the manager of the award-winning Vineyards Campground & Cabins in Grapevine, Texas. He is also an Outdoor Hospitality Industry leader and has served as an instructor for OHI’s George O’Leary National School of Outdoor Hospitality.
Here are a few factors he says park owners should consider when deciding whether or not to expand:
- Do you have enough extra land? Do you have room to expand on your existing property or is there land available for purchase adjacent to your campground? If you’re thinking about adding more RV sites (as opposed to cabins or other accommodations), a good rule of thumb is that you’ll need one acre for every 10-12 sites.
- Is your average occupancy high enough to warrant expansion? Moore says he generally judges it time to consider expanding when a park gets close to averaging 85-90% occupancy during the season. Otherwise, the only way to increase revenue from sites is by raising rates, an increase that is usually based on the Consumer Price Index (CPI). He says park owners may even want to start making the decision to expand a little before they reach that 85-90 occupancy rate to allow enough time for planning the expansion.
- What would your expansion look like? Are you thinking about adding more RV sites? Cabins, glamping tents, park models or yurts? Or would it be a combination of these types of accommodations? The answer to this question will help determine the cost of your expansion and the amount of land you’ll need. Even though alternate types of accommodations require a greater investment, they can generate two—and sometimes three—times the revenue of an RV site and those higher revenues will continue after the units are paid off.
- Will your expansion pay for itself within an appropriate amount of time? Moore says it’s important to do due diligence about the financials to get an accurate estimate of the overall cost of the expansion and the time it would take to recoup that investment. He says three to five years is a reasonable goal.
- What’s happening in your market? Keep in mind that if nearby parks are expanding at the same time, it may take you longer to fill your new sites.
Even if you don’t have the extra land to expand, Moore says there are still ways to generate additional revenue. You could, for example, consider converting some of your existing RV sites into sites with park models, yurts, teepees, covered wagons or glamping areas that command a higher rate.
Moore says that even if you decide that the timing or circumstances aren’t right for expansion, there are still things you can do to generate more revenue such as offering golf cart rentals, adding more activities you can charge a fee for or by making changes in your camp store or restaurant. Offering special events is another option as is offering enticements such as discounts to bring in more business midweek to fill in any gaps. The good news is that whether or not you decide it’s time to expand, there are plenty of ways for you to increase your park’s revenue.
