Economically Resiliant RV Parks

DEVELOPERS LEARN A LESSON FROM THE SCHOOL OF HARD KNOCKS: HIGH QUALITY RV PARKS CAN BE MORE ECONOMICALLY RESILIENT THAN HOTELS, CONDOS AND SHOPPING MALLS

The recession has prevented many developers from converting RV parks and resorts into other seemingly more lucrative uses, such as hotels, shopping malls and condos. Several California RV parks slated for demolition have not only survived, but thrived during the recession.

AUBURN, Calif., Nov. 18, 2009 – Between 2000 and 2005, as California’s real estate prices rocketed to unprecedented levels, developers pulled out their wallets and encouraged owners of RV parks and resorts to sell their properties because they wanted to replace them with shopping malls – all more lucrative uses of these properties, or so they thought.

As the real estate market has tumbled, however, many developers have not been unable to get very far with their plans, and several of the RV parks and resorts they acquired have not only survived, but prospered during the current economic recession.
In fact, one lesson that developers have learned is that high quality RV parks and resorts are more economically resilient than hotels, shopping malls or condos, particularly when investments are made to improve these parks.

“Developers have always assumed that land is more valuable when it’s used for hotels, shopping malls and condominiums. But in resort destinations, high quality RV parks and resorts have greater economic resiliency, particularly when times are tough,” said Debbie Sipe, executive director of the California Association of RV Parks and Campground.

One case in point is Emerald Desert RV Resort in Palm Desert, Calif. Several years ago, Scottsdale, Ariz.-based Taylor Morrison bought the park with plans to replace it with housing. But Taylor Morrison only built a few homes on a small section of the RV resort before the recession pulled the rug out from under house values, prompting the company to put the mostly intact RV resort back on the market.

La Jolla, Calif. based SunLand RV Resorts bought the property last summer and plans to keep as a resort. “I’ve had my eye on this property for 20 years,” said Reza Paydar, SunLand’s president and CEO. “It is a very valuable. There is nothing like it.”

Far from merely keeping it as is, SunLand has already invested more than a $1 million in improvements to the 251-site property. It’s newly designed 1,200-square foot lobby features a custom designed floor mosaic and reception desk with inlayed stone. Luxury furnishings are also being added to the newly designed fitness center and swimming pool area.

Meanwhile, the economic downturn has given La Pacifica RV Resort in the San Diego suburb of San Ysidro a chance to assert its economic resiliency. An investor purchased the property several years ago with the idea of re-selling it to a housing developer. But as the real estate market tanked, the investor’s plans evaporated and he wound up selling the property to another investor, Bart Thomsen, who plans to make improvements and keep La Pacific as an RV resort.

“The park is in very good condition already. But we’re absolutely intent on making it an even better place,” Thomsen said. “We’re putting money into fixing up the bathhouse and clubhouse and investing in better utility pedestals and making improvements to its streets. We’re planning on it being an RV park for the long haul.”

Developers’ plans to convert RV parks and resorts to other uses have not only been put on hold by the recession. In some cases, even city and county officials have discouraged them from replacing RV parks and resorts.

Consider Flying Flags RV Resort in Beullton, Calif., near Solvang. An investor group purchased the property several years ago and planned to bulldoze it. “The initial plans were to re-title it for a commercial-residential mixed use product,” said Randall Hendrickson, the resort’s manager. “But local officials were not as excited about seeing development on the property. They had an affinity for Flying Flags and wanted to see a continued influx of travelers and vacationers that fueled the local economy.”

The developers spent two years trying to re-title Flying Flags before giving up on their initial plans. But instead of abandoning the property, they decided to spend more than $1 million to make it an even more appealing RV resort. The improvements, which include new park model cabin rental units, a fitness center, electrical and sewer service upgrades, renovation of campsites, cable television system upgrades and new landscaping, have paved the way for record occupancy and revenue growth at the resort.
“To their credit,” Hendrickson said, “they investors realized they had a profitable enterprise to begin with, and they invested more funds to make it the best it could be. The end result is an amazing property.”

These investments in improvements are paying off because camping and RVing enthusiasts have shown a consistent willingness to pay for parks that offer high quality facilities, amenities and service, said Sipe of the California Association of RV Parks and Campgrounds. RV parks are resorts are also aided by the fact that they offer the nation’s most affordable vacation option, she said.

John Grant, owner of San Diego-based Park Brokerage Inc., said growing consumer interest in camping and RVing is also helping RV parks and resorts to retain their real estate and business value during the worst recession since the Great Depression. “RV parks are holding on to their value because people are downsizing their vacations, taking their RV or tent and going camping,” he said, adding, “This translates into higher property and business values for parks.”

For additional commentary, statistics and sources on the latest camping trends in campgrounds, RV parks and resorts or for leads on parks in your news coverage area, please contact Debbie Sipe at the California Association of RV Parks and Campgrounds at (530) 885-1624 or (530) 906-4592 (cell).