Is Owning a Campground Profitable?
The answers to those questions are dependent on many things, including:
- Business experience of the owners
These are just a few of the factors that affect the outcome. Still, it is possible to get a general sense of the potential profitability of owning a campground. By evaluating costs and the factors that influence success we can form a picture of the business opportunities available with campgrounds.
The campground industry
If you are considering owning a campground in the United States one of the first things you need to know to determine profitability is the overall state of the industry. Market research on the campgrounds and RV parks industry last year in 2019 indicates that, overall, it is a good field to be in. Total revenue increased in 2019 to $7 billion while the number of businesses in total increased to around 14,500. This fits in line with a reported 2.7% annual growth from 2014 to 2019.
This steady growth is projected to continue as it is fueled by economic growth and increasing numbers of retiring baby boomers both entering into the business and also taking to the open road in their RVs. Of course, this growth can be impacted by many things in both positive and negative ways. For campgrounds that cater to RVs, which most do, there are even more factors to consider.
The rise and fall of costs associated with RV life, such as fuel, for example, can influence how much people are using their RVs for camping. Even the profitability of freelance work and other things that allow people to be more mobile can play a part. The housing market plays into this as well. If housing becomes too expensive many more people might just move into their RVs.
On top of all this, you have the overall economic conditions to consider which influence how willing people are to spend money on camping that is sometimes seen as a luxury.
As you can see, there are many things that influence the industry as a whole and it is important to keep track of them to help determine your profitability. You have to consider these factors on a national and local level too. The location of your campground might be influenced by different factors that don’t reflect the rest of the industry. It is good to know what’s going on but it isn’t the final say on success.
The key questions
There is more than one way to own a campground. Depending on how you go about it you can set yourself up for success or for failure. The key questions to consider are:
- Whether to buy a preexisting campground or not
- Where exactly you want to have your campground
These questions go hand in hand and the answers will influence your profitability. You can decide where you want to own a campground first and then see what’s available in terms of land or campgrounds for sale. This limits your options though.
Alternatively, you can make the decision to start from scratch or buy a pre-existing property and then go from there. These two approaches work as two ends of a spectrum and you can certainly make your own choices with a combination of these ideas in mind. For example, maybe you know you want to be near the mountains but you don’t want to build a campground from the ground up. You can now look for campgrounds for sale near mountainous areas.
Location, location, location
In terms of profitability, your location determines when and how often your campsite will be full. It also determines what amenities and extra features you can offer which is something that plays a role in attracting new campers. There is a lot to consider here. There are straight forward considerations like seasonal changes to keep in mind. If you own a campground where it snows then you can expect to be less profitable during the winter. Unless of course, you have provisions for extra heating and maybe options for winter sports like skiing.
Location is also a determinant of risk and that impacts profitability too. Florida might seem like the perfect place to have a campground, and in many ways, it is, with nearly year-round sunshine and a massive influx of retirees. However, you have to keep in mind the risk of hurricanes which bring high winds and flooding. One powerful hurricane can destroy a campground. You have to keep location in mind when considering profitability but it is also a very personal choice about where you would want to live and work.
Also, location is ultimately one of the most, if not the most, important factors that will impact how profitable you are. As it goes with everything in business you have to think about the big picture as well as the local situation. Big picture considerations for location include seasonal changes, weather, nearby attractions like hiking or canoeing and so forth. More local considerations for your campground involve other questions. For example, will it be easy for your target market to access you? If you cater to RVs can they drive to where you are?
You also need to think about the local market. Are there enough people going there, with enough money, to sustain your business? And, if there are, what kind of competition might you be facing? These are all things that you will have to think about and answer before you can really know how profitable your campground can be.
To reinvent the wheel or not?
Similarly, deciding whether or not to start a campground from scratch is a personal and financial choice. Based on rough estimates a campground business can cost around $10,000 to $50,000 to start and that doesn’t include the cost of the land. There may also be additional costs with equipment, supplies and utilities, communications, advertising/ market research and more. When you start from scratch it takes time for people to know you are there and you have to consider this in your costs as well. In the beginning, you will probably be spending a lot more money than you are making.
Let’s look at some simplified numbers as an example. If you buy a plot of land for around $200,000 and spend another $50,000 getting it ready for campers then your upfront costs are $250,000. Now, let’s say you can host 50 campers there but your first year you only average 50% capacity. If you can average 25 campers a day for a year and say you earn around $30 per person you will make $273,750 that year in total revenue. Once you subtract your upfront costs that leaves you with $23,750 from which you still need to pay employees, repair costs, utilities, other unexpected costs and ultimately yourself.
Don’t despair at those numbers though. If you build on the momentum of the first year you might manage a higher occupancy rate and be able to charge a little more. Also, you will have recouped your startup costs. So, let’s say you average around 30 campers a day for the following year and with added amenities you earn around $40 per person. Now you have earned $438,000 for the year! That is much better. Of course, you still have to pay out all your costs but the final profit will certainly be higher.
Starting from scratch like this doesn’t always turn out successfully though. As you have probably heard before, most new businesses fail within the first couple of years. Instead, you might choose to buy a pre-existing campground. The upfront costs might be higher but your revenue might be higher as well. You have to do your due diligence but the right find can definitely be worth it.
Again, these numbers are simplified, but let’s consider a similar situation to the one mentioned previously. Let’s say you buy an established and successful campsite that can host 50 campers. You might pay $1,000,000 or more for such a site, probably through a loan realistically. If the campground is still in good standing and you maintain things as they were, or even better, improve them, you might expect an average occupancy rate of 70% or higher.
Adding to that a well-established campground should have amenities to help earn additional income. In this case, let’s imagine you average 35 short stay campers for half the year earning you an average of $50 per person. That alone brings you $319,375 for half of your first year. If your campground runs year long and isn’t seasonal you could be making double that at $638,750. Depending on how the business is run it will take time to pay off the initial investment but leveraging a preexisting campground’s success can get you up and running quicker.
The reality of earning potential
In North America, the average campground or RV park will make up to 80% of its annual income over a 12-week period. In the northern regions, this usually falls between June and August while in the south the money-making months are January through March when many snowbirds from up north come down for the winter. As previously mentioned weather and climate are large factors that determine when and where people camp and northern winters play a significant role in this.
Overall the northern campgrounds tend to cater to short term campers who only stay for a week or less while the southern campgrounds make more money from long term campers staying for a month or longer. These seasonal and regional differences are an important thing to keep in mind when determining how profitable your own campground business will be. In general, short term campers are actually more profitable on a person/per night basis. You can charge them more per night and because of their limited stay, they are more prone to buy food and other supplies from your campground if available.
Long term campers often expect a better nightly rate since they are paying on a monthly basis. Also, because they have planned for a longer stay they usually have all the supplies they will need and won’t spend as much money at your campground. These differences aren’t always true but they do seem to hold as a general trend. But, whether you cater to long term campers, short term campers or a mix, there is an important element of earning potential to keep in mind.
Many campground owners start off thinking that having more space for campers equals more money. This isn’t true though. The real trick is to have high occupancy rates. Experience has shown that it is always better to improve the space you have before expanding. The key idea here is that when it comes to profit you need to be thinking in terms of the number of camper nights and how much you can charge per night. A campground with 10 spots, fully kitted RV hookups, wi-fi, bathrooms, a general store, and nightly events can charge much more per night than another campground with 50 spots but no amenities.
If you compare some example figures for these two sites you can see the difference. The better equipped 10 spot site is more likely to achieve 70% occupancy or higher and can charge more per night, let’s say $40. The other campground might be lucky to get %30 occupancy and could probably only charge $15 a night or so. Over a 90 day period, the better-equipped campground will bring in $25,200 while the other site will bring in only $20,250. The smaller site made more money with less space and fewer campers on site.
The pros and cons of owning your own campground
A campground can be a profitable endeavor with the right work and planning but it isn’t a life suited for everyone. There are several pros and cons you need to consider first. As far as the cons go you will quickly realize there are certain times of the year you don’t really get time off. If the summer is your busy month then be ready to be attentive to your guests then. This also means that weekends aren’t free time either when you are busy. If campers and RVers are staying at your campground for a vacation then they will expect every day to be great, doesn’t matter if it is Monday or Sunday.
Another con is that any successful campground business, or any small business for that matter, requires a lot of time and hard work, especially in the beginning. This is true for most businesses. While you are busy with guests on the weekends you will be missing family events, birthdays, and other important moments. This won’t always be true but until you hire more staff and create systems to keep things flowing it will be. Last but not least, you will have to get used to the idea that your income is dependent on factors you can’t completely control like the weather and the economy. That’s how it is in business.
Despite all of these cons thousands of people still go into owning a campground and it is still very much a good idea to do so. Why? Because it can be profitable and deeply rewarding. Instead of answering to some employer you don’t like you get to be your own boss, you set the rules, you make your schedule. There is a certain irreplaceable freedom in that.
Many campgrounds are seasonal so that means you can enjoy ultimate freedom for half of the year. Work for 6 months and then do whatever you want for the other 6 months. In addition to that, because you own the campground, you also have free accommodations. If you buy a pre-existing campground they often come with an owner’s home on site and if you start from scratch you can bring your own RV. So, despite all the initial work that goes into owning your own campground you ultimately get to enjoy a freedom that many others never have.
Owning a campground can be very profitable if it is done right. Whether you start from scratch or build on a pre-existing campground there are many options to find great success and freedom in the industry. It helps to keep in mind the importance of location, the seasonal nature of the business, and the many pros and cons that come with it. Owning a campground is not the right endeavor for everyone but for some, it is the perfect ticket for decent profitability and a less restricted lifestyle than that lived by others. If that sounds like a good fit for you then you should certainly give it a go.
Bonus tip: Go behind the scenes with one couple that left everything behind to own a campground!