Underwriting an RV park where six peak weeks carry the whole rate card

Question

A seasonal RV park in a mountain market two hours from a metro is a useful case for how badly a broker's pro forma can diverge from trailing revenue. If two years of monthly data show peak summer weeks plus a few holiday weekends accounting for 60 percent or more of annual site revenue, with the shoulder months doing most of the rest and winter close to nothing, the shape of that revenue curve should drive the entire valuation exercise. A pro forma that takes the peak nightly rate, applies a modest occupancy lift, and arrives at a number 20-plus percent above trailing revenue is usually pulling that lift entirely from shoulder season nights the market has never actually paid for. Modeling the shoulder honestly, at last year's actual rates and occupancy, can move a deal from an 8 cap headline down into the low sixes at the asking price. The legitimate counterargument is operational. A park with no online booking system, no marketing, and a policy of not taking reservations more than 60 days out has a real, identifiable gap between current performance and what a competent operator could achieve, particularly in shoulder season nights that a booking system would capture. The discipline worth holding onto: pay for what the asset has actually earned on a trailing basis, and treat operational upside as something to underwrite separately and conservatively, not as a given baked into the purchase price. Every seller in this sector looks like a poor operator to the next buyer, which makes trailing revenue the only anchor that doesn't depend on someone else's assumptions.

ryanmck27 · Answer

The 60 day booking window is the detail I'd chase before anything else. Families planning a summer trip book in February. If he won't take that reservation, he isn't losing shoulder nights, he's losing peak nights to the park down the road that will. Which would mean part of your "upside" is in the months you already believe in, and that's a different and much better bet than paying for October.

chriswalton8 · Answer

On the capital side the question worth asking is what happens to coverage in a single bad summer. Not a recession, just rain. If 61 percent of revenue lands in six weeks then one wet July is the whole year, and a lender looking at that concentration is going to size debt off something conservative anyway. Asking the lender early what revenue basis they'd underwrite from, in writing, is worth doing, because that number may end up setting the price.

nicole_adeyemi · Answer

Before spending more time on rate cards, find out whether the county allows anything with the closed months. Some jurisdictions treat a stay over 30 days at a campground as something other than transient occupancy, and that changes what can be sold in the off season. It varies by state and often by county, so read the actual ordinance rather than asking the seller. If long stays are permitted there may be a winter product. If they are not, November through March really is zero forever, and it should be priced that way.

tashaford30 · Answer

Halyard's point reframed the whole thread for me. A booking window fix is cheap and testable. A shoulder season demand fix is neither.

ehernandez74 · Answer

It helps to turn the two years of monthly data into nights sold rather than dollars, if the seller will give it up. Revenue mixes rate changes with volume changes and you cannot see which one moved from dollars alone. If nights sold in September have been flat for two years at the same rate, that is a market telling you something. If nights sold dropped while rate rose, the seller has been trading volume for rate, and the shoulder season may be more elastic than the pro forma assumes. Either way it is one spreadsheet away and it is the difference between guessing and knowing. Also worth asking who answers the phone now. If it is the seller personally and he is retiring, some of that trailing revenue may be his relationships with repeat seasonal guests, and repeat guests do not always follow a new owner.

laurenkim53 · Answer

Small point on the cost side: no plowing in winter isn't just lost revenue, it's a maintenance regime. Roads and pads that sit unmaintained under snow and then thaw are how a gravel budget nobody forecast shows up the following spring. Worth asking what the park spends on road work each spring and comparing it to what the pro forma has budgeted for repairs.

priya_n21 · Answer

Genuinely worth asking, does anyone buy these things at trailing revenue? Every listing in this category prices the improved version. If the whole market is priced on operator upside, then paying trailing revenue means simply not being a competitive buyer, and windlass's second position starts to look like the realistic one.

renee_dubois · Answer

Marlow, it is still possible to be a buyer, just as the one who walks. A common pattern is buying small buildings by being the second call after the aggressive underwriter's financing falls through. Sellers of seasonal assets have a clock too, and a park that does not sell in March is a park that has to be operated through another summer by an owner who wanted out. That is leverage available for free by being patient. Windlass, worth separating the 22 percent lift into what costs money and what does not. Online booking is software and a few weeks of attention. Pulling October families into a mountain park with no heated bathhouse costs capital. Pay for the first, not the second.

brandonlee36 · Answer

The thing that breaks at scale here is staffing a shoulder season the underwriting does not really believe in. Operators who try to extend a season by five weeks often find the real cost is not marketing, it is keeping people on payroll for weeks that run at 20 percent. A model can carry a shoulder night at incremental cost. A labor schedule cannot be built in increments, someone is either there Friday or they are not. So buying the lift only makes sense with a plan for who works those weeks and what they cost, at hours that can actually be staffed.

paulgrant17 · Answer

I'm two rungs below this deal but the repeat guest question anchor raised is the one I'd lose sleep over. Do seasonal guests sign anything, or is it a handshake every spring?

Underwriting an RV park where six peak weeks carry the whole rate card

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