Small campground I inherited management of finally cleared 100k gross, here's what it took

This isn't mine on paper. My aunt owns a 26 site campground on a river, an hour from a decent sized city, and she asked me to run the books and the bookings two years ago because she was doing it in a spiral notebook. I get 8% of gross plus a small monthly.

Where it started: 62k gross, 31% occupancy across the season, roughly 24 usable weeks. She took bookings by phone, wrote them in the notebook, and lost maybe a dozen a season to double bookings or nobody answering.

What we changed, in order:

Online booking with real time availability. Cost about 3% of processed revenue plus a monthly fee. Bookings went up before we changed anything else, because roughly 40% of them now come in between 8pm and midnight when nobody was ever picking up a phone.

Rate by day of week. Fridays and Saturdays went from 42 to 58. Sunday through Wednesday stayed at 42 and I stopped feeling bad about the empty midweek.

Six sites converted to full hookup. She had water and 30 amp, no sewer. Sewer runs to six sites cost 19k and those six now book at 68 weekend, 52 midweek, and they fill first every single time. That was the single best dollar spent.

A two night weekend minimum in July and August. This lost us bookings and made us money, because the one night Saturday guest was eating a full turnover for half the revenue.

Last season: 104k gross, 47% occupancy. Expenses ran about 41k including my cut, so she netted low sixties on a property she paid 210k for in 2009.

The part that nearly broke it: the two night minimum. She hated it, we argued about it for a month, and in the second week of July we had four empty sites on a Saturday and she called me pretty upset. Those sites filled by the following weekend and July ended up our best month, but if that had run three weeks instead of one I don't think the policy survives.

What I'd keep: the six full hookup sites and the day of week pricing. What I'd think harder about is whether 47% occupancy in a 24 week season means we're priced right or still priced low.

Answer

1samantha_ruizAU4APRO6

47% over 24 weeks with a two night minimum in peak means you're probably still under on weekends and about right midweek. Here's the test I'd run before touching rate again. Pull last season and count how many Fridays and Saturdays in June through August hit 100% occupancy. If more than about a third of them sold out, your weekend rate is low, because selling out means you left money on the table on every one of those nights. If almost none sold out, 58 is the number the market gave you and the problem is demand rather than price.

The six full hookup sites are the real finding in your post and I'd push harder there. You spent 19k and got a 26 dollar weekend premium over the water only sites, filling first every time. That's not a pricing signal, that's a capital allocation signal. What does sewer to the next six cost? If the marginal run is cheaper because the trunk line's already in, you may be looking at a better return than the first six, and if it's more expensive because of distance or grade, find that out before you build the plan around it.

One thing to watch. Full hookup guests stay longer, which cuts your turnover labor per revenue dollar, and it also means fewer arrivals to sell the shorter midweek gaps to. Track average length of stay on those six against the rest. If it's climbing, your occupancy number will look better while your rate per site night goes flat.

Also worth knowing whether your aunt's insurance and any state camping or lodging registration changed when you added sewer service, because that varies by state and it's worth a call rather than an assumption.

2 replies

1hannah_west29 Get yours

Numbers first. 104k gross, 41k expenses, so 63k net on a 210k basis, ignoring appreciation. That's a 30% cash yield on original cost, which is a fine number and also a 2009 number, so it tells us nothing about whether the asset is worth buying today.

The figure I'd want is net against current value. If a 26 site river campground doing 104k gross trades at, say, 6.5x net in your area, that's around 400k, and 63k on 400k is still strong. Ask what happens if occupancy drops to 38% in a soft travel year. Revenue goes to roughly 84k, expenses barely move because most of your 41k is fixed, and net lands around 44k. That's the number I'd stress against, since campground revenue moves with discretionary travel spending.

Also, what's your capital reserve line inside the 41k? I don't see one, and a 2009 vintage water system with new sewer runs on six sites will ask for money eventually.