Comparing a nightly stay revenue mix against a seasonal contract mix for an RV park underwrite

The number I'd want from Park A before anything else is the nightly rate by week, not the annual average of 62. Destination parks often have four or five weeks doing enormous rate and the rest doing very little, and a 62 dollar blended average can hide a 95 dollar peak and a 38 dollar shoulder. If that's what it is, your pricing power argument is really a pricing power argument about five weeks, and those weeks are already full. You can't sell more than 58 sites on a Saturday in July.

Same test on B in reverse. I'd want the seasonal contracts sorted by start date, because a base that all renewed in year one and has never been repriced isn't the same asset as one where a third of the sites turn over annually at market. The flat monthly rate you're admiring might be a rate nobody has touched in six years, which is either your upside or your reason the base holds, and it can't be both at once.

Here is the erosion story on something closer to B, since you named it. Take a 46 site park, 30 on annual contracts, the rest overnight. Two years in, a base like that is often down to 24 annuals, and none of it was a decision the owner made. Four leave because they bought property, two because rate went up, and replacing them at the number the owner wants is hard, because the people shopping annual sites are comparing against a park 12 miles out that is cheaper and worse. So occupancy in the 70s becomes occupancy in the low 60s with more overnight churn than was planned for, and overnight is a different job. Turnovers and check ins, and the phone rings at nine at night. What that says about B is that the flat expense line only stays flat while the base holds. The minute seasonals are being replaced with nightly, you inherit A's labor problem without A's rate. So ask what the base has actually done over three years, and count by site rather than by percent of revenue. Pike is right that the repricing history matters. A park with none often gets read as room to grow. It is usually closer to the reason they stayed.

The thing that jumps out is that A and B are different jobs. One is a hospitality business with a land component. The other is closer to a rental operation that also sells nights. So the revenue mix cannot be voted on without knowing which of those two the buyer would be good at. Twenty weeks of intensity followed by four months off suits some operators enormously. It wrecks others, who spend the off months doing nothing and the on months doing everything badly. B's flatness looks boring on paper, and boring is what many owners actually execute well. Bramble, which one would you rather run on a Tuesday in August? The numbers you posted are close enough that the answer should come from that question rather than from the spreadsheet.

I'm new to this so most of this thread is above me, but can somebody explain the four month dead period part. If Park A closes for four months, does the mortgage payment just stop, or is the operator supposed to have saved the summer money to cover the winter. That seems like the whole difficulty and I don't understand how it's handled.

Rigging, the payment doesn't stop. You bank the season and spend it down over the winter, and every seasonal operator I know underestimates how much of the season gets eaten by things that only show up in the season.

Which is my actual point for bramble. I do renovation work and the four closed months at Park A aren't free, they're your entire capital works window. Water lines, pad regrading, electrical pedestals, bathhouse work, all of it has to happen between closing day and opening day, and if the ground is frozen for half of that you have a six week window to do twelve weeks of work. I've watched a small park try to redo 20 pedestals in a shoulder season and open two weeks late, which on a 20 week season is ten percent of the year's revenue gone before the first guest arrives.

Park B lets you do work in September on a Tuesday while 40 sites are still occupied and nobody notices. That flexibility is worth real money and it never appears on an income statement.

So when you underwrite A, put a number on the off season construction window and ask what the last three years of deferred work actually was. If the seller has been pushing infrastructure down the road because the window is tight, you're buying the backlog too.

The labor difference between the two is bigger than your staffing counts suggest. Park A at 58 sites with 90 percent July occupancy is turning something like 50 sites a day on a busy weekend. Every one of those is a reservation, a payment, a gate code, a question about the dump station, and a cleaning cycle on the shared facilities. Three seasonal staff for that is thin unless the manager is on site and working the desk, and seasonal staff in outdoor recreation markets are hard to hold, especially where there is no housing. Ask whether the park has staff housing, because a park with two employee sites is a completely different hiring problem than one without. Park B with 70 percent contracts is a maintenance and relations job. Fewer transactions, but the operator is now living next to the tenants and the disputes are slower and more personal. Somebody's dog one month, somebody's guest parking the next. Harrow's point about the works window is the one to underwrite hardest. On a nightly park there is never a good time to shut the water off. On a seasonal park it can be done on a weekday morning with a notice on the doors.

Talk to the contractors who service parks on both models, because the billing pattern tells you something about the businesses. Nightly destination parks call in April with a list and an opening date, and the whole scope has to land before that date whatever it costs. Rush pricing and overtime, whatever gets it done, because a week of July nightly revenue is worth more than the premium. Then silence until the following spring. On seasonal and annual parks the work spreads out and the vendors are cheaper to them because the park can wait. Those parks also spend less overall, partly because they can defer and partly because a long stay guest tolerates more than a family who paid 95 dollars for a Saturday and expects the bathhouse to be spotless. So add an amenity standard line to the A underwriting that is not in the trailing numbers. If a park has been trading on reputation and reviews, keeping that reputation costs money every single spring, and it does not scale down in a bad season. That is the asymmetry to worry about with A. Bad summer, same spring bill.

Voting for mixed, and I'll say why even though it looks like the coward's answer.

Everything in this thread describes two failure modes that are each survivable on their own. A blows up when one summer goes wrong. B erodes when the base doesn't renew and you find yourself running an overnight business with an overnight cost structure and B's rates, which is quarry's story. A park with a real seasonal base and a real overnight season has a floor under the debt and a ceiling that isn't fixed.

What I don't know is whether the mix is stable or whether one side always eats the other. If your best sites go to annual contracts, you've taken your premium nightly inventory off the market at a flat monthly rate, and your overnight business is now selling the leftovers. Trellis, is that how it plays out in practice, or can you actually hold back the good pads for nightly and keep the seasonals in a separate loop of the park?

Plumb, the mix cannibalizes unless the site plan physically separates it, and most small parks were not laid out with that in mind. That is a survey question before it is a strategy question. On the vote, A, and underwrite it lower than the seller does. Here is the mechanical reason. A destination park's value sits in rate, and rate is the one line an operator can move without the market's permission. Occupancy in July is already 90, so there is no volume upside there, but 62 blended against a comparable park's 78 is a gap that can be tested in a single season with almost no capital. If it holds, that is real. If it does not, the answer arrives in twelve months and the only spend was a booking engine change. B's upside is contract rate growth, and that requires the tenant's consent, one at a time, against a cheaper competitor 12 miles away. It cannot be forced and it cannot be tested cheaply. The cost of that view is coverage. A four month closed period means debt service coverage has to be sized on the season. That calls for a lender who has actually underwritten a seasonal park and for real reserves, and the seasonality treatment should be confirmed in writing before anyone gets attached to a number. Some lenders will spread it and some will size on a stressed season, and it changes what price works. What would move the case off A is harrow's works window. If the deferred infrastructure list is long and the ground is frozen half the shoulder, the rate experiment happens in year three instead of year one, and the whole case was learning fast.