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Welcome to Equity Insights, a channel dedicated to documenting our journey to a hundred world-class communities.
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Welcome back to Equity Insights. This is Dylan Marma, and today we're going to share with you a much-requested topic, which is best practices for managing and operating RV campgrounds. So, let's dive into it.
Managing and operating RV campgrounds can be a very daunting task. Up front, there are two ways to go about managing your RV campgrounds. There is using a third-party manager, and then there is managing in-house, or what we call self-management. Using a third-party manager can have a lot of advantages, and if your campground is big enough to where you can afford to use a good third-party manager, that may be a good path for you to consider, especially if you can find a good third-party manager that you know, like, and trust. But that said, that is not always the case for every campground operator, and self-managing can be the best way to really scale and grow your business over time.
So, so we're going to talk today about self-managing your campgrounds because whether you're managing the manager or whether you're rolling up your sleeves and doing the management work yourself, it's crucial to be able to understand what goes into effective operations. Effective operations can be broken down into a few key components. The key components that we see to effective operations consist of building the right team, creating proper budgets and revenue management, managing the guest experience and expectations, establishing a solid foundation, creating your online presence, and using the right software to be able to manage your processes and interacting with campers and building your community.
Starting off with topic one, building the right team. Building the right team takes place both on-site and off-site. So, off-site, our team consists of having an operations manager, several regional managers, and our in-house accounting team. Now, it's taken us time to be able to get here. So, in the beginning, your off-site team might just be you, and the off-site team is going to be responsible for hiring and firing the staff, getting the right people in place, training the people, holding them accountable, setting the goals, setting the budgets, helping with the, the marketing of the property, and, and so on. So, that's your off-site management, what we consider your operations and your asset management.
And then you also have your on-site management, which is really where we'll dive in the most time is staffing the actual property itself. Every property usually has someone that you'd consider to be your general manager, your GM, on-site. And you can call them your campground host, community manager, general manager, whatever you want to call them. This is the person that is ultimately in charge of all of the day-to-day operations. We like to consider these people the CEO of their campground, right? They're, they're there having to make the tough decisions and build the support team and also usually having to go out there and execute on a lot of the tasks day-to-day, depending on the size of the campground. So, your GM, getting that hire right, is crucial.
In addition to your GM, you have to think about your support staff, and your support staff can be both in-office and out of office. So, again, not on-site, off-site, but now you're talking in-office, out of office. In-office meaning support staff, usually the first person is someone that's there to work the front desk, like a reservation specialist or a front desk host. Generally, they're there to be able to answer calls and to be able to assist with people coming into the campground and checking in on the campground. If you have a lot of short-term stays, this is an essential role to have someone that's coordinating all of the chaos. You might have, you know, we have oftentimes, you know, 30 people coming in and out any given day. So, you have to have the right person there to be able to help with, you know, coordinate all those check-ins and create, you know, the ideal guest experiences on-site.
In addition to that, you may have in-office staff that could be helping with anything from either bookkeeping or running the campground store or managing any of the additional amenities or services that you provide in the office. And that may comprise of both full-time and part-time workers.
Now, stepping outside of the office, it's time to be able to maintain the campground. And generally, your maintenance crew is going to be a blend of, you know, full-time and part-time staff that are there to do everything from lawn care. We generally like to mow the lawn in-house and have someone that's either full-time or part-time that does all the lawn care, generally picking up the leaves during the, you know, the off-season or going into the fall or coming out of the spring, just keeping the grounds fresh, re-graveling the sites if the sites are getting disheveled, being able to put fresh new gravel in, executing on all of our capital improvement projects. Maybe they're upgrading the bathhouse or, you know, putting some fresh paint in the office, being able to execute a lot of the day-to-day capital improvement projects.
In addition to cleaning the bathhouse, that's a super, super important aspect of running a campground is keeping the facilities clean, both in the main office and in the bathhouse or any other facilities you have. Have maybe you have cleaners there that are turning units if you have park model cabins or some sort of short-term rental component to what you're doing, cleaning the sites if people are coming in and out. You want to make sure that all the fire pits have been cleaned and the sites are not left a mess before the next person comes and checks in.
So, those are a lot of the key roles when it comes to staffing, and it really varies based on whether you have long-term sites or short-term sites, the size of your campground. So, I can't really give you too many rules of thumb, but we have seen this range widely from anywhere between as much as $500 or as low as $500 per site per year, and we've also seen it as high as, you know, $1,500 or higher per site per year, depending on the needs of that specific campground. So, that is what it takes to be able to build the right team.
Now that you have your ideas for your, your team in place, it's now time to be able to create your budgets and handle your revenue management. Now, hopefully, before you bought the campground, you put together a budget and you feel good about the numbers on the property being able to cash flow and achieve your financial targets on the property itself. But just like any other budget, this is not a one-time set it and forget it thing. This is something that is constantly being iterated upon over time as you get settled in, as you get to know the campground, and as you're adapting to the changes that the business throws at you over a schedule of time.
The budget itself should be broken into a few key components. You'll have everything from your taxes to your insurance, which are usually what we consider to be your non-controllables. Then you're going to have your repairs and maintenance budget, which will be all of your day-to-day repairs and maintenance and upkeep. Sometimes landscaping could fall in into there as well. Then you'll have your contract services, which are your routine services such as cleaning the pool, landscaping, pest control, any kind of routine contract services. Then you will have your general and administrative, which could be everything from for expenses to office supplies to maybe some of your event supplies may fall under your general admission illustrative. Then you'll have your marketing budget, which depending on how you set up your chart of accounts, could be your event spend or your Google and Facebook spend that goes into the marketing to be able to drive your revenue. And then you also have your property management. If you have a third-party manager, if you're paying yourself a fee, which I think you absolutely should if you want to grow and scale a company, paying a market-rate property management fee, which will be usually a percentage of gross collected income. And then lastly, you have your utilities, which is your water, sewer, and electric, and being able to properly, you know, budget towards those.
So, usually, I would recommend looking at the previous financials and how the campground's been ran in the past, and then picking those apart and trying to set your own budget. We know our numbers well enough now to where we kind of know what each of the, how we run the place, and we're able to mainly just create our own kind of expense schedule with the exception of looking backwards to see maybe utilities or insurance rates, things along those lines. But we generally have a sense and how we're going to run the place. Also may not have mentioned payroll, but of course, your payroll is your one of your biggest expenses too. So, you want to think about how am I staffing this? What's the whole and payroll budget? What are my utilities going to cost? What is my repairs and maintenance? And, and so on, and create that, you know, nice budget for you to be able to stick to and measure. And usually, we want to re-budget every 12 months or so, if not more often than that, to be able to kind of stay on top of any changes that we're seeing throughout the year. And that can usually be a seasonal budget where you may have higher utility costs in the summer and lower in the winter, depending on where you're located in the country, that kind of thing.
Beyond that, revenue management. Revenue management consists of being able to set and optimize the income of your property. And you have really your main income, which comes from your site rentals, and then you have your other income, which comes from all of your ancillary services or streams of income that you may offer, from gas sales to store sales to kayak rentals to arcade games to laundry machines and things along those lines. But for the most part, when it comes to revenue management, I want to just focus on actual income that comes from your sites.
The first question you need to ask yourself is, am I going to run this campground with majority seasonals or majority short-term sites? And if you decide seasonals, you might have a lower income per site, but that also might be a more stable revenue stream that also has lower total expenses to be able to service them. And then if you run it short-term, you might have higher income per site, but it might be a little bit more volatile and seasonal, and it also may have higher expenses that come along with it.
I would start with looking at the competitors and doing a really deep dive of what we call a comp analysis, where you're actually calling all local campgrounds and getting a sense of what are they charging per month, what are they charging for the night, what are they charging for an annual stay, and just seeing how each of the local campgrounds are operating. Building are usually a giant Excel sheet that will give you every campground within a certain mile radius and being able to see kind of what the market's charging. And then look and ask yourself, you know, how does this campground compare with our campground? Does it have similar amenities, better amenities, worse amenities, and trying to find that sweet spot on pricing. And realize that this is more of an art than a science, where you're really going to have to kind of test and measure, especially if you're dealing with short-term, to optimize your revenue. You may want to start with a lower income and just see how you're able to perform with occupancy, and then experiment with, if you raise the income a little bit, how does that impact occupancy to find that sweet spot where you're able to hit your income goals or exceed your income goals and just maximize the potential for the property.
The next crucial piece of this is managing your guest experience and managing guest expectations. So, now that you've built the team that's there to create world-class, let's call it the wow factor, to be able to just create these awesome guest experiences on-site for the team, now it's just time to be able to manage that and monitor what their experience is from the first time that they hear about you all the way through the time that they become a repeat customer and fall in love with the campground and are coming back year after year.
Guest experience starts with how are they hearing about you in the first place? So, that's where generally having a really great online presence becomes powerful because they'll either hear about it from word of mouth or they'll hear about it from one of their searches, and that usually comes in through Google or Facebook and so on. So, maybe you have some good ads that open up the guest eyes to the awesome campground that you have. Then they click, they go visit your website, and on your website, hopefully, you have a very nice, well-laid-out webpage that includes everything from rate information to site information to maps to pictures to get them enthusiastic enough to click "Book Now" or to be able to call in and speak with your call center.
And at that point, once you've called into the call center, make sure that those people are trained because about 50% of people still book through call centers, and about 50% just book directly on. And sometimes people call in before they go ahead and book online. So, a lot of people will call in still, and you want to make sure that you have a well-trained person to be able to answer the phone, to be able to greet them with the hospitality that you want, and to be able to answer all their questions and help them make it as easy as possible to be able to book their reservation.
Once they've booked, they will show up to the campground, and you want to make sure that they're greeted by either a campground manager or front desk host. And sometimes they'll even escort them to their site, depending on how busy you are or, you know, depending on the campground that you're at, or sometimes just there to be able to be really clear and explicit as to how to get around, and they kind of point them in the general direction they need to go to be able to go and, and check in. But that's really important because these people have driven usually like two hours at a time to be able to get to your campground in the first place, and the last thing they want is to be a mess or be really complicated when they're trying to find their site and, you know, park their RV.
So, once you've got them on the campground, then the key there is just, you know, pouring in with good guest events, being there to be able to handle any customer service issues. You do these things right, then they will start to leave good reviews on Google or Facebook or TripAdvisor or Campground Reviews or so many different platforms now to direct them towards. But definitely, if you see someone having a good time, you want to teach your managers to be able to give them the nudge because a lot of times people only leave bad reviews unless they're really prompted to leave a good review. So, you want to make sure that if you're seeing people have quality experiences, you're giving them that, you know, gentle nudge to, you know, encourage them to leave a nice review. And that tends to do really well because then that helps spread the word-of-mouth advertisement and get further buy-in from people that are finding you online.
The next piece is establishing a solid foundation. Now, just like setting a budget, this is something that you really should be focused on during your due diligence period. And hopefully, you've been able to come up with not just an operating budget, but what we also call a capital improvement budget, which is the money that you're going to reinvest into the campground to be able to bring it up to modern-day standards and being able to, you know, therefore improve the guest experience, improve the revenue, improve the valuation of the campground over time.
So, establishing a solid foundation really comes down to just having the right infrastructure in place. And that starts first with just from a legal and zoning perspective, ensuring that the campground is properly zoned. And this isn't just someone that built a nice campground illegally and does not have the rights to be able to operate this piece of land as a campground. So, we always start with calling Planning and Zoning as one of the very first due diligence items on our action list to be able to confirm that this is either currently zoned as a campground, or in many cases, it's a campground that is located on land that has a different type of zoning, but it has been grandfathered in and has full permission to be able to continue to run and operate as a campground for the foreseeable future. So, starting with planning and zoning and getting that confirmation from them, and usually trying to get something in writing from them, is the starting point to make sure that you have the right bones and infrastructure to be able to build on.
And then you're also going to go ahead and order all of your third-party reports, consisting of your survey to be sure you have clear, proper boundary lines and a full understanding on what rights you have to the land, and also your Phase One report to ensure that there's no environmental issues or concerns that would put you at risk of being able to continue to operate the property.
So, once you've gotten through sort of your physical or your zoning due diligence and your third-party reports, then it's going into the actual campground itself and just asking yourself, what are the bones like here? What are the utility systems like? What condition are they in? Do you have private or public water sewer? And if they're private, what kind of private systems are they? Do they have enough bandwidth? Have they been maintained properly over time? And what are the biggest risks that you might face if you have an old wastewater treatment plant that has been really poorly maintained over time? That can be hundreds of thousands of dollars of unforeseen risk if you did not account for that during your due diligence.
Now, if it's a newer treatment plant and it's been properly maintained, that still may pose some risk, but it might be something you can get much more comfortable with and, and just know that you're gonna have to set aside time, set aside money over time to be able to continue with the proper maintenance and possible repairs down the road for the treatment plant. So, understanding your utility systems, understanding septic systems, and, and, you know, public and public sewer, and how, you know, each of those carry their own different risks. We probably do a whole episode on that alone. And then with the water sewer side, or with the water side of things, is it well water or is it city water? And just understanding the differences there and making sure you're getting the proper inspections done.
Now, once you've gotten comfortable with the utility systems and you've built it into your budget to be able to maintain any private utilities over the course of time, if you have private utilities, then it's looking at the size of the sites, the layout of the sites. Right now, big sites are in style, and they're not going anywhere. It's only really getting bigger over time. You're seeing new developments go anywhere with sites as big as 40 feet wide and 80 feet long, and everyone likes these nice big sites that like pull-throughs. And a lot of these older campgrounds were not built for that. They were built for much, much smaller campers, and they just may not support the older RVs, or they may not support the newer RVs because they're just too small of sites. And you might have to run it differently. Maybe it makes it a better spot for long-term sites because they're not really, it's not really built to make it easy to get in and out of with nice big pull-throughs like the modern campgrounds often have.
You also want to look at the utility structure, infrastructure. If you also want to look at the electric infrastructure. So, is the electric? Usually, in today's world, the sites that are going to do best with occupancy are going to have both 30 and 50 amp hookups. So, you want to make sure that you understand what is 30/50 currently, and then what might be outdated and just have 30 amp hookups, and make sure you can budget to be able to upgrade the electric system because generally, we recommend having every site with 30 and 50 amp to be able to accommodate the maximum number of campers that have interest in staying at your campground.
And then also, some, some older campgrounds have partial hookups. So, they might have water and electric but no sewer. And that might be something you learn to live with, or might be something you feel like you have to budget to be able to add sewer to be able to support the, the demand from the campers in that area. It really depends on how you're going to run the place. So, usually water or sewer or electric water are make for better short-term sites because people that are going to stay there for weeks at a time or longer are going to want to have direct sewer access and not going to want to unplug and go use the dump station every few days to be able to clear out their septic tank. So, understanding the utilities from end to end is is crucial. So, that's what goes into sort of the bones of a property, and that's why it's so important to really make sure that you feel comfortable with the physical infrastructure.
So, that pretty much summarizes a lot of the key points for what goes into effective operations, property management, and asset management of an RV campground. What I would stress is that operations is a business of constant firefighting, right? This is a business where it's not when, if something goes wrong, it's when something goes wrong. And just know that being in this business is constant gut punches and surprises and calls in the middle of the night, and that's what you're signing up for going into property management. There's no way around it, and it's just inevitable that there's going to be constant unforeseen challenges and things that will arise. And that's, you know, that's the fun of it, right? So, just know that that's all part of the game, and that's why you always want to have excess reserves set aside to be able to deal with unforeseen circumstances, and you want to be able to think on your feet and know going into this, this is not an easy, like, this is not a super passive business by any means whatsoever. This is an active business. But done right, it can produce great cash flow, it can be a great long-term investment. So, you really have to enjoy what you do. I, I really do stress that. Having managed several different types of real estate, RV campgrounds are the most fun business, but they're also the most work. So, you have to know that this is an operations-intensive asset class in the real estate investment world. But it's so rewarding to see raving reviews coming through, to see pictures of all these events and people having just phenomenal experiences and showing up year after year based because of the culture you've been able to build on and off-site throughout your company. So, just know that there is definitely light at the end of the tunnel having on this right, and it can be extremely rewarding, both from a financial standpoint and from an impact standpoint, but not easy.
So, definitely would love to hear what we may have left out on this video. If you have any other, you know, fun stories that you've run into on the operations side, or if you have any topics you'd like us to dig deeper, be sure to go ahead and throw it in the comments. And if you like this video, it means the world for us to just, you know, like, share, and subscribe, as we, we definitely want to continue to pour into the, the RV campground community. And for those of you that are listening through the podcast, be sure to like, share, and subscribe the show, as we, we definitely appreciate you listening in, tuning in. Let us know your feedback, and we will see you next week.
Thanks for tuning in to another episode of Equity Insights, hosted by our team at The Equity Group. You can find recordings of all shows along with our opt-in form to set up a call and view future investment offerings on our company website, TheEquityGroup.com. Also listed in the show notes.
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