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KOA’s O’Rourke: When the Economy Goes South, People Turn to the Outdoors

Despite headwinds that threaten to slow down the growth of the outdoor hospitality industry, Kampground of America’s (KOA) President and CEO Toby O’Rourke maintains a positive outlook on what 2023 holds for the campground industry, saying that even when the economy goes south, people turn to the outdoors.

“Overall, camping is extremely resilient—it’s proven that time and again,” O’Rourke today said at the kick-off of the virtual 2023 Canadian Outdoor Hospitality Conference and Expo (COHCE), organized by the Canadian Camping & RV Council (CCRVC).

In her keynote session, the executive covered some factors that could impact the industry this year by hindering the sector’s ability to go full throttle and accelerate as external aspects drag and slow it down.

The economy, lasting COVID-19 effects, labor market issues, site availability, and meeting camper expectations are some of the major headwinds that threaten the growth rate of the industry in 2023, per O’Rourke.

In the Canadian setting, the economy has experienced slowing growth which is expected to continue or even stall in the first half of the year. As businesses in the outdoor hospitality industry, she said it is important to consider the impact that increasing inflation or rising interest rates could have on leisure spending.

But what do the numbers say?

The Economy

Citing a recent KOA study, the executive delved into how 66% of Canadian Campers said inflation had an impact on their camping and travel last year. 

While the number did not come as a surprise as inflation was at its highest point in the heart of the summer season last year, she said it still impacts what people can spend on travel which can directly affect even the RV industry.

“I definitely believe that the economy is a formidable headwind for the RV industry,” she said, noting that RV shipments last year dropped 15% and are expected to continue to fall into 2023 (21% decrease forecast versus 2022).

Looking on the bright side, O’Rourke said that with headwinds also come tailwinds that the campground industry can capitalize on.

Given the number of RV owners that exist, KOA’s president believes that Canadian campgrounds will continue to be occupied as camping proves to be a cheaper option for travel. According to KOA, 44% of Canadian RV owners said they will take the same number of trips or even more during an economic downturn.

“They’ve made that investment. They’re going to get out and use their RV, and I think that’s really important that we keep in mind,” she said.

An advantage to the campground and RV park industry is campers’ view on camping’s affordability compared to other vacation options. The KOA study revealed that 47% of Canadian Campers see camping as a travel option that is lighter on the wallet.

Even as airplanes are back in the air, flying is still significantly more expensive compared to the same period in 2022. Because of this, more people are opting for land trips instead, with 24% of Canadian campers stating they would cancel planned trips and replace them with camping if economic conditions continue to be unfavorable.

Another tailwind that can help the industry propel forward despite economic headwinds is how camping can provide comfort in tough times, O’Rourke said.

“It provides a sense of normalcy that people will seek out. So if they’re stressed because of the economy, [or] what’s going on with their jobs, a lot of people will look for things that evoke this spirit of nostalgia. And camping fits that bill,” she said.

She further noted that camping offers more flexibility for consumers, such as skipping long lines in airports or avoiding the risk of flight cancelation. Therefore, O’Rourke said that the tailwinds are things that campground owners can tap into to really appeal to people when offering camping in 2023.

Lasting COVID-19 Effects

When COVID-19 came, it didn’t just disrupt the U.S. economy, it also impacted the world—and Canada was no exception. During such time, businesses suffered losses as borders remain closed to prevent the spread of the virus.

Fast forward to 2023, borders have been reopened for a while now, yet some parks are yet to welcome returning American travelers due to confusion. KOA data shows that there has been a decrease in the number of American campers visiting Canadian parks (13% in 2019 versus 9% in 2022).

“I think it’s important we do think about what sort of lasting effects you might have from COVID that’s still impacting our business,” O’Rourke noted.

Per the KOA chief executive officer, there still might be some hesitation or confusion about crossing the border. She then disclosed that 29% of American campers said they had concerns about crossing the border because of COVID or didn’t know enough about the rules and regulations. 

In order to address this issue, O’Rourke urged the industry to post up-to-date information through messaging, social media, media, and engagement with campers.

“[T]his could be a good opportunity for the industry at large to really just get out and say, ‘hey, we’re open for business!”

One such way is through campaigns, in which O’Rourke underscored the importance of tapping into the benefits of camping mentioned earlier in order to resonate with campers well.

Earlier in the session, the industry leader mentioned that some elements might seem like headwinds but can easily switch and powerfully turn into tailwinds that can propel the industry forward. Playing right off of COVID, she said there are now larger amounts of campers, with the addition of COVID campers.

In Canada, 15 million households consider themselves campers. Putting the number in percentage, that’s 66% of the country’s total population.

During the pandemic, people also sought refuge in the great outdoors as social distancing allowed them to go outside and travel. The “new normal” after this tremendous growth, per O’Rourke, is that camping and outdoor hospitality have joined the table of ranks of travel and tourism.

Camping is now part of the options when people choose to take a vacation. When going to destinations, travelers are also considering campgrounds now among some hotel accommodation choices. Canadians, in 2022, increased their camping trips, with the particular outdoor recreation activity comprising 32% of their total leisure travel. 

Overall, over half a million people camped for the first time in Canada last year. Why?

“There’s staffing and service issues [and] there [are] lingering effects from the pandemic. And so people are turning to camping to escape that or to make their travel easier. And I think that will definitely continue,” said O’Rourke.

How the industry can leverage itself from those mentioned is by taking the themes and putting them into marketing messaging, she said.

For example, KOA asks campers what they look for when choosing a campground. Most of the time, the feedback they receive points out a lot of interest in unique experiences such as natural events. 

“If you are in the path of the eclipse, for example, or any sort of solar event, butterfly migrations,” she said. “So tapping into the thing that’s unique about your area really will resonate with travelers,” she added.

O’Rourke also suggests strongly considering the impact of proper rate management and keeping ahead of inflation.

“Make sure you’re not cutting yourself short,” she said.

Tackling increasing rates, O’Rourke said that finding the right balance is key and that travelers expect increases, so it is critical for businesses to balance their margins.

When all is said and done, the business leader said that there will naturally be a drop in the number of COVID campers. KOA estimates about 27% of Canadian campers fall from those that started.

Some of the “fickleness”, KOA President & CEO Toby O’Rourke said, is tied to service. 

Numbers show that only 29% of new campers in 2022 said they loved their camping experience, while almost half (48%) said it was just okay, not very good, or awful. 

Handling service issues call for education and training that focuses on the soft skills of customer service from guest communications before their arrival to engagement with campers during check-in, dealing with difficult guests, and more.

“[T]here’s a lot of great content online to help develop your service philosophy and then I would really work to infuse that into your staff because we have to work together to ensure that these new campers have a great experience so we can continue to retain them into this activity,” said O’Rourke.

Also, there might be a lot of uncertainty for new campers, so campground owners have a role to fill by providing education such as campground etiquette or how to engage on the campground. 

Labor Market Issues

The labor market is something that O’Rourke sees to continue to be a significant headwind this year. 

Citing a recent study by the Angus Reed Institute, she said that there has been an 18% decline in the number of workers in the Canadian service sector over the past two and a half years. 

Of the number, 22% were among 18 to 24-year-olds, which is the usual age bracket of workers at campgrounds.

“I really view this though, as a big opportunity for us. We have to reframe how we attract talent of all ages. We can appeal to those who already have experience in hospitality that are reassessing right now and have a service mindset, but we can offer them the outdoors and that’s a really big thing that we can sell,” O’Rourke suggested.

“We’re giving fresh air, campfires, more you’d unique ways and magical ways to engage with guests. And I think that really does appeal to people that are wanting to leave the traditional hospitality segment,” she added.

Site Availability

Another headwind for the outdoor hospitality industry is site availability. Campgrounds have been full, occupancy is high, and availability is becoming an issue for campers, per O’Rourke.

She infers that this has led to a five-point drop in camper stay at private campgrounds last year, leading to a rise in dispersed camping in privately owned land, state parks, and peer-to-peer listings. 

To combat this, she reinforced the value of communications and promoting when sites are available.

“I know mid-week shoulder seasons are good times to get campers on the campground if your weekends are full. And it’s educating and reframing how people think about when they can take those vacations,” she said.

There is also building more campgrounds and adding more sites. As owners do so, they must capture the vote of municipalities to give them permits and permission. When pitching, she said owners can present what camping provides to society, to communities, individuals, and families. 

The power of outdoor hospitality, she said, serves a tangible economic impact that owners can reference. In Canada, people spent an average of $131 a day in their local communities when they camped—a 30% increase versus the previous year. 

“Overall, we’re sure that the total amount spent in local economies was 7.6 billion last year by campers, and that was a huge increase over the year before,” O’Rourke said. However, she also said that development costs are rising along with everything else.

“And so there’s a lot of new campgrounds being built that might slow based on what continues to happen with prices.”

Owners deciding not to build can instead focus their investment on improving the quality of their existing sites by transitioning those to higher-producing ones. 

While it doesn’t solve the availability challenge, O’Rourke said it produces higher revenue for parks.

Meeting Camper Expectations

The last headwind O’Rourke discussed was meeting camper expectations as it can be financially straining.

“This can be challenging, particularly in the business we’re in. And you have to continue to keep up. We’re an ageless, timeless activity that has a newer, younger, tech-savvy generation and we’re trying to keep up with their expectations,” she said.

Still, she believes it poses to be a tailwind for the industry if campgrounds can keep the momentum going and bring the new campers back to camp and encourage future generations to explore the outdoors and camp.

According to KOA, 64% of Canadian campers are Gen Z (20%) or millennials (46%). Meanwhile, the boomer generation now only makes up 11% of Canadian campers.

In providing service to the new generation of campers, O’Rourke remarked on the importance of WiFi and learning ahead to accommodate electric vehicles (EVs).

“I think WiFi needs to be wholeheartedly embraced and addressed across the board in the industry. This is definitely a mind shift for us. It’s not an amenity. This is not an extra perk at your campground. It has to be thought of as a utility, and it has to be invested in properly, just like water, sewer, and electric,” she said.

While it might be extremely difficult for some operators, she said it is expected by campers now. In fact, 33%  expect to be able to stream with multiple devices and be connected while they’re camping. 

Working remotely has also driven the demand for better-quality WiFi. Half of Canadian campers in 2022 said they work while they’re traveling, up 85% from where it was in 2021, according to O’Rourke.

On the plus side, this allows WiFi campers to camp 9.3 days a year versus just over five days the year before. However, the president stressed the importance of WiFi quality, saying that only 34% of campers ranked campground WiFi quality as excellent.

Another area to consider when meeting camper expectations is EV. 

“I think it’s going to become more of a requirement, more of a request, if you will,” O’Rourke said, noting that campers are showing interest in EVs.

For Canadian campers, 31% said they’re likely to purchase an EV over the next two to three years, and 30% said they’re likely going to be purchasing EV that would be their towing vehicle when camping.

As a result, 40% of campers in KOA’s study said they expect EV chargers to be available in a general space.

The increased interest in EVs presents an opportunity for the industry to provide education to campers, said O’Rourke.

“We’ve definitely dug in here the past year working with RV partners, just trying to understand everything we can about EV and then educate our campgrounds about it,” she said.

“But then we have to educate the camper. And this is where think we as an industry can do a lot of work together,” she added, pointing out the opportunity to educate campers on how they can properly charge on campgrounds, what they should or shouldn’t do, what they can look for, and how they can find out where charging is available.

The Outdoor Hospitality Industry = Recession-Proof

Closing her keynote session, Toby O’Rourke mentioned that discussing headwinds coming into the industry is important to do at the beginning of the year. She also said that what’s most important is understanding what tailwinds the outdoor hospitality industry has to its advantage and how owners can propel their businesses forward.

She believes that the biggest tailwinds for this year are the strong new camper base and growing interest in the outdoors.

“That’s not going away, and we can continue to tap into that. I feel really good about what we’re seeing so far. Really strong outlook,” she declared.

“Camping is extremely resilient. We’ve seen that time and again. We’re timeless. People turn to camping in times of economic downturn. They turn to camping for stress relief. And these are things that we need to keep capitalizing on as we head into these next couple of years.”

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PaigeTwilight
PaigeTwilight
May 3, 2024 10:41 pm

Isn’t it interesting how more people are turning to outdoor activities during tough economic times? It’s great to see the camping industry embracing eco-friendly practices and tech to enhance our experiences. What do you think about this trend towards sustainable camping and digital advancements in the industry?

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Hi, you might find this article from Modern Campground interesting: KOA's O’Rourke: When the Economy Goes South, People Turn to the Outdoors! This is the link: https://moderncampground.com/canada/koas-orourke-when-the-economy-goes-south-people-turn-to-the-outdoors/