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News for November 28, 2022

Camping vs. Economic Uncertainty: Campgrounds Can Stay Resilient in 2023, Says KOA CFO

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As 2023 approaches in a couple of months, economic uncertainty is one of the industry’s biggest fears for campground owners. 

However, Chris Scheer, CFO of Kampgrounds of America (KOA), said during the 2022 KOA Convention & Expo Opening General Session that “camping is resilient,” especially in an economic recession.

“I like to call the competition is the camping industry versus the economy,” he said. “Inflation is a big topic right now. You’ve heard of the news, [and] you feel it at your campgrounds. Things are expensive, the labor market—it’s been tough for a couple of years.”

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Chris Scheer, CFO of Kampgrounds of America (KOA), during the 2022 KOA Convention & Expo Opening General Session.

Scheer said that inflation has grown to 9.1% in June, the highest growth in over 40 years, leading to necessities like social security benefits rising to 8.7% in 2023. This uncertainty of increasing costs for food, fuel prices, and other items could lead to what he described as an “unemployment pandemic.”

“We’re down to 3.5% unemployment right now. It’s the lowest rate of unemployment in 50 years,” he said. “It’s a supply and demand problem, right? There’s a huge demand for people, but not enough people.”

In 2021, payroll costs leveled with the prices for every other business need, and it allowed them to hire more people, but the supply of potential workers was low, according to Scheer. 

He hopes that in 2023, businesses find more people, but they must expect payroll costs to go up. They need to properly manage staffing levels since paying them, as well as the utility prices, are going to rise.

“Our utility consultant tells us [that] in 2023, utilities would be up five to 35% depending on where you are in the country. Property taxes, the value of your property, have gone up in the last couple of years. People see the camping industry. It’s booming. Your county, your jurisdictions, they’re going to notice your property tax assessments might go up,” he said.

Scheer said the good news for the camping industry is that travelers prefer to camp during an economic downturn way more than any other form of travel, based on KOA’s research team.

He said that during an economic downturn, 62% of travelers view camping as a more viable option during a down economy, finding ways to camp regardless of the difficult situation.

“A lot of people out there are camping—a lot of new campers. Still, camping is resilient. I heard a term the other day: camping is recession-resilient,” he said. “I don’t know if we’re recession-proof, but we’re definitely resilient. 66% of campers will continue camping in 2023.”

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Based on their research team, 34% of travelers generally place camping as their formal means of travel. Scheer said the campgrounds are well-positioned in the industry, despite the economic uncertainty.

He further added that people are already making reservations for next summer based on their data. He advises the owners to practice revenue management as their net worth is currently high.

“People have money. If they want to camp, they’ll pay. Keep that rate going. Keep up with inflation. Worry about rate management and revenue management. Set those rates early. Watch your occupancy [rise] as the new year goes on,” Scheer said. 

Scheer said that compared to 2021, the camping industry is at a 9.5% average daily rate, while inflation is at 7.7%, showing that they are ahead of the problem.

“Since 2019, our rate growth as a system was 26.3%. Sounds amazing, right? It’s a big jump. In the meantime, inflation has gone up 15.6% in the same period of time, so we’re good. We’re ahead by 10% or 11%. That’s great. That’s the inflation and the popularity of the camping industry,” he said.

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Hi, you might find this article from Modern Campground interesting: Camping vs. Economic Uncertainty: Campgrounds Can Stay Resilient in 2023, Says KOA CFO! This is the link: https://moderncampground.com/usa/florida/camping-vs-economic-uncertainty-campgrounds-can-stay-resilient-in-2023-says-koa-cfo/