Every site is an income producing source and each RV Park site should be analyzed to make sure that you are maximizing the income that space produces. Many reservation systems provide tools that make this examination process easy to understand. Read through the example below to gain a better understanding of the importance of your RV Park valuation.
RV Park Valuation Example
Let’s say you have 100 sites in your RV park and have determined that a 50/50 ratio between seasonal sites and overnight sites suites your park. The best approach in this example is to determine how much each site makes in order to establish the overall value of your site.
Site by site analysis:
Site #1 is a seasonal site that produces $2250 per season.
Site #2 is an overnight site that generates $40 per night on a weekend and $35 per night otherwise.
A typical season includes May, June, July, August and September and averages to 153 days of opportunity. All other days before and after this window of opportunity should be considered bonus days! Now, let’s assume you are full every weekend. This gives you 22 weekends in this scenario or 44 days.
- 44 Days X $40 = $1760
- 20% of the week days are also booked:
- So 153 days – 44 days = 109 remaining days X 20% occupancy = 22 days X $35 = $770
Final outcome: $1760 + $770 = $2530 per overnight site
In this example, we are analyzing what each overnight site should produce. This means the seasonal rate for site #1 should be increased to $2530 per season based on 50 sites picking up $280 per site per season ($2530 – $2250 = $280)
With a 10% Cap Rate basis 280 X 50 sites = $14,000 more income X 10 = $140,000 valuation increase to your park!
Additionally, park owners need to take their RV park’s ancillary income (bar/food/supplies,etc.) into account. This is often determined on a site to site basis in order to quantify whether seasonal or transient visitors make more purchases. Typically seasonal guests provide more of their own supplies and require less from the rv park stores. However, seasonal guests may also spend more time in our bars.
A great tip that some owners suggest is giving away gift certificates for weeknight stays at local fundraising events. Not only does this make you look good, it also helps fill vacant sites during the week and increase ancillary income in the bar/restaurant/store area.
Call John Jaszewski with Campgrounds4sale.com at 507-450-5626 for more detailed information on this site analysis!