The outdoor recreation industry is an economic powerhouse, employing over six million Americans and infusing both local and national economies with $646 billion dollars in outdoor recreation spending each year, according to the Outdoor Industry Association's 2012 Recreation Economy Report. Often under the radar, outdoor recreation is big business.
In this occasional Schmarder University series, Our Business Is Fun, we'll meet an assortment of outdoor recreation industry leaders, learn about how their businesses serve the industry and its consumers, and talk trends in outdoor recreation.
Small business owner Randy Hendrickson is the president and founder of Horizon RV Resorts and Horizon RV Resort Development, offering a soup to nuts approach -- from feasibility studies to third-party management services -- to outdoor hospitality property owners and developers. Knowledgeable, expert and authentic, Randy has been serving this industry for seventeen successful years and shares his insight on this growing sector of the hospitality industry.
Evanne Schmarder: Randy, RV parks and campgrounds are not what immediately come to mind when someone mentions property management. How did you find your way into this industry?
Randy Hendrickson: I got started in property management in the 1990's, working with a large, multi-family management firm in central Texas. In 1995, a friend approached me, said he was thinking of buying an RV resort, and asked if I could manage it. I'd been fascinated with the idea of outdoor recreation for a number of years since my parents were RVers so I took a closer look and I was surprised. The deeper I dug the more I was smitten. What I found was an absolutely vibrant, exciting industry just on the cusp of growing into something big.
I ended up leaving the property management firm to work for the owner of the RV resort and later moved on to work for a company that managed resorts all across the country. In 2003 I formed Horizon RV Resorts and, with our spectacular team, we have developed the business in a number of successful directions. So, all said and done, I've been in the RV business for seventeen years and have never been more enthused. It's been my bread and butter, my livelihood, my passion, for nearly two decades.
ES: Give us an idea of the size of your business and the services you provide?
RH: Sure. We have three areas of focus, the first being Horizon RV Resorts, a third-party property management and consulting firm for RV resorts, parks and campgrounds. We currently provide management services to twelve properties in seven states equating to over 2,300 rentable units and total gross revenue of $7 million annually. We're not massive, nor do we intend to be, instead we've carved out and are serving a niche.
We're very fortunate in that we've never been busier. We are also nearly alone, because it's a tough business. If you've not operated an RV resort it is very easy to lump what we do as a management company into apartment or mobile home management, but this is a very, very different animal. In this industry there's an implicit understanding that this is a really difficult asset to manage. A great deal of expertise and experience is required to do it well, and the time commitment is enormous. It is a high service/low margin business and that excludes a lot of people from entering this arena, but it has served us well.
Second, Horizon RV Resort Development offers feasibility studies, site design, and construction management. It was a natural progression for us. Our team has over 30 years' experience and here again we are fortunate to be very busy with this division. Between Horizon RV Resorts and Horizon RV Resort Development we can handle literally every aspect in a property's life cycle, from feasibility and construction for new properties, to turnkey management when they open for business, and even assist with selling properties. Offering this mix of services, we are unique to the industry.
Lastly, we work with RVC Outdoor Destinations to identify acquisition targets. RVC is a major player in the industry, is fully funded and debt free, and aggressively growing.
I should note that according to the Outdoor Recreation Industry, annual consumer spending for outdoor recreation is nearly twice as large as consumer spending in the the pharmaceutical industry -- it's an incredibly compelling market. These three related lines of business, from acquisitions to feasibility of new development to management of new or existing properties, are keeping us quite busy, for which we are grateful.
ES: Since they are both lodging products, how do you see the comparison between RV properties and hotels?
RH: On a social level there's a bright line between the two. In the hotel world, guests are not inclined to knock on doors and ask other patrons where they stayed last, where they are headed next, and share experiences. In the RV world, our guests are much more likely to engage one another in conversation and rest assured, your reputation is quickly and easily passed around. The proverbial knocking on another's door is the equivalent to sitting outside and striking up a conversation with a passerby. This is a potent difference between hotel properties and us.
On a more institutional level, hotels have more solid data while ours is still fragmented. Reliable data has been very difficult to come by and we know that's an issue, but this is improving very quickly and ultimately, better data helps all of us, from individual owners to institutional or franchised operations.
Hotels also have more recognizable brands, and guest expectations/experiences are pretty clearly defined. When considering a Motel 6, Ritz Carlton or any other hotel brand stay, the guest has a reasonable expectation of their experience. We also have great brands in our industry of course, KOA being the largest and best known, but we don't yet have the same brand identification where the guest experience is as clearly defined. The more data, more clearly defined brands, and better segmentation of our product, the better the guest experience generally. We're gaining strides as an alternative to hotels as the product offering improves.
However, all that being said, it is important to note that while I think these things are an inevitable part of the evolution of the industry, the beauty of the outdoor hospitality industry lies in the uniqueness of well-run, stand-alone, individual properties with their own unique character. While brands will be more ubiquitous, it is the overall elevation in quality of all RV resorts that makes this industry very exciting to be a small part of. In fact, I would make the case that although brands will have a larger prominence in the future, the overall health of the industry will continue to depend on individual operators providing great experiences to the consumer.
ES: RV resorts, parks and campgrounds are offering several other lodging options that are more than just a patch of dirt to pitch a tent, right?
RH: Yes, though it's a paradigm shift that's evolving over time. Parks are now offering complimentary lodging products such as park models, cottages, yurts, and glamping -- all part of an overall lodging landscape. Additionally, this wider range of options creates an attractive revenue model for property owners. By expanding to a much broader customer base, everybody wins. The biggest challenge has been, and remains, availability of capital to make these improvements. In aggregate I believe a great many owners would love to offer an enhanced level of products and services to their guests, and fortunately many are.
ES: What's your role, as a small business, with the local community?
RH: We are big believers in local level relationships. We see the convention and visitor bureaus (CVBs) and Chambers of Commerce as betterments of travel as a whole, including RV and camping businesses. We are cognizant to reach out on a local level to engage the CVBs and chambers and share the vision about what we are and what we do. Working with these local level relationships, we are championing the positive economic impact of what we have to offer to the local community.
ES: What have you found to be the general CVB and chamber perceptions of the RV and camping industry?
RH: It's been increasingly positive. Many years ago we began approaching these organizations wanting to participate, asking how we could become involved. While they were not dismissive, we found we were pigeonholed, not in the mainstream, perhaps a lower tier of hospitality product. That's changed dramatically. The industry has grown and become more dynamic and attractive, offering upscale accommodations and amenity packages. I'd say we are every bit as exciting and vital as hotel products or other types of accommodations and are almost on equal footing, and getting better all the time.
ES: How have you combated a less than positive image of RV properties among the public?
RH: Quite simply, the Internet has been a wonderful tool for disseminating info and leveling the playing field. In the early 1990s it was more of a hand-to-hand combat for perception. The Internet has allowed us to tell a great story about an alternative to a traditional hotel stay, and the benefits of spreading the word in this fashion has been beyond calculation as we elevate awareness of the product.
That's not to say that some properties couldn't use an uplift in quality. There's always going to be a variance of quality products in every hospitality segment, including hotels -- some are great, some are not. This is true in our sector of the industry as well. But fortunately, as our ability to tell our story and present our product has evolved, so too has the overall quality of outdoor hospitality product. To a large degree, I don't think we, as an industry, need to apologize or explain ourselves anymore. We combat the former negative images of our product with better quality and by serving the needs of travelers better than we ever have.
ES: What's been your biggest success?
RH: That's a great question, and the answer will probably sound contrived, but I can assure you I mean it with all my heart -- every day that I'm fortunate enough to work with our great team is to me the very definition of success. Beverly Johnson is co-founder of Horizon RV Resorts and we've worked together for 13 years, and without her there would be no Horizon. Scott Foos is our executive vice president and one of the most talented individuals I have ever known, bar none. David Simms and Tony Caputo head Horizon RV Resort Development, and the level of care and commitment in their work is beyond reproach. And beyond the executive team, our resort managers and staff are the best in the business and work hard every day to produce amazing results. It isn't hyperbole to say that categorically, without every person on this great team, there would be no Horizon and you would be interviewing someone else. For me, our biggest success and my greatest joy is knowing that every day, we strive for great things not because it's what we do, but because it's who we are, collectively. I'm just lucky they put up with me!
I'm still naïve enough to believe the 'Golden Rule' is alive and well. I'd like to think it's possible to be passionate and principled and take a position because it's right, not popular. Our company's philosophy is doing business right. This might sound old fashioned but we believe doing the right thing and governing ourselves respectfully with clients, vendors, guests and staff is paramount to doing business properly. If we were more aggressive, more cut throat we could be a much larger company but that's never been the first order of business. Functioning in a good framework of solid relationships is much more important to us. That's the paradigm we always aspire to, so every day that our team strives towards these goals, that to me is the very definition of success.
ES: And a big fail?
RH: We're far from perfect. I'm glad to report we've not had a cataclysmic fail, though we've tried things that have not worked -- that's business. Any time you are creative or innovative you take a chance that something is not going to work and you are going to miss from time to time. We're fairly obsessed with avoiding miscues of course, but when it happens we evaluate to a grueling level, vocalize, own it, learn from it, and take corrective measures. Every time we go through that we emerge stronger, more capable, more agile, and better equipped to succeed going forward. We would rather not have to do this often of course, but any time we fall short the end result is a shift toward positive results in the future.
ES: Can you name a tech-driven business-building tool you've used and would recommend?
RH: LinkedIn groups. LinkedIn is a great tool allowing business owners and operators to make connections that may not have otherwise been made. It's been a very explosive platform over the past few years providing lively, illuminating, thought-provoking conversation all across the spectrum. I find it very valuable in my business and have started four groups, now upwards of 1600 members.
The discussions in those groups shed light on topics important to all of us in the outdoor hospitality industry. Certainly, there are a lot of lurkers but that's part of the landscape and not everyone wants to chime in, and that is absolutely fine and completely understandable -- but ultimately, if even one person is able to extract one piece of information or one contact, that is beneficial, then the endeavor is valuable.
ES: Last question, Randy. Should the hotel side of the hospitality industry see the outdoor hospitality sector as competition?
RH: Increasingly, hotels must understand that we are here to play, and compete for consumers that they may have formerly thought were squarely 'theirs.' That is not to say we compete directly in all cases, because we are still different products. However, the lines that once separated us are blurring. With the increasing availability of park models, cottages, yurts, and glamping options, there's an interesting intersection taking place between RV resorts, parks and campgrounds and traditional hotel accommodations. Many properties offer restaurants, catering, banquet facilities and are able to compete for convention and corporate 'retreat' business.
Hotels must -- or should -- pay attention to the fact we have alternative lodging options. We offer a different, and arguably better, guest experience in many cases. We're not a threat to their livelihood per se but we're real, we're here, and we will compete as we further blur the distinctions between hotel and outdoor hospitality options. It's a great time to be in this industry, and I've never been more energized. As an industry our best days are clearly in front of us, and we are getting stronger every day.
Like this interview? Click on the links to learn more about Randy and Horizon RV Resorts, Horizon RV Resort Development, and the associated LinkedIn groups - RV Park Biz, RV Resort Development, RV Park Buyers and Sellers, and RV Park Job Zone.