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How To Start An RV Park In 2023

How To Start An RV Park In 2023

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How To Start An RV Park In 2023

How To Start An RV Park

The open road, the freedom of travel, and the comfort of home on wheels have made recreational vehicle (RV) camping a popular way to vacation, whether for a weekend getaway or a road trip across the country.  Opening an RV park can be a great opportunity, allowing you to capitalize on the growing popularity of RV travel and provide a valued service to RVers.

But how do you get started?

In this guide, we will walk you through the ins and outs of starting your own RV park and answer common questions so you can start taking the first steps with confidence.

Business Overview

An RV park is a campground that offers temporary overnight accommodation for recreational vehicles such as motorhomes, travel trailers, and camper vans. RV parks are typically located near tourist attractions, beaches, or other outdoor activities. As the owner and operator of an RV park, your business would involve providing RV sites for rent, along with amenities like electrical and water hookups, restrooms and showers, Wi-Fi, barbecue areas, pools, dump stations, recreation areas, and other guest services.

Industry Summary

The RV park industry has grown steadily along with the increasing popularity of RV travel. According to a 2023 report from IBISWorld, the industry generated $8.1 billion in revenue during 2022 from the 1.4 million RV sites that are available.

The RV lifestyle appeals to retirees and younger travelers alike, drawn by the freedom and flexibility it offers. With RV ownership rates climbing, RV travel is projected to continue growing in the coming years, fueling ongoing demand for RV parks and campgrounds.

There are some trends to be aware of that are shaping the RV park industry:

  • Increased demand for luxury amenities: Many RVers are looking for upscale amenities like pools, fitness centers, and full-service convenience stores. Parks catering to the high-end of the market are seeing growth.
  • Focus on the RV experience: New and upgraded parks are designed with the RVer in mind, paying close attention to site layout, landscaping, and convenience.
  • Glamping additions: Some RV parks now offer “glamping” options like fully outfitted rental units, cabins, and yurts to appeal to non-RV travelers.
  • Booming RV travel: The COVID-19 pandemic drove increased RV purchases and road travel. As more Americans embrace RVing, demand for parks and campgrounds has skyrocketed.

Steps To Start An RV Park

Starting an RV park requires more than just a love of the outdoors; it also takes extensive planning, regulatory compliance, and substantial capital investment. With the right guidance, however, anyone can start a successful RV park business. The following steps will help prepare you with the knowledge and insights needed to navigate this journey.

Step 1: Assess the Market

Even with the rise of staycations, camping, and outdoor recreation, there is certainly a demand for RV parks. But before you invest in a new business, it’s important to do your research. Let’s highlight some of the key strategies that will help you research and establish the demand for a new RV park.

Analyze the location

Analyzing the location of a potential RV park is typically at the core of researching the potential demand. It’s important to consider both the local and regional markets when assessing whether there are enough potential customers to make starting a new RV Park worthwhile.

When looking at the market, it’s important to look at factors like population density and nearby attractions that could attract customers. For example, if you are looking at a rural region with a sparse population but lots of outdoor activities or tourist attractions nearby, this could be a good indication that an RV park would be successful. On the other hand, if you are looking at an urban area where land is expensive and has limited attractions for travelers, this might not be a viable option.

Additionally, look into any events or festivals happening in neighboring towns that may bring more people into your area who may be interested in staying at your RV park during their visit.

Finally, don’t forget about basic infrastructure considerations such as the availability of water and electricity for hookups and access to roads for easy transportation by customers coming from farther distances. Taking all these factors into consideration will help you assess whether there is adequate demand to make starting an RV park feasible or not.

Investigate the competition

When researching the competition for a new RV park, it is important to understand what they offer and how they compare to your own services. Start by researching what type of amenities and services already exist in the area, such as full hook-up sites, Wi-Fi connections, showers, laundry facilities, and more. Be sure to also look into pricing structure, policies on pets and visitors, discounts or specials offered throughout the year, customer reviews online, and any other factors that could set you apart from the competition.

Consider seasonal factors

Another consideration when researching the market is seasonal factors. While some areas may have year-round demand for RV parks, others may have more seasonal patterns that can affect your business. It is important to understand how temperature and weather conditions can influence how long people stay in a particular area and whether or not they decide to take a vacation there at all. In addition, consider if local attractions are only available during certain times of the year or if they become popular at specific periods.

For example, if you’re looking to open an RV park near a beach destination, you’ll need to assess the number of tourists who come in the summer months versus those who come in the winter months. You should also look into the number of people who are likely to stay for multiple nights during different seasons, as this could affect your pricing structure. Additionally, consider any holidays or special events that might be popular times for visitors, as these could be great opportunities to bring in more customers by offering discounts or special packages.

Step 2: Write a Business Plan

the next step in creating a successful RV park is putting together a business plan. A business plan is a roadmap that outlines how you will start, grow, and maintain your RV park. Perhaps most important to a lot of people is that it will be needed to secure financing or investment.

While all of the sections of a business plan are important, there are a few that are especially significant to a lender or investor. The ones I recommend focusing on include:

Market analysis: In this section, you’ll need to provide a thorough understanding of the RV park market. Start by researching your competition, including their location, services, and prices. You should also research your target market, including their demographics, interests, and key factors that might influence their decision to choose your RV park over others.

Show how your park fits into this landscape and what sets it apart from competitors. Lenders will look at this section to understand whether there is a viable market for your business and if your business has a competitive edge.

Management team: The management team section provides an overview of the key individuals driving the business. This includes the owners and any other significant members who will contribute to the business’s success. Lenders often consider the strength, experience, and qualifications of the management team when making their decision. This is because the people behind the business are typically responsible for its success or failure. Show that your team has the necessary skills, experience, and dedication to make the RV park successful.

Location: The location of your RV park is another important factor lenders will consider. In this section, explain why your chosen location is ideal for an RV park. Discuss factors like accessibility, proximity to tourist attractions, and the demand for RV parks in the area. Lenders will want to see that you’ve chosen a location that will attract customers and contribute to the business’s profitability.

Financial projections: The financial projections section is one of the most scrutinized parts of a business plan. Here, you need to provide detailed and realistic projections for revenue, expenses, and profitability. Lenders will examine this section closely to determine whether your business is financially viable and capable of repaying the loan. Ensure these figures are reasonable, well-researched, and show a path to profitability.

Related: How to write a business plan

Step 3: Secure Funding

Starting an RV park requires a significant capital investment, but there are various funding options available to help you get started. Each funding option has unique advantages and disadvantages, so it’s important to research and evaluate which option best suits your business needs.

Bank loans: Banks and credit unions are the most common sources of traditional financing. You can apply for a business loan by submitting a business plan, financial statements, and other necessary documents. Lenders will generally require a minimum personal investment of 15% of the total project, a good credit score, and collateral to secure the loan. Don’t hesitate to shop around and compare interest rates and terms with different banks to find the best financing option.

SBA loan guarantees: If the bank sees a loan as too risky, they may want to get a Small Business Administration (SBA) loan guarantee. These programs are designed to take some of the risk off of the bank and help small businesses obtain financing, including RV parks. The SBA programs include 7(a) loans, which are general-purpose loans, and 504 loans, which can be used to purchase fixed assets such as land, buildings, and equipment. The interest rates on an SBA will be slightly higher than the bank but will often qualify for longer repayment terms.

Investors: Investment partners can be another source of funding to provide capital for your RV park. These are typically individuals with higher net worth who exchange ownership equity for a share of profits. However, securing such investment can be challenging, as these investors may have specific criteria for the businesses they support, and it typically takes some time to secure.

Related: Finding the money to start a business

Step 4: Acquire the Location & Begin Buildout

At this juncture, the spotlight is on acquiring the perfect plot for your RV park. Before any ink hits paper to finalize a property deal, ensure your funding is in place because securing funding can sometimes face unexpected delays or even disappointments. Confirming that the chosen land is zoned appropriately for an RV park to avoid future regulatory hurdles is super important as well.

The layout of your park should be designed for the convenience of your guests. Be sure to consider the varying types of RVs and trailers your guests will have. Some guests will have large motorhomes and 5th wheels requiring pull-through spots, while others will have smaller trailers and popups. Consider having different-sized spaces so that there’s enough space for them to maneuver and park comfortably. Tent campers will need some space too, so don’t forget about them.

The facilities must be clean, and perhaps most importantly, keeping clean restrooms and showers is critical to customers returning to your park.

As the internet becomes more important in today’s connected world, offering good wifi is a requirement for many RVers. Even though this is an additional cost to set up, customers will be more than willing to pay extra for it.

Step 5: Register the Business

The next major step to tackle when starting your RV park is a big step and ensuring that your business is properly registered and legal. The process can vary by state, but there are some key steps that all entrepreneurs should follow.

Choosing a business structure: The first decision you need to make is determining the kind of business structure that will suit your RV park best. The common types are:

  1. Sole proprietorship: This is the simplest structure and involves just one individual who owns and runs the business. It’s easy to start up and has lower costs, but it doesn’t offer any liability protection.
  2. General partnership: This involves two or more people running the business together. It allows for shared responsibility but also comes with shared liability.
  3. Corporation: A corporation is a separate legal entity owned by shareholders. This means the corporation itself, not the shareholders that own it, is held legally liable for the actions and debts the business incurs.
  4. Limited Liability Company (LLC): This option combines the features of corporations and sole proprietorships, offering protection for the owner’s personal assets while maintaining operational flexibility.

When it comes to RV parks, there isn’t a one-size-fits-all answer, as the best structure often depends on individual circumstances. However, many choose the LLC route for its balance of protection and ease of operation.

Related: Comparison of business structures

Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.

Some popular LLC formation services include:

IncFile - $0 plus state fees & free registered agent for 1 year!

ZenBusiness - Best for beginners. $0 plus state fees & free registered agent for 1 year!

Northwest - Best privacy protection. $39 plus state fees & free registered agent for 1 year!

Business name registration: After registering the business structure, you may need to register your business name. This process will vary depending on what business structure you pick. Sole proprietors and partnerships will often be required to register a “Doing Business As” (DBA), while corporations and LLCs register with the state during the formation process.

During this time, it’s also a good idea to check if the name you want is available as a web domain, even if you’re not ready to set up a website yet.

Related: Finding a domain name for your business

Obtain business licenses and permits: Licensing requirements for an RV park can vary depending on the state and local jurisdiction. Generally, you will need a campground or RV park license, which is issued by the state or local health department. For example, in Michigan, a license from the Michigan Department of Environment, Great Lakes, and Energy is required to operate a campground offering five or more campsites or recreational units. In Arizona, you may need permits related to water and sewage management. In Illinois, you need to submit an application for a Campground Construction Permit and comply with the Campground Licensing and Recreational Area Act.

Other permits and licenses may also be required, such as zoning permits, environmental permits, and food service licenses if you plan to offer food on the premises. It is essential to consult with your local government and health department to determine the specific licenses and permits required for your RV park.

In addition to obtaining the RV park specific requirements, there are also general local, state, and federal business registrations, such as a business license, sales tax permit, and an Employer Identification Number that may be needed.

Related: Common business licenses, permits, and registrations by state

Step 6: Hire Staff

If you will be hiring staff for your RV park, there are a number of legal requirements and processes to know about as an employer. Generally, RV parks hire a range of staff, including front desk personnel to welcome guests, maintenance crews to keep the facility running smoothly, and sometimes event coordinators to arrange community activities.

Requirements vary by state, but here is an overview of what a new employer should know about:

Employer Identification Number: An EIN is a number assigned by the IRS to identify your business for tax purposes. If you don’t have one yet, you can apply for an EIN through the IRS website.

Employment eligibility verification: You must verify that each new employee is legally eligible to work in the United States.

State reporting: Each state has its own reporting requirements for new hires. Typically, this involves sending a report to a designated state agency with information about each new employee.

Worker’s compensation: Most states require businesses to carry worker’s compensation insurance, which covers medical costs and lost wages if an employee gets hurt or sick due to their job.

Labor laws: You’ll also need to familiarize yourself with federal and state labor laws, which cover areas like minimum wage, overtime, breaks, recordkeeping, and poster requirements.

In addition to these requirements, it’s important to budget for payroll expenses. Payroll taxes typically add about 15% on top of salaries, so be sure to factor this into your financial planning.

Step 7: Create a Marketing Strategy

The next task is to come up with a marketing strategy to let people know about your RV campground. First off, determine the type of guests you’ll attract. To do this, you need to consider who your target audience will be. Are they traveling families? Retirees? Adventure seekers? Each group has different needs and expectations when it comes to RV parks, so understanding who you plan to serve will help inform your business decisions moving forward.

Once you have determined who your business will serve, you can use this to tailor a strategy to get them interested in coming to your facility. Since many people will be coming from outside of your area, having a strong online presence is important. This could include a professional-looking website with pictures of the facility, rates, contact information, and online booking.

Claiming your business on relevant online directories, such as Google Business Profile, TripAdvisor, Good Sam, RV Parky, and others, enhances your online presence and makes it easier for potential guests to find you. Social media platforms like Instagram and Facebook can help you build a community around your park, showcasing its best features and engaging with your audience.

You can also investigate competitors’ marketing strategies – from their website design to social media presence. Research how they drive traffic to their business through search engine optimization (SEO) tactics or paid ads. Taking note of these strategies can help you create a unique approach tailored to your own targeted audience.

You can also collaborate with RV dealerships, tourist-related businesses, or local events or attractions that draw people to the area – like festivals or outdoor activities, to co-market your RV park and reach a wider audience.

Related: Low-cost ideas to market a new business

Step 8: Prepare to Open!

You’re almost there, but before opening your RV park, there are probably a few more loose ends to take care of. While everyone’s needs may differ, here is a list of common areas to look at:

Business insurance: Acquire business insurance to protect your investment from liabilities and unforeseen events. This should cover property damage, liability, workers’ compensation, and possibly income interruption. This should cover property damage, liability, workers’ compensation, and possibly income interruption. We recommend getting at least three insurance quotes, including local insurance agents and online providers like Coverwallet or Hiscox to get the best coverage and price.

Bookkeeping: Setting up a bookkeeping system to track income and expenses is necessary. It will help track your revenues and expenses and help manage your tax reporting. Consider hiring an accountant or using software like Wave Accounting (FREE) or Quickbooks to keep your finances in order.

Contracts: Develop contracts that outline the rules and regulations of the park, rental agreements, and vendor contracts for supplies and services. RocketLawyer and Law Depot have free and inexpensive templates that may be helpful.

Bank account: Open a bank account dedicated to your business to manage your finances efficiently and to keep your business and personal finances separate.

Management software: Invest in reliable management or Point of Sale software to streamline operations. Consider options such as RMS Cloud, Campground Master, or CampSpot for managing reservations, payments, and other essential functions.

Pricing: Set competitive pricing for your park. Conduct market research to understand the prevailing rates and offer value-added services to differentiate your park from others.

Industry associations: Consider joining associations such as the National Association of RV Parks & Campgrounds (ARVC), the Resort and Commercial Recreation Association (RCRA), or a local RV business group. These organizations can offer networking opportunities, industry insights, and resources to help your business flourish.

Grand opening: Prepare for a memorable grand opening. Make sure your RV park is in pristine condition, and consider organizing events or offers to attract your first customers.

Greg’s Tip: Learn from successful RV parks: Visit other parks from outside of your area and talk to the owners to learn more about the business, tips, and take notes on their design, amenities, and management.

Greg's Business Tip

Common Questions When Starting An RV Park

How much does it cost to start an RV park?

Starting an RV park is a significant undertaking, and costs can vary greatly based on a wide array of factors. Generally, most new RV parks will spend anywhere from $100,000 to over $2 million to get your RV park off the ground.

Let’s break down the primary costs involved:

Location: Purchasing land is one of the most substantial costs you will incur. Prices vary dramatically based on the location, size, and amenities of the land and can range between $1,000 to $10,000 per acre.

With land prices likely being the largest expense and the price per acre varying significantly depending on the location and access to utilities, be sure you have ample space. If funds are tight and you can’t purchase all of the property needed, consider making an agreement with the landowner to give you the first right of refusal if someone else wants to buy the adjoining property.

Infrastructure and setup: Before opening, you will need to develop the land which includes installing electrical hookups, water, and sewage systems. You may also want to set up recreational areas, laundry facilities, and restrooms. The costs for setting up the essential infrastructure can range from $15,000 to $50,000 per site.

Equipment: You would also need to purchase various equipment for maintaining the park, such as lawn mowers, cleaning supplies, and possibly a golf cart for transportation around the park. Set aside a budget of around $10,000 to $30,000 for initial equipment purchases.

Insurance: It is a good idea to have a good insurance policy to protect your business. The initial premium for a basic policy can be about $5,000 to $15,000, which would cover property and general liability insurance.

Marketing: To attract guests to your new RV park, you will need to invest in marketing. Building a website, creating brochures, and online advertising are some methods you might consider. Initially, earmark around $5,000 to $10,000 for initial marketing activities.

Business setup: Entity formation and any legal expenses, such as obtaining the necessary permits and licenses, complying with zoning laws, and drafting contracts, will add to your startup costs. While these costs can vary widely, it’s essential to factor $2,000 to $5,000 into your budget.

Bear in mind these figures are estimates, and actual costs can vary based on a wide range of factors. It’s crucial to conduct thorough research and financial planning specific to your situation and location.

How profitable is an RV park?

The profitability of an RV park can vary greatly based on factors such as location, size, amenities, and occupancy rates. However, industry statistics and trends can provide a helpful starting point for estimating potential profit. Here’s a simple formula commonly used in the RV park industry to estimate potential profit:

Revenue = (Number of Sites) x (Average Daily Rate) x (Occupancy Rate) x (Operating Days)

Assuming an RV park with 100 sites, an average daily rate of $40, an occupancy rate of 70%, and operating 365 days a year:
Revenue = (100 sites) x ($40) x (0.70) x (365 days) = $1,022,000

The total number of operating days will vary a lot by area. To get a solid estimate, consider contacting your local Tourism board.

Expenses in the RV park industry are typically around 30-40% of revenue. This includes costs like utilities, maintenance, staff salaries, insurance, marketing, and property taxes. If we assume expenses at 35% of revenue,
Expenses = ($1,022,000) x (0.35) = $357,700

So, the estimated annual profit would be:
Profit = Revenue – Expenses = $1,022,000 – $357,700 = $664,300

What skills are helpful in running an RV park?

Running an RV park involves a variety of skills to ensure smooth operations and guest satisfaction. Here are some key skills that can prove helpful:

Business management skills: This includes understanding the financial aspects, marketing, and strategic planning. Being able to manage your business effectively is crucial to running a profitable RV park.

Marketing skills: Promoting your RV park through various channels, including social media, can help attract more guests. Marketing skills are essential for increasing visibility and attracting potential customers.

People skills: As an RV park owner, you’ll be interacting with a wide variety of people. Good people skills can help in dealing with guests and other staff members effectively.

Problem-solving skills: Running an RV park comes with its fair share of challenges. Being able to solve problems quickly and efficiently is a valuable skill.

Technical skills: Understanding the technical aspects of running an RV park, such as managing sewer systems or using campground reservation software, can make operations run more smoothly.

Communication skills: Effective communication is key in any business. You’ll need to communicate with guests, staff, and other stakeholders.

Hospitality skills: Providing a welcoming and comfortable environment for your guests is crucial. Hospitality skills can help ensure that guests have a positive experience at your park.

RV knowledge: Basic knowledge about RVs and related equipment can be helpful, especially when it comes to understanding the needs of your guests.

What is the NAICS code for an RV park?

The NAICS code for a rv park is 721211, which is classified under Recreational Vehicle Parks and Campgrounds.

The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.

Related: What is a NAICS code and how to find yours

How To Start An RV Park In 2023

How To Start An RV Park In 2023

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