6 Steps To Assessing Demand For Your Outdoor Hospitality Project
Whether you’re buying an existing campground or building a glamping resort (or anything in between) - take these steps first.
Estimated time to read: 5 minutes
TL;DR:
If you've ever come across a piece of land and thought, "This would be a great spot for a campground/glamping resort," this How To Guide is for you.
Take these 6 steps first:
Step 1: Analyze the local weather at weatherspark.com.
Step 2: Find and analyze local tourism data.
Step 3: Identify local attractions & events.
Step 4: Study nearby National and State Park visitation data.
Step 5: Analyze local and regional transportation.
Step 6: Analyze local and regional demographics.
The steps below work for evaluating existing outdoor hospitality properties or new developments, as they simply provide a foundation upon which you can begin to forecast seasonality, occupancy, and revenue (deeper analysis that will be covered in future newsletters).
You may be thinking, “If I am looking at an existing outdoor hospitality property with revenue in place, doesn’t historical revenue/performance prove out the demand?”
My answer to that: “Yes and no.”
While historical revenue is a great indicator of potential future revenue, you may find that the property has a long-term customer base that is loyal to the current owner. They may leave when you come in and make changes.
Are you positive that those customers will remain?
Performing the 6 steps below is the first step in fully evaluating a location. It will give you the confidence to explore purchasing or developing a campground or glamping resort further.
Without properly assessing customer demand, you may be risking a lot of time and money on a location that doesn't attract enough customers.
Here are 6 steps to assessing demand in a particular location:
Step 1: Analyze the local weather at weatherspark.com
Unfortunately, one of the top indicators for demand at an outdoor hospitality property is one you HAVE NO CONTROL OVER - the weather. Analyzing year-round weather at your location will help you project the seasonality of revenue in the future.
Freezing temps in the winter? While the industry is seeing an uptick in winter camping, it usually makes sense to shut down RV and tent camping during harsh winters, because of lacking demand.
You may find that there is some demand for winter-friendly lodging units, which is a strategy we’re pursuing in NY.
On the flip side, a very hot and/or humid summer can stifle demand as well.
A very rainy season can also put a real damper on your annual revenue if you have significant transient (nightly) RV and tent camping revenue. If you have long-term renters like monthly, seasonal, or annual RVers, you’re typically avoiding volatility in your revenue due to weather.
Check out Sensible Weather, a firm that offers “Weather Guarantees” for campers and is working to mitigate the risk of lost revenue from bad weather.
Step 2: Find and analyze local tourism data
I’ve found that a local or state tourism organization is the best source for tourism data. You’ll have to do some research to see what is out there for your area.
These are the questions you’re looking to answer:
Why do people come to the area?
How many people travel there annually?
What times of year do they come?
Is there any reason to believe there could be a change in the trend?
These answers will further add context around potential seasonality and volatility of revenue.
Step 3: Identify local attractions & events
This is closely related to the tourism exercise above, but in this step, you get more granular with your research.
Identify and study the top 10-12 attractions and events in the area. Searching your local city on tripadvisor.com is a great way to find these attractions and events.
Your goal is to find out:
How many people visit these attractions and attend these events?
Could a big chunk of your projected revenue be tied to a few weekends or special events?
Is the visitation to these attractions steady or seasonal?
Step 4: Gather and study nearby National and State Park visitation data
National and State Parks are a wonderful draw for private campgrounds.
Identify the closest ones (ideally under an hour away). Study the visitation data trend over the last several years. Look at the monthly data, too. Each state has its own source for data, and National Park data can be found here.
This visitation data will add further context around how to forecast occupancy & seasonality for your site.
Step 5: Analyze local and regional transportation
Look at:
How do/would guests get there?
How easy is it for them to get to the area and its attractions?
Are there major airports nearby? Train stations? Highways?
How close is your location to the interstate?
If more than 15-20 min drive from an interstate, your location may not be able to attract many nightly stays and could depend on extended stays.
Step 6: Analyze local and regional demographics
You can find this data for free at the Bureau of Labor Statistics website. Study the following:
Population data & growth trends within a 1, 2, and 3-hr driving radius.
How does the median household income of this population compare to the national and state average? How has it been trending?
What are median home values and housing vacancies in this area? How are they trending?
These data points will give you an idea if local residents will visit your property, or if you need to draw people from a larger nearby city.
A growing population is always a good indicator. A declining population may not necessarily indicate a bad location - which is fairly common with rural tourist destinations.