The History of Kampgrounds of America, Inc. (KOA)
How 1 location in 1962 turned into nearly 500 locations today.
Estimated time to read: 5 minutes
TL;DR:
Founding - Dave Drum and partners started the company with a single location in Billings, MT in 1962.
Early Years - Drum franchised and built a sales team to travel across the country and aggressively open locations.
Going public, then private - KOA IPO’d in 1969 and then hit a rough patch in the 70’s. The stock price plummeted, and a major shareholder took the opportunity to take the company private in 1979.
The 80’s to today, and the current portfolio - Under private ownership, KOA saw huge expansion to over 900 locations in the 80’s. Now the company seems to be focused on building its corporate-owned portfolio, and you can guess why when you look at the numbers below.
1. Founding
The original Kampgrounds of America, Inc. campground is in Billings, MT and was founded by Dave Drum in 1962.
The price to camp at that time was $1.75 per night.
Drum owned some land on the Yellowstone River in Billings, MT. His original business plan was not to build a campground but to opportunistically time the acquisition of land before the construction of I-90.
He hoped the government would come knocking to purchase the land to construct the interstate.
The highway ended up being constructed a little bit farther north than originally thought, and the government had no interest in his land.
As he was sitting on the land, he got the idea to build a campground after seeing so many travelers come through the town on their way to the Seattle Worlds Fair.
Drum partnered with local businessmen to build the campground, and the first season was successful, with over 500 reservations.
One of Drum's partners, John Wallace, suggested sending a survey to the 500+ customers to gauge interest and sentiment. The overwhelming response convinced both that they were onto something big.
Kampgrounds of America, Inc. was officially formed in 1963.
Fun fact: “Kamprounds of America” starts with a “K” because the founders were unable to copyright anything with the word “Campground” - considered an “everyday word.”
2. Early Years
Drum set up a team of salespeople to secure franchise locations west of the Mississippi River. The first franchise location was sold to a Cody, WY lawyer, and by the end of 1964, there were 7 locations.
In 1965, they began selling franchises east of the Mississippi.
As the franchise system grew, KOA became known for providing consistent, reliable accommodations - hot showers and bathrooms.
3. Going public, then private
In 1969, KOA went public. By 1970, there were 262 franchises!
The oil embargoes of the 70's slowed growth and tanked the company's stock price.
Oscar Tang, an NYC financier and a major shareholder of KOA, bought the company and took it private in 1979.
Tang believed in the company's long-term value as the only national chain of campgrounds.
4. The 80’s to today, and the current portfolio
Under Tang’s ownership, KOA expanded to over 900 locations in the 80's, but the number of locations has since shrunk to under 500.
Tang and KOA have focused on growing their corporate-owned portfolio to 49 locations in recent years. KOA adds corporate locations through a right of first refusal provided for in the franchise agreement.
In other words, when an independent KOA franchisee decides to sell, KOA corporate has the right to match any offer. They appear to have systematically grown the corporate portfolio by cherry-picking the best-performing locations.
As of 12/31/23, KOA had 432 franchise locations and 51 corporate-owned locations. Since the beginning of 2021, they’ve added 18 of those corporate-owned locations. When you look at the numbers, you can guess why they seem to be focused on adding to the corporate portfolio.
Franchise vs. Corporate
The franchise portfolio, as of the end of 2023:
432 campgrounds
~50,000 campsites
~116 sites per campground
~$329.4MM revenue
~$6,600 revenue per campsite
~$763k revenue per campground
The corporate portfolio, as of the end of 2023:
51 campgrounds
~10,300 campsites
~202 sites per campground
~$146.1MM revenue
~$14,200 revenue per campsite
~$2.86MM revenue per campground
As you can see, the corporate portfolio generated more than 2x the estimated revenue per campsite and more than 3x the estimated revenue per campground. The corporate campgrounds have more than 1.74x the number of campsites.
Since 2020, the franchise system has lost over 20 franchise locations, and the corporate portfolio has grown by 19 locations.
In the coming weeks, we’ll explore some of KOA’s recent transactions and the company's new glamping brand, Terramor Outdoor Resort.
Look out for some audio and video content coming soon, as well.
That is all for this week in Outdoor Hospitality! Thanks so much for reading.