Feasibility Guide for New RV Park Developments in the U.S.

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Introduction

Developing a new RV park requires careful feasibility planning to satisfy both developers and lenders. This guide outlines a structured approach to evaluating new RV park projects, covering critical site selection factors, regulatory hurdles, industry challenges, and financial benchmarks. It aims to help developers identify viable locations and design profitable parks, while lenders get the insight needed to assess project risks and returns. Each section provides data-driven criteria – from location and climate considerations to typical occupancy rates, operating margins, and ROI metrics – to support sound decision-making in new RV park development.

Site Planning & Selection Factors

Choosing the right site is paramount. Key planning factors include:

Location & Accessibility: Favor sites near population centers or major tourist draws and with easy highway access. Parks visible from well-traveled roads and within a short drive of cities or attractions enjoy stronger demand. Proximity to natural features (e.g. national parks, lakes, beaches) or urban attractions can significantly boost occupancy. At the same time, ensure practical access for large RVs – wide roads, adequate turning radii, and nearby fuel and grocery services for guest convenience. A balance between a scenic setting and accessibility is ideal. Community context also matters: an area supportive of tourism is helpful, whereas a community hostile to campgrounds may pose challenges.
Climate & Seasonality: Evaluate the regional climate’s impact on operating season. Parks in northern or high-altitude locations may only operate during warmer months, as colder climates see near-zero occupancy in winter. In contrast, Sunbelt regions (e.g. Florida, Arizona) allow year-round usage and can attract winter “snowbird” campers. Align the site’s climate with your target season – a great summer location might sit idle in winter, affecting annual revenue. Consider how weather patterns (hurricane zones, wildfire risk, etc.) could disrupt operations in peak season, since an unusually bad season (e.g. heavy rains or smoke) can significantly impact revenue.
Natural Features & Surroundings: Leverage appealing surroundings to draw customers. Sites adjacent to natural attractions (beaches, lakes, mountains) or recreation areas are inherently attractive to RV travelers. Scenic views and outdoor amenities can justify higher rates. Conversely, be wary of negative surroundings – noisy industrial neighbors or highways too close to campsites can deter guests. Ideally, the site offers a pleasant environment that complements the outdoor lifestyle, enhancing the guest experience.
Utilities & Infrastructure: Confirm the feasibility and cost of utility access early. Determine if the site can support necessary hookups: electrical grid access (or cost to extend power lines), water supply (municipal connection or drilling wells), and sewage disposal (city sewer tie-in or space for septic systems). Remote locations without existing utilities can still work but will incur substantial costs to develop wells, septic fields, and bring in electricity. High-speed internet is increasingly considered a “must-have” utility as well, especially for remote-working guests, so plan for broadband installation in the infrastructure budget. Also assess physical site characteristics like terrain and drainage – enough flat acreage for sites and roads, and no floodplain or erosion issues. An otherwise attractive location may prove infeasible if utility access or land topography is unsuitable.
Transportation & Access: Excellent transportation access is essential. Ideally, the site lies within a few miles of an interstate or major highway for easy RV ingress/egress. Ensure the entrance can accommodate large rigs (adequate turning lane, wide gate) and that internal roads are designed for heavy vehicles (loop roads or spurs that prevent dead-ends, with durable gravel or pavement). Sufficient signage and visibility from main routes can help capture passing travelers. Additionally, being within reasonable drive time of a metro area can expand the customer base – many RV park guests are weekenders from nearby cities, so a site 1–2 hours from a large population center can see strong demand. Easy transportation access not only attracts customers but also simplifies construction, maintenance, and emergency services access in the long run.

Regulatory & Permitting Hurdles

Navigating regulations is often one of the biggest hurdles in new RV park development. Key regulatory and permitting challenges include:

Zoning & Land Use Approvals: Verify that local zoning allows for a campground/RV park, or be prepared to seek a rezoning or special use permit. Many municipalities require specific campground zoning designations or conditional-use permits. The approval process can be lengthy and typically involves public hearings – which may introduce local opposition. For example, some jurisdictions impose limits on RV park density or even maximum stay durations (to prevent year-round residency). Engaging the planning department early and securing at least preliminary zoning clearance is critical. Zoning hurdles have stalled many promising projects, so include realistic timelines and costs for zoning approvals, impact fees, and any required hearings. A community averse to new campgrounds can leverage zoning processes to delay or block a project, so gauge local sentiment in advance.
Environmental Permitting: Assess environmental constraints on the site and budget time for necessary permits. If the land contains wetlands, protected wildlife habitat, or is in a floodplain, developers may need environmental impact studies and permits from agencies like the Army Corps of Engineers. Clearing a wooded site might trigger forestry or endangered species reviews. Even absent special habitats, any significant land development usually requires a construction stormwater permit and erosion control plan. Local environmental reviews (e.g. California’s CEQA process) can be stringent and time-consuming. In one example, opponents of a lakeside RV park in Minnesota forced an Environmental Assessment Worksheet, delaying the project by months. Developers should conduct environmental due diligence early and, if needed, hire consultants to navigate the permitting process. Failure to plan for environmental compliance can lead to costly delays or even project denials.
Utility Access & Health Codes: Plan for permits related to water, sewer, and other utilities. County health departments often govern potable water and wastewater systems for campgrounds. If the park will use well water or a septic system, approvals for well drilling and septic design are required. Many states also mandate a campground license or annual inspection to ensure health and safety standards are met. Utility providers might need to grant permission or easements to extend lines to the site. For instance, hooking into a municipal sewer may require a capacity review and a formal agreement with the town. If on-site propane sales or fuel storage are planned, additional licenses will be needed. In short, securing utility connections can be as challenging as securing the land: factor in the time to obtain well permits, septic permits, electrical hook-ups, and any special operational licenses. All these must be in place before opening and often before lenders will release construction funds.

Why New RV Park Development Has Been Slow

Despite growing demand for RV sites, new development has historically been limited. Several industry factors help explain the slow pace of new RV park construction:

Fragmented, Mom-and-Pop Market: The RV park industry is highly fragmented, with the majority of parks owned by small independent operators. Over 75% of U.S. RV parks are mom-and-pop businesses, and fewer than 10% are part of large corporate chains. This fragmentation means there have been relatively few large-scale developers building new parks, and less institutional capital driving new construction. In past decades, many investors overlooked RV parks in favor of more mainstream real estate assets, keeping new supply growth modest. Only recently have some REITs and consolidators begun acquiring or developing parks, but the sector remains dominated by older existing parks. The lack of big players and limited industry consolidation has contributed to a slow trickle of new park openings.
Local Opposition (NIMBYism): New campground proposals often face “Not In My Backyard” opposition from nearby residents. Neighbors may raise concerns about traffic, noise, environmental impacts, or property values, leading to contentious public hearings. This local resistance can result in added studies (traffic impact analyses, environmental reviews) or political pressure on officials to deny permits. Even when approved, developers might spend extra time and money mitigating community concerns (e.g. adding buffers or reducing site density). The perception that RV parks will attract undesirable activity or hurt home values fuels opposition, despite evidence to the contrary in many cases. For developers, overcoming local objections can prolong the timeline significantly. Many new projects are delayed or shelved because the community approval risk is too high. Engaging in early outreach and highlighting the economic benefits (tourism dollars, jobs) may help, but local pushback remains a key barrier slowing development.
High Capital Intensity: Building a modern RV park from the ground up requires substantial upfront investment, which can deter development. Land costs in desirable areas have risen, and suitable large parcels near popular destinations can be expensive. Beyond land, infrastructure costs for a 100-site park (roads, pads, utilities, buildings) often run into the millions of dollars. For example, installing full utility hookups for each site (electric, water, sewer) plus building amenities (bathhouses, clubhouses, pools) can cost hundreds of thousands on top of land acquisition. These high capital requirements mean developers must either have significant equity or obtain financing for a project that may not turn profitable for a few years. Lenders historically viewed campground development as niche and risky, often requiring strong feasibility studies or higher equity contributions. The combination of expensive development and cautious financing has made new projects difficult to get off the ground. Many investors instead chose to buy existing parks (often at lower per-site cost than building new). Only when projected returns clearly outweigh the costs will new construction make sense – and achieving that can be challenging given the moderate income per site (see ROI benchmarks below).
Regulatory and Site Challenges: Aside from the above, the complex web of regulations (zoning, environmental, building codes) adds risk and delay to new developments. In high-demand regions, stringent zoning and environmental rules have kept new supply growth very low. For instance, California’s tough permitting environment resulted in relatively few new parks in recent years, even as demand surges, leading to persistent waitlists at existing campgrounds. In other areas, simply finding suitable land is a hurdle – large tracts with the right location and no environmental constraints are limited. Collectively, these barriers to entry (regulatory hurdles, land scarcity, and community resistance) have benefited incumbents by keeping competition down, but also explain why new RV parks are comparatively rare and slow to materialize despite strong market demand.

ROI Benchmarks and Financial Performance

For any new RV park project, developers and lenders must crunch the numbers to ensure the investment is sound. Proprietary loan analytics data and industry surveys provide useful benchmarks on occupancy, revenues, costs, and returns that can guide feasibility assessments:

Table: Typical RV Park Performance Benchmarks (U.S.)

Metric (Annual)	Typical Benchmark
Average Occupancy Rate	~50–70% of capacity (stabilized park).
Peak Season Occupancy	Near 100% at summer/holiday peak in popular areas.
Operating Expense Ratio	~50–70% of gross revenue.
EBITDA/Profit Margin	~14% of revenue (industry average net margin).
Cap Rate (Valuation Yield)	~8–10% target cap rate on stabilized NOI.
Development Cost per Site	Varies widely; often $15k–$50k per site for modern parks.

Sources: Loan Analytics industry data and feasibility studies.

These benchmarks illustrate the financial profile of RV parks. Notably, established parks operate at about 60% average occupancy nationally, with full capacity often reached during peak summer weekends. New parks should not assume 90%+ occupancy year-round – it takes time to build awareness and demand. In fact, a new park might only achieve ~30% occupancy on average in its first year if it’s mostly busy on weekends (e.g. full every weekend translates to ~28% annualized occupancy when weekdays and off-season are counted). A conservative ramp-up projection (spanning 2–3 years to reach target occupancy) is advisable to avoid overestimating revenues.

Revenue Streams: The primary income is site rentals (nightly, weekly, or monthly fees). Nightly rates vary widely by location and amenities (roughly $30 to $100+ per night). Monthly pad rentals for long-term stays typically range from about $300 to $700 per month. Many successful parks use a mix of short-term and long-term guests – for example, dedicating ~70% of sites to nightly/weekly visitors and 30% to monthly or seasonal renters – to balance high nightly rates with stable monthly income. Ancillary revenues provide a boost: camp store sales, equipment rentals, Wi-Fi or cable access fees, laundry and propane sales often contribute an extra 5–15% of total revenue. This diversification can buffer the business during slow periods (e.g. if transient camper traffic dips, long-term renters or on-site cabin rentals can help sustain cash flow). Overall, a mid-sized park (~100 sites) might gross on the order of $1 million to $3+ million annually once stabilized, depending on rates and occupancy mix.

Operating Expenses & Margins: RV parks have an active operating cost structure similar to a hospitality business. Operating expenses usually consume half to two-thirds of revenue, yielding EBITDA margins in the mid-teens. Major expense categories include on-site staffing/management, utilities (electricity, water, trash disposal), maintenance of the grounds and facilities, insurance, property taxes, and marketing. Labor is often the largest single expense – even a modest park needs personnel for guest check-ins, maintenance, and security. Utilities are significant too, as each site’s electric and water usage adds up, especially if included in the rate. Because expenses scale with occupancy to a degree, profit margins tend to stabilize in that ~15% range for many parks. Industry data indicates an average EBITDA margin around 14% of revenue, though efficient operators or high-end resorts can achieve 20–30% margins in some cases. For feasibility, it’s important to benchmark the projected expense ratio against industry norms – if a pro forma assumes only 30% expenses (70% margin), it is likely underestimating costs. Lenders will scrutinize these assumptions, expecting to see expense estimates in line with typical levels.

Capital Costs & ROI: Upfront capital expenditure (CapEx) for new parks is significant. On average, developing a mid-sized RV park from scratch can cost anywhere from a few hundred thousand dollars up to several million, depending on land price and amenity levels. For example, land acquisition might cost $5,000–$30,000 per acre (varying by location), and constructing each RV pad with hookups, a share of road infrastructure, etc., can be several thousand dollars per site. Adding buildings (office, bathhouse, clubhouse) and amenities (pool, playground, landscaping) can push costs higher. It’s not uncommon for a fully developed resort-style RV park to invest $40k or more per site in total development costs when all infrastructure and facilities are included. Given these costs, ROI analysis is critical: developers should compare the project’s stabilized value (based on NOI and prevailing cap rates) to the total development cost to ensure the project is worthwhile. Many investors target an 8–10% capitalization rate on stabilizing NOI. In practical terms, that means if a park is expected to generate $200,000 in annual NOI at stabilization, it might be valued roughly around $2–2.5 million (NOI divided by cap rate). If the project’s all-in cost is significantly above that (say $4 million cost for a $2.5 million value), the feasibility is questionable. A positive development feasibility typically shows a stabilized value at or above the development cost – indicating value creation. This “cost vs. value” check is a key benchmark for lenders; they want to see that the project, once built and stabilized, will appraise for at least its cost, if not substantially more.

Cash Flow and Break-Even: Another critical benchmark is the occupancy or revenue level needed to break even. Feasibility studies should calculate the breakeven occupancy rate – the point at which operating revenue covers all operating costs and debt service. For instance, if a park will have $500,000 in annual operating expenses (excluding depreciation) and an average revenue of $50 per occupied site-night, then roughly 10,000 site-nights per year are needed to break even. In a 100-site park, that equates to about 28 occupied sites per night (out of 100) on average, or a 28% occupancy rate year-round. A project that can break even at a low occupancy (around 30% in this example) has a cushion, whereas one that requires, say, 60% occupancy to break even is far riskier. Lenders typically prefer projects with comfortable breakeven levels and will test the financial model for resilience – e.g. what if occupancy comes in 10% lower than expected? Including sensitivity analyses in the projections (showing how changes in occupancy, rates, or costs affect the bottom line) is considered best practice. It demonstrates that the developer has examined worst-case scenarios and that the project can still service debt under less-than-ideal conditions.

Seasonality, Revenue Volatility & Operating Risks

RV parks are seasonal businesses in many markets, leading to fluctuating revenue and unique operational challenges throughout the year. Both developers and lenders must account for these factors in their feasibility evaluations:

Seasonal Demand Swings: Most parks experience high season vs. off-season cycles. In peak summer months and holiday weekends, occupancy approaches 100% and nightly rates are at their highest due to strong demand. Conversely, in the off-season (winter for northern states, mid-summer in extremely hot regions), occupancy can drop dramatically, sometimes into the single digits for extended periods. This means the annual income is often earned in a relatively short window. For example, a park in the Midwest may generate the bulk of its revenue between May and September, with minimal income in winter. This seasonality creates cash flow volatility – expenses like loan payments and property taxes continue year-round, but revenue is front-loaded into certain months. A rainy summer or early cold snap can materially reduce the year’s performance if it falls during the prime camping season. Lenders will look at whether the operator has a plan to manage these swings (e.g. reserving cash from the high season to cover off-season costs). In warmer climates, seasonality is less extreme but still present (e.g. Florida parks might be busiest in winter with snowbirds, slower in hurricane season). Feasibility studies should model monthly occupancy and revenue to illustrate the seasonal cash flow pattern. This allows stress-testing of worst-case scenarios (such as a bad peak season) and ensures that even during slow months the park can cover critical expenses.
Mitigating Revenue Volatility: Developers can adopt strategies to smooth out revenue. One approach is catering to long-term or year-round occupants: some parks secure seasonal contracts (e.g. retirees who lease sites for the entire winter in Arizona, or for the whole summer in northern resort areas). These longer-term stays provide steady rental income regardless of short-term tourism fluctuations. Another tactic is adding shoulder season attractions – hosting special events, festivals, or offering off-season discounts to draw guests in traditionally slow periods. For instance, an RV park might organize fall harvest events or holiday light displays to attract visitors outside of summer. While such measures may not eliminate seasonality, they can incrementally boost off-peak occupancy. From a lender’s perspective, a project that has plans for year-round revenue streams (or is in a year-round destination) is viewed more favorably. In any case, projections should realistically reflect lower occupancy and possibly discounted rates in off-peak times. A rule of thumb for conservative planning is to assume no revenue for at least 2–3 months of the year (for seasonal closures or very low occupancy) and ensure the business can still meet its fixed obligations during that period.
Operating Expense Structure: Operating costs in RV parks are relatively stable, but some expenses do scale with occupancy. For example, utility costs (electricity, water, propane) will be higher in peak months when more guests are on-site. Seasonal staffing may be needed – parks often hire extra help in summer and scale back in winter. Operators should budget for the full annual cycle, including maintenance projects in the off-season (road repairs, facility upgrades) when the park is less busy. The expense ratio discussed earlier (50–70% of revenue) implicitly accounts for these seasonal variations averaged over a year. Importantly, even when revenue drops to near-zero in the off-season, some expenses persist: basic staff salaries or security, utilities to keep pipes from freezing, insurance premiums, loan interest, etc. It’s wise to have a reserve fund or line of credit to cover off-season cash needs, especially in the first couple of years of a new park when occupancy may be ramping up. Lenders may require a working capital reserve in the loan for this purpose. In terms of volatility, RV parks are somewhat buffered by the ability to adjust costs (e.g. reducing staff in off-season) and by the fact that many guests pre-pay or make reservations in advance, giving some revenue visibility. Nonetheless, the operating risk is higher than a typical year-round apartment building, for instance, so feasibility assessments should highlight the management plan for seasonal swings and include a contingency for unexpected events (e.g. storms, wildfires, fuel price spikes affecting travel). Robust insurance coverage (liability, property, business interruption) is also part of the expense structure and risk mitigation strategy that stakeholders will expect to see addressed.

Feasibility Evaluation Criteria & Benchmarks

When assessing a new RV park development, developers and lenders should apply a rigorous set of criteria and compare project metrics to benchmarks. Below are practical evaluation points to determine a project’s feasibility:

Market Demand & Location Viability: Is there proven demand in this area? Analyze local occupancy rates at comparable parks and the draw of nearby attractions. A feasible project should demonstrate unmet demand – for example, evidence that existing parks in the region run at high occupancy or turn away guests in peak season. Strong tourism traffic counts, rising RV ownership demographics, or a lack of competitors within the market radius are positive indicators. Lenders will expect a market study showing who the target customers are (weekend campers, snowbirds, tourists, etc.) and how the location captures that demand. A rule of thumb is that a new park should ideally serve a high-traffic corridor or a popular destination with year-round or seasonal draws sufficient to fill the park’s sites when open.
Site Suitability & Approvals: Can the land physically and legally support the park? Verify that the site meets the crucial criteria discussed: appropriate zoning (or a clear path to obtain it), no insurmountable environmental constraints, and available utility infrastructure. Feasibility is highest when the land is already entitled for an RV park or campground use, or when local officials show support. Red flags include needing a dramatic zoning change in a community with known opposition, or a site that would require extensive land grading and environmental mitigation. Benchmark metrics can include site size per RV pad (many parks need ~0.25–0.5 acres per site when including roads and common areas) and site coverage ratios – ensure the parcel can comfortably fit the planned number of RV sites plus amenities. Lenders will often require that all key permits (zoning, environmental, utility hookups) are attainable within a reasonable timeframe as a condition of financing, so a feasibility review should detail the steps and timeline to permit the project fully.
Financial Projections & Breakeven Metrics: Do the numbers pencil out under realistic assumptions? The pro forma financials should be scrutinized against industry benchmarks. Key metrics: Breakeven occupancy – e.g. does the park break even at 40–50% occupancy (a comfortable buffer), or does it require a risky 70+% occupancy to cover costs?. Also examine the debt service coverage ratio (DSCR) in the stabilized year; lenders typically want a DSCR of at least ~1.25x, meaning NOI is 25% above debt obligations. If the projected DSCR is thin (or negative in early years), the plan should show how that will be managed (larger equity injection, interest reserve, etc.). Compare the projected EBITDA margin to the ~14% industry average – if the plan assumes a much higher margin, are cost estimates understated? Similarly, check the assumed average daily rate and occupancy against local comps – overly optimistic assumptions are a common pitfall. A conservative feasibility analysis might, for example, model stabilization at 60% occupancy with moderate rates and still show positive returns; if it only works by assuming 90% occupancy or top-tier pricing, it may not be truly feasible. Sensitivity analyses are a must-have benchmark: ensure the model has been tested for interest rate changes, lower occupancy, higher construction costs, etc., and remains viable in those scenarios.
Capital Requirements & ROI: Is the required investment justified by the returns? Compare the total development cost per site to industry norms and to the expected revenue per site. For instance, if development cost per site is $50,000, can each site generate at least, say, $5,000–$6,000 in annual revenue at stabilized levels (which would be a ~10% yield)? Projects where cost per site far exceeds the market value per site (as indicated by recent sales of comparable parks, often in the $15k–$50k per site range) should raise concerns. Lenders will look at the loan-to-value (LTV) on the completed project – typically they may lend up to ~70% of the appraised stabilized value. So if a park will be worth $3 million but cost $4 million to build, financing that gap is difficult. A solid feasibility plan targets a stabilized value >= total cost (for example, build for $3M and the park is worth $4M when stabilized, implying value creation). Additionally, calculate investor returns such as cash-on-cash yield and IRR. Many RV park investors seek IRRs in the mid-teens or higher to compensate for development risk. If the projections only yield, say, a 5% cash return at stabilization, the project might not be attractive unless there are other strategic benefits. Use the benchmark cap rate (8–10%) as a gut check: dividing projected NOI by an 8–10% cap should roughly align with the development cost; if not, reevaluate the plan’s profitability.
Operational Plan & Risk Mitigation: Can the developer execute the plan and manage the park effectively? Since RV parks are operating businesses, feasibility isn’t just about build costs and projections – it’s about operations post-opening. Lenders and investors will evaluate whether the team has a plan for marketing to fill the park, an experienced manager or management company in place, and strategies for known risks like seasonality, cost overruns, or slow ramp-up. A practical benchmark is to have at least 6–12 months of operating expenses and debt service reserved or available as working capital, ensuring the park can sustain itself through the initial lease-up phase or an unexpectedly weak season. The feasibility study should outline contingency plans: for example, what if permitting is delayed or construction costs come in 15% over budget? What if occupancy is only 40% in the first year? Showing a cushion in the budget (typically a 10–15% contingency on construction costs and conservative revenue estimates) signals that the project can weather typical challenges. From a qualitative standpoint, lenders will also value an exit strategy – e.g. can the park be sold or refinanced at stabilization to repay the loan if needed? A well-rounded feasibility assessment covers these operational and risk considerations, not just the “sunny day” scenario, giving all stakeholders confidence that the project is feasible even when reality deviates from the plan.

Both developers and lenders should use a data-driven, conservative lens when evaluating new RV park developments. By ensuring the site is right, the numbers align with industry benchmarks, and the risks are mitigated, one can identify truly feasible projects that promise attractive returns in the growing outdoor hospitality sector. Proper upfront planning – from market research and site due diligence to rigorous financial modeling – is essential to turn a new RV park vision into a successful, financeable reality.

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