RV Rental Revenue Jumps Again, Contracts are Longer, and Fleet Sizes Are Increasing
According to 2016 Survey of RV Rental Business Operators
(Fairfax, VA) Heading into the summer of 2016, the market for RV rentals appears solid, with a majority of dealerships that rent RVs reporting rising revenues as well as plans to expand their fleets, in addition to longer term rental contracts. In terms of revenue, fleet size, and length of contracts, things are looking up for the RV rental business according to a recent survey conducted by the Recreation Vehicle Rental Association (RVRA) to gauge profitability and trends in the RV rental market.
“This segment of the market continues to be a winner for dealers. For the third year running the survey results underscore what many of us in the rental space already know,” said Scott Krenek, Chairman of the RV Rental Association. “The RV rental market is healthy and growing. That’s why so many RVRA members are looking forward to a great summer. Renting RVs is not only profitable, it helps drive interest in the RV lifestyle.” Krenek owns and operates Krenek RV Super Center in Coloma, MI.
Fully 80 percent of rental operators surveyed reported higher revenues in 2015, with about half of those dealerships experiencing revenue increases above 20 percent. Sixteen percent of dealerships surveyed had increases of 50 percent or more.
Slightly more than half of respondents (55%) said they plan to increase their rental fleets this year, while 33 percent plan no changes. Twelve percent plan fleet reductions.
Sixty three percent of survey respondents said their rental profit margins are adequate, with 37 percent reporting they are not. “Remaining profitable” also was listed as one of the biggest challenges to success in the RV rental business. “This survey is such a powerful tool for dealers because it identifies challenges we can work to address, from financing to insurance, by working with industry partners to clear the way for greater profits,” said Krenek.
Although dealers who respond to RVDA’s quarterly market surveys say adequate amounts of wholesale and retail financing are available, 23 percent of respondents to the RVRA rental survey say finding financing for their rental fleet is their biggest challenge. The rental survey shows that towable RV rentals are rapidly growing in popularity and forty-five percent of respondents plan to include these units in their fleet, even exceeding Class C motorhomes. The Class C is the type of RV rented by the big fleet/multi-location rental agencies for whom rentals are the primary business. An even 40 percent of respondents plan to include Class Cs in their rental inventory this year.
Almost 80 percent of dealers who rent towables will deliver units to a campground or other location for the customer. And most are seeing an increase in customer requests for trailer deliveries.
Dealers report growth in the length of contracts over the prior year, too. Contracts spanning four to seven days accounted for 70 percent of rentals in 2015 versus three night contracts leading the way in 2014 at 50 percent. The breakdown of rental contracts last year averaged four to five nights for 35 percent of dealers, six to seven nights for another 35 percent of dealers, three nights for 25 percent, two nights for four percent, and more than seven nights for 2 percent.
In terms of the accommodations sought by consumers, RVs that can sleep at least four are the most popular models, according to 45 percent of respondents, and up slightly from the prior year. Twenty-seven percent said RVs with at least six sleeping areas were the most popular with their customers, and 22 percent said at least two sleeping areas was good enough for their customers. Seven percent of respondents said their customers wanted units that could sleep seven or more.
All of the survey respondents have rental fleets of 70 or fewer units; about two-thirds of those have fleets of 10 or fewer units.
RVRA is a unit of RVDA, and the survey was conducted through the RV Retailer Intelligence program, a service of the RV Assistance Corp. (RVAC), a wholly-owned subsidiary of RVDA. To learn more about RVRA go to their website.