Will fuel prices affect the growth of the RV Industry?
The Toy Storage Nation (TSN) Board had an uncomfortable conversation the past month with partners and investors about how the fuel prices are going to impact RV and boat markets. Whether it hits the storage market is unclear. But we can’t be blind to the fact that it could potentially impact the market. The Board’s discussion led to some interesting thoughts.
First, we’ve all seen the videos of owners filling up their RVs and the bill coming to a thousand dollars. If that guy must pay a thousand dollars to fill up his RV every time, is that going to dampen ownership and usage? Is this going to mess up the storage market? Should investors and partners pivot and not do RV/boat storage property developments right now?
Secondly, market study research shows that these RV owners will gravitate to their destination, where they recreate the most. Instead of driving the RV several times a year to the same place, they will drive there once and park and store minimizing the fuel costs. The gas prices have nothing to do with storage. It has more so to do with how it impacts their vacation plans. They may not play quite as much at the destination for instance, but it doesn’t affect storage. Do you agree or disagree? Why?
Let’s do some quick math. Let’s say it’s a 500-mile trip and they are taking their RV or their motor home that gets 10 miles to the gallon. In markets that is an extra $200 for the round trip in just gas.
Will the rising gas prices affect future sales of million-dollar RVs?
To date, there is a tremendous backlog of consumers that have put a 20% deposit down, even though it’s going to take them over a year or two to receive the vehicle. It’s not likely that they are going to walk away from the purchase. This backlog of sales is already in place. Does it really matter to Executive Class A owners, or will it impact the other classes first?
There is a big difference between the gas-purchasing practices of the Executive Class A and the travel trailers. Those travel trailer guys might be impacted more by gas than the Executive Class owners. Owners that buy a million-dollar motor home are willing to spend thousands of dollars to store it and use it near their favorite destinations or maybe not. But Executive class owners are not really worried that much about a little higher fuel cost. Obviously, nobody wants to pay more but the Board’s consensus was the cost of fuel is not going to be a major consideration for the executive RV asset class.
As much as we want to believe mini-storage and RV storage is recession-proof, there are still concerns and hesitations to address. We all made it through 2009, 2010, and COVID, right? But let’s be honest, it could impact RV storage and we need to be prepared.
What are your thoughts? Let us know by writing to email@example.com. Your input will be appreciated and select responses will be published for public consumption.