During yesterday’s (Oct. 21) conference call on Equity LifeStyle Properties Inc.’s (ELS) third-quarter financial results, CEO Marguerite Nader talked about the unexpected growth Chicago-based ELS has seen in their RV resorts this year.
“Within our RV platform our properties performed better than anticipated,” she said. “I believe it is helpful to take a step back to view the progress of our RV portfolio this year. We increased — we issued guidance last year anticipating a 3.8% increase in RV revenue. We’ve updated that projection throughout the year and now project to finish the year with a growth rate of 6.2%. From a marketing perspective, we’re driving new customers to our RV resorts. We have increased our presence at rallies, trade shows and travel websites. We’re focused on having a presence wherever an RVer is looking for their next vacation adventure.
“The transient component which is the most difficult to predict had performed well for us this year.” she explained. “Our transient business is concentrated in the summer months with over 50% of the full year revenue coming in from Memorial Day to Labor Day. The three key holiday weekends performed 12% better than last year. This additional revenue was driven by a combination of new customers visiting our resort, existing customers returning, and maximizing the rate increase where demand is high.
“We’re now turning our marketing efforts to our snowbird locations, where we’re seeing increase demand for our product offerings. Our reservation pace is up in all three categories of revenue, annual, seasonal and transient. We’re seeing the consumers’ behavior continuing to trend toward online decision-making and have adjusted our marketing efforts accordingly,” Nader said.
Looking ahead to next year, “we believe demand for our product is strong and we will continue to see the same positive trends from 2014 coming into 2015, including strength in our RV footprint and increased MH ownership transactions,” Nader said.
Looking at the Encore and Thousand Trails resort chains, CFO Paul Seavey said, “During the quarter we sold approximately 3,650 annual memberships an increase of almost 14% over last year. We refer to these annual memberships as zone park passes or ZPPs. Our year-to-date ZPP sales volume for 2014 is approximately 8,400 units, an increase of 10% compared to last year. Our RV dealer network generated 2,600 zone park passes in the quarter and 6,300 year-to-date. Our renewal rate for these RV dealer memberships is almost 20%.”
In their RV parks, Seavey said ELS expects 5% overall growth next year. “Our guidance assumes a 3% increase in both seasonal and transient revenue for 2015. Our first quarter generates just over 50% of our seasonal revenue for the year and approximately 20% of our transient revenue. Our current reservation pace is consistent with our guidance assumptions. Our membership business, which consists of right-to-use annual payment revenue, right-to-use contract sales and sales and marketing expense,s is expected to perform slightly better than 2014. In 2015 we expect to sell approximately 11,000 zone park passes and we expect the RV dealer program to generate 9,500 additional ZPPs,” he said.
During the question-and-answer session, Nader expounded on the recent RV parks ELS acquired in September and October. “We bought three RV properties in September from a distressed seller who had mismanaged the properties. These properties were, they were auctioned off online and we bought them for about I think they were about 800 sites for about $14,000 per site. One property is on Cape May (N.J.) located a few miles from another ELS community and one property is about 20 miles West of Cape May, and then the other is in New Hampshire. We have some work to do on these properties to bring them back just from an operations perspective and then with respect to the fourth property that we closed in October it is a 270 site RV resort that actually shares a property line with an MH property that we own on the east coast of Florida and the pricing on that was about $22,000 a site,” she said.