Inflation Hasn’t Silenced Call of Open Road, RV Industry Says
The rising cost of fuel and almost everything else hasn’t dampened consumers’ enthusiasm for using their recreational vehicles (RVs) and other equipment for outdoor activities this summer.
Manufacturers in these fields report that demand is strong, and it’s just a matter of whether they can meet that demand in the face of the supply chain challenges that can limit their ability to source or make products.
“We are seeing no decrease in consumer participation in the outdoors,” Winnebago Industries president and CEO Michael Happe said June 22 during the company’s quarterly earnings call. “Campgrounds are full, reservations into the future are full, marinas are full — it’s tough to get a boat slip these days almost anywhere in the country.”
Providing Economically Viable Travel
Consumers are traveling less distance in RVs due to the price of gas, but they are still participating, Happe said, adding that the cost of an RV trip still compares favorably with that of a trip that requires paying for a plane ticket, rental car and hotel room.
“We continue to still be a pretty economically viable option for people that want to spend time in the outdoors, especially from a renting standpoint and existing ownership standpoint,” Happe said.
During the call, Happe said Winnebago, a maker of motorhomes, towable RVs and marine products, had seen record-breaking quarterly results driven by its success in fulfilling its RV order backlog and strong consumer demand in marine.
Looking ahead, however, Happe said the company expects that industrywide shipments of RVs will fall 12% in 2022 compared to 2021, noting that the industry saw record demand last year and is now confronting higher interest rates, rising gas prices and inflation, and declining consumer sentiment.
“We continue to believe in the long-term health of our consumer segments as more people continue to pursue outdoor lifestyle experiences,” Happe said.
Alternative to Flights, Hotels
Peer-to-peer rentals of RVs are opening new opportunities for the industry, and apps and platforms are meeting the expectations of younger, tech-savvy consumers who are adopting the outdoor lifestyle, LCI Industries President and CEO Jason Lippert said May 10 during the company’s quarterly earnings call.
LCI Industries, which makes components for original equipment manufacturers (OEMs) in the recreation and transportation product markets, reported that its revenues in the quarter were up 64% year-over-year due to strong demand in the markets it serves.
“Secular megatrends driving the popularity of the outdoor lifestyle are now well established as [Kampgrounds of America’s] camping survey has recently shown that 57 million households camped in 2021,” Lippert said. “RVs have quickly become an even more attractive alternative to the skyrocketing cost of air travel and hotel lodging.”
An Outdoor Lifestyle
At Camping World Holdings, a retailer of RVs and related products and services that has locations in 42 states, the company anticipates that even if sales of new RVs dip, those who already own RVs will keep using them.
The company saw during market contractions in 2001, 2008 and 2018 that consumers do not exit the RV industry — instead, they continue using their vehicles and going outdoors, Camping World Chairman and CEO Marcus Lemonis said May 4 during the company’s quarterly earning call.
“Decade after decade after decade, regardless of the noise that happened inside of a small cycle, every single decade, more people got into the lifestyle than the previous decade,” Lemonis said.