Membership Resorts Expose! Part Two!

Costs and Responsibilities!

When people talk about how they think RV resorts should just “bend the rules” and let any member in, it shows how little people actually know about the different types of membership systems, what they cost, and how little the resort actually gets of that money, which is sometimes none! Some of that was explained in part one of this three-part series.

A park isn’t just a place to park an RV, and collect rent for the space. It’s a very technically oriented property that takes skilled people to run.

Let’s start with the electrical system. NO ONE, employee or otherwise, should be allowed to touch an electrical system that provides power to anything used by the public, unless they are a properly trained electrician! Yes, it is that important and that dangerous! Improper connections, lack of proper grounding, lack of proper over-current protection, and much more puts every RV owner at risk!  Why does everyone say to always check for proper voltage, polarity and ground fault protection at every pedestal at every RV park before you hook up?  Because there are so many inexperienced employees and managers who have the mistaken mentality that “any two wires will get you power”. Gee, is that why the NEC code book is an inch thick in fine print? I’ve read it from cover to cover. Every electrician should. But they don’t!

I’ve been in the business most of my life, and worked along side many who call themselves “electricians” when in reality, all they’ve ever done is hang conduit! Many don’t know what a system ground is, how a GFI works, or even how to wire a three-way switch! I had a commercial service manager tell me that you could run a common neutral with a three-phase split circuit on three individual ground fault breakers. I tried to tell him that he couldn’t because if a fault was detected it would trip all three breakers because it couldn’t detect which circuit was which!  He found out the hard way, after the job was already bid and installed, and he had to send a crew over there to run separate neutral wires in a separate conduit… to the tune of several thousand dollars!

This is why you have to protect yourself, even from “supposed professionals”! Park owners will hire anyone who claims they “know” electrical work, because the park owner himself doesn’t know it and doesn’t know how to hire someone who actually does! To save their budget, rather than pay electrical contractor rates, they let an unskilled emloyee take care of repairs. 480-volt three phase is nothng for amateurs to mess with, and some parks have that coming in before it is “stepped down” to normal 120/240 volts! Beware! Some states are cracking down on unskilled workers, and say that even if you work on your own home electric, HVAC, or plumbing system, you have to be licensed. If they catch you doing your own work, and having someone licensed “inspect it” for you, they’ll make you tear it all out and start over! Arkansas just passed such a law not long ago! If they do that on homes, think what they will do on a commercial property where you are respnsible for other’s safety!

On water systems, in many states, a water system that feeds the public, even if it’s on private land, is considered a commercial water system. Even if the well is on the property, it may be subject to public rules because it is considered “multi-family”, which means the park manager may have to get trained in water system management. If the water system is fed from a source outside the park (city water system) then whoever manages that system must be trained.

In many mountain areas, wells sometimes have to go thousands of feet deep to reach usable water supplies. Driving such wells can cost in the tens of thousands of dollars! And again, for safety sake, the new rules in some states say that ANY time you have to shut the water off, even at a stop valve under the sink… you have to call a licensed plumber! A “handyman” can’t even legally change a faucet washer anymore!

The same training goes for sewage systems! Many parks have sewage treatment plants that have to be operated just like any city treatment plant. Such facilities can cost upwards of a million dollars to install. If the park is in hilly country, there may be lift systems to get sewage from one level to another, so that gravity can take over when it needs to. Typical pump motors for such systems can cost $10,000 or more, with just a brass impeller costing upwards of $2500!

Lakes and ponds don’t just set there and maintain themsleves. Many private lakes have pumps and dams to maintain lake levels. Sometimes both lakes AND ponds have to have weed control in place. If they are stocked for fishing, someone has to pay for that stocking. A public lake usually can be stocked by the fish and game commission out of tax dollars, but a private lake may have to pay for the service!

There are all kinds of buildings and equipment to maintain, plus the grounds themselves… and the bigger the park, the more they will have! The park we managed here in Arkansas had 22 acres of grounds that needed maintenance weekly! If you have ever owned a house, you have an idea of what kinds of repairs can be expected on buildings. If they have to pay for city water and sewage, that bill alone can run into the thousands of dollars. For our 384 apartment units the water bill alone ran more than $5000 a month, and that was back in the mid-70’s!

Survival 1.01!

Many parks are charging extra (like $1 a day) for electric these days because of the increased utility rates they have to pay, but if they don’t charge for electric for overnight rentals, then that comes off their overhead!

So if the parks don’t get much of the money that is collected by membership fees, then how do they survive? The sad truth is that many of them don’t. Like any other business, the profit lies in the last few percentage points that they collect, over and above expenses, which is why it is CRITICAL that the resorts be managed properly and efficiently, and why bad managers can make or break the success of the resort! If a bad manager or clerk drives away 10% of their potential customers, it can easily put a park in a deficit condition! This is why many things go unrepaired on the parks today, because they just don’t have sufficient operating income!

Many of the parks DEPEND on volunteers to help run them. Typically, only office staff (those who deal with finances or member records) and “maybe” one or two maintenance people are on wages or salary. Most of the others are volunteers, including security guards, check-in personnel and store clerks. Any park that is not willing to make use of volunteers is foolishly spending money they shouldn’t be! So before you, as a customer or member, get snippy with someone that you think is improperly trained… remember… they probably are! And under the circumstances, they are probably doing the best that they can!

Resort Income types and sources!

For resort income, let’s start with the obvious… the rental fees for the spaces and cabins that the resort has on hand. That is the highest single source of income a park can have, which is why you can’t have people driven away by bad attitudes from the staff! If people don’t stay, the park doesn’t make money! For the high-dollar memberships, the members don’t even pay space rental fees. The parks reciprocate with each other to host the members at no charge! Corporate monitors the rentals at the parks and uses that figure to decide how much money the park gets. Fewer visitors means less operating funds, just like in the real world. You’ve already seen how much they receive from corporate (not nearly enough), so it’s critcal that they make money in other ways, sometimes by letting in non-members, but charging them normal rates for services.

What bad attitudes drive away isn’t just one member fee! Multiply that loss by about 30 times! If they fail to join, the company has lost not only that first year’s fee, but ALL subsequent years as well! Then add in all the additional money they would have spent with the system, like laundry fees, entertainment fees, space rentals (if applicable), maybe an occasional cottage rental, and the additional money that they would bring into the area to surrounding businesses outside the park! Even RV’ers need groceries, prescriptions, vehicle repairs, and many other things that the campground doesn’t provide!

In the case of a very low $75 entry level fee, it also would mean loss of the ability to upgrade that entry level membership to a higher priced one… so income from that additional money would be lost as well. If membership also includes the privilege of being able to purchase lots or long term memberships, the income from that will also be gone!

The loss of ONE customer can cost into the tens of thousands of dollars and hurt the whole community! So all you campground workers, think about that the next time you start to get snippy with a potential customer! If you drive a customer away, that’s the same as purposely stealing from the company! You were in charge of your actions, and could have corrected those actions!

Anyone who deals with the public has to be just like an entertainer… able to get up on the wrong side of the bed, spill their morning coffee, be told off about something they didn’t do, get a traffic ticket on the way to work… and STILL put on a smiling face for the public! If you can’t do that, then please, don’t get into jobs where you are supposed to be nice to people! If it’s too much to ask to put on a smile and have a pleasant disposition, it’s better you stay home! You’re unemployment will probably cost the company less money than the damage you can do!

Some membership parks also allow non-members to use the parks, but they charge them for the usage. It’s unfortunate that some parks can’t be totally private to the members only, but some depend on this “non-member” income for their survival.

Some parks have stores, and in that category is also propane sales. Those stores have to operate just like any other convenience store. Yes, sometimes the prices are a little higher, but hey! It’s a CONVENIENCE! It’s still cheaper than driving into town for what you want! And from having worked in a “normal” grocery store when I was in school, I know that the markup on many food items is only about 10%. Convenience stores may have a slightly higher markup, but still… they aren’t making a killing from food items! They actually make more from some of the “nonsense” “impulse” items that you see prominently displayed up by the cash register! (Which of course, is why they put them there!)

Most parks will have a laundry. In most cases the parks don’t own those machines because it is too much of a maintenance issue. The machines are usually supplied by a specialty service, and in turn that company opens the coin boxes and gives the park their commissions from it… which isn’t much… usually about 25%.

Entertainment vending is next… I’m talking about coin operated things like video games, pinball machines, and pool tables. If the park has a golf course, you could also include “green fees” and equipment rentals in that mix. Again, many of the equipment items may be owned by a vending company, and they are the ones who empty the coin boxes and give the parks their cut…again, not much…. about 25%.

Services to non-members is also critical in sales, like dumping fees. But unless they are in a high drought area or have to pay an exceptionally high price for water, I think charging for water is going a little over the top! That falls into the same category as charging for showers or the use of a laundromat. They already have to pay to use the laundry machines, anyway, which puts a portion of that income back into the parks pocket, so charging even more just to get into the room to use them is like double taxation! They should be glad for the income they get, rather than chase people away and make them feel unwelcome! (AND lose the revenue totally!)

Sometimes parks will sponsor special meals, for which they collect a few dollars more than it costs them, Much of the work is usually done by volunteers.

There aren’t many more ways that a park can make income, unless they provide some specialty services, like repairs or a guide service.

Hard Decisions!

Having owned and managed several businesses, I have to say that trying to operate a membership campground or resort is one of the least secure businesses a person could get into. If you try to go cheap in setting one up, you won’t get the traffic or the members, and if you go too expensive, you may never be able to keep up with the maintenance costs. It’s a very fine line to toe, and any mistakes anywhere along the line means going under.

So think about these things, before spending money on a membership, as well as considering them if you already own one! All parks and resorts are in financial trouble in these recessional times, and some are doing what they feel is necessary in order to survive. If you haven’t read your rule book yet, you should! Every member should know ahead of time what their membership includes, and how to go about using it properly. It will take the pressure off the rest of us in trying to explain it to you!

Above all have fun, and make every day fun for everyone else!