Maximizing Revenue From Boat and RV Storage: Attracting Tenants With the Right Pricing, Amenities and Marketing
|Copyright 2014 by Virgo Publishing.|
|Posted on: 06/06/2012|
By Tony Jones
The worst mistake one can make in boat/RV storage is to approach the business in the same manner as traditional self-storage. The differences between the two are more than just unit size or type. A failure to adjust the business model to strategically address boat/RV as a specialty, niche market is a surefire way to shortchange what could be a powerful revenue stream. Facility operators who offer boat/RV storage, either as an ancillary service to self-storage or their primary business model, should think like specialty retailers.
While there may be some customer and product overlap between Walmart and Bass Pro Shops, for example, their core customers are not the same demographic. As a general mass merchandiser, Walmart pretty much carries something for everybody, but the primary motivations of its core customer are convenience and price. As a specialty retailer, Bass Pro must meet the higher expectations of a more discerning customer base through quality of merchandise, display presentation and expert staff knowledge.
One can buy a fishing pole at either outlet, but the diehard sportsman is more likely to patronize the retailer that has the best product selection and a 24,000-gallon aquarium than the store where he can also buy office supplies and toilet paper. He will also willingly spend more at the specialty store for comparable products because of perceived quality differences, and a better overall customer experience leads to brand loyalty.
The point is, while self-storage is a service that appeals to general consumers, boat/RV storage applies to a specialty base. The best way to maximize revenue, then, is to attract a core customer—one who will likely spend the most and stay the longest—by meeting or exceeding his expectations for the product.
Before you can rent space, your facility must appeal to boat and RV owners. Building storage designed for this sometimes fickle, seasonal and transient client takes forethought. Today’s successful facilities offer myriad amenities and storage options. After all, the property being stored is generally a valued investment or toy, whether it’s a travel trailer or motorhome. RV values can range from $5,000 to $500,000, but the personal attachment customers have for their prize is virtually the same.
According to a 2011 University of Michigan study commissioned by the Recreation Vehicle Industry Association (RVIA), a record 8.9 million U.S. households now own RVs, a 7.6 percent increase from 2005. The typical RV owner is 48 years old and married, with an annual household income of $62,000. RV owners are likely to own their own homes and spend disposable income on traveling an average of three weeks every year. That leaves 49 weeks annually in which they need a safe and secure place to store a prized possession.
To entice and retain boat and RV owners, many of today’s storage facilities resemble first-rate RV parks with beefed up security. At a minimum, facilities need to offer a convenient and accessible location as well as add-ons such as propane, potable water, a waste dump, a wash rack, power to rental spaces and 24-hour surveillance. Many new facilities offer wide drive aisles (35 feet wide for covered, 60 feet for enclosed), large rental spaces for ease of access, 24-hour access, valet service, and even clubhouse-style amenities for luxury appeal.
RV enthusiasts Kelly Woudenberg and her husband, Dana, recently opened RV SuperStorage in Chandler, Ariz., with luxury and convenience in mind. “We have owned RVs for many years and built our facility based on what we had been looking for in a storage facility,” she says. “We think we have brought a fresh approach to RV and boat storage.”
RV SuperStorage features 100 enclosed garages, 300 covered spaces and 50 air-conditioned self-storage units on 11 paved acres. The facility offers power to each space for trickle charging, an ionized wash rack to eliminate water spots, ice and a fully stocked RV store. An onsite mechanic is available five days a week, and the office features concierge staff every day. The office is closed only on Thanksgiving, Christmas Day and New Year’s Day.
Much like it sounds, the daily concierge service is predicated on pampering the facility’s “members” and exceeding expectations on customer service. “Our concierge can arrange transportation to the airport, detailing and [repair] service,” Woudenberg explains. “We have helped with laundry, groceries and many other personalized services. We even found a driving teacher for a customer who had bought his first coach.”
All 100 of the facility’s garages are alarmed, and the site features 16 security cameras that can be monitored remotely.
Charging for Value-Added Services
Boat and RV owners demand security to protect their toys when they’re stored but also look for convenience when returning from a long trip. Luxury and convenience may be coveted, but they do not have to be free. Many facilities strike a balance between free or value-added services and additional pay-to-play privileges.
Customers who choose to rent uncovered spaces, for example, generally don’t have the same access and conveniences as tenants who opt for covered or enclosed spots. “They are completely different customers, and you have to keep exclusivity with your covered and enclosed [renters],” Woudenberg says. “We are just starting an uncovered phase, and those tenants will not have 24-hour access to the services that our covered and enclosed customers have.”
Thus, all customers may have use of the wash bays, waste dump and power, but access comes with a price. “All of our customers in covered and enclosed enjoy complimentary use of wash, dump and power,” Woudenberg explains. “Our uncovered customers will have access only when the office is open, and they will pay for the use of these services.” Similarly, enclosed and covered tenants at RV SuperStorage also enjoy 24-hour access to the facility through computerized gates.
Pay-for-use services and higher rents for added privileges and security can enhance profit, but they also come with internal costs. Covered and enclosed spaces, for example, may command higher rents, but have higher building and maintenance costs, explains Lois Nielsen, marketing and site manager for Empire Boat & RV Storage, a $7 million covered-storage facility that opened three years ago in Healdsburg, Calif.
Determining paid services vs. complimentary may simply come down to internal costs. “This depends mostly on the cost of maintenance for these services. We charge for almost all services, excluding the dump station (free to all tenants), potable water and the air compressor,” Nielsen says. “The other services are too expensive to maintain if we don’t charge the tenants.”
In general, Nielsen says the facility’s best margins come from maintaining high occupancy. “The storage rent itself provides the best profit margin,” she notes. “It does not cost the site anything to add an extra tenant to the facility. We have mostly fixed costs at the facility (employee salaries, utilities, inventory, advertising, etc.), but these don’t necessarily increase if we can simply add more tenants.”
High occupancy means rate flexibility for facility operators. Some will raise rents when they hit a target occupancy rate. “We examine rate increases based on the percentage of occupancy for particular size codes,” Nielsen says. “For instance, if the 10-by-20s are 100 percent occupied, we would be more likely to raise rents in that size.”
Nielsen admits the newness of Empire Boat & RV in its market has tempered rate increases that a more established facility may have been able to implement. “We are being sensitive about rate increases with the motive that we want to build a loyal and consistent tenant base,” she explains. “In general, target occupancy for rate increases is 80 to 90 percent. We also offer incentives if tenants agree to pay for a year upfront, or if they sign up for longer-term contracts.”
Robyn Wilson, a district training specialist with US Storage Centers, agrees that pushing rates during high occupancy is a key strategy for maximizing revenue. US Storage Centers operates 62 storage facilities in nine states, including 18 boat/RV sites in Arizona, California and Florida.
“We typically raise rates at six months and then every nine months thereafter, and the amount is about 4 to 6 percent of the rate,” Wilson says. “It’s always a hit and miss with the RV lot because some people go out to the desert for activities during the summer months, so they will cancel the storage.”
Despite the seasonality of the business, Wilson says, “Many RV lots stay pretty full all year-round. At times we actually have a waiting list.”
Creative Marketing Efforts
Getting the word out about your boat/RV-storage facility and marketing your points of differentiation from competitors are critical to success. Many operators use local newspaper advertising and employ Internet and e-mail campaigns, including an up-to-date website that promotes rent specials and explains a site’s full features and amenities. Operators should also consider accepting online rental payments. Such functionality will help keep tenants current, and the convenience will be viewed by customers as an extension of your onsite customer service.
The specialty nature of the business, however, means word of mouth will play a major role in facility exposure. Referrals from existing customers can be incentivized and help spur business. Empire Boat & RV Storage, for example, rewards referrals from tenants with rent credit, and provides Visa gift cards for outside referrals.
A formal referral program with local boat and RV dealers as well as repair centers can be among a facility’s most rewarding and cost-effective marketing strategies. “We currently have referral partnerships with three RV dealers in the area, as well as participating in two chambers of commerce,” Nielsen says. “We also work with boat/RV mechanics and detailers to come on site and work on tenant vehicles.”
Rewarding business referrals is a necessary and important step in maintaining momentum built on word-of-mouth business. “I would say we get 10 percent of our rentals annually from RV repair shops or dealers,” notes Wilson. “After the new customer stays for three full months, we send the representative from the repair shop or dealer a check for 50 percent of the new customer’s first month’s rent.”
As the economy continues to recover, the record number of boat and RV owners should grow along with it. In the RVIA’s RV Consumer Demographic Profile released last year, 21 percent of all U.S. households indicated intent to purchase an RV in the future.
“These purchase intentions are very encouraging for the industry,” says Sid Johnson, chairman of RVIA’s Market Information Committee and director of marketing for Jayco, an RV manufacturer. “These survey results were collected in a challenging financial environment, yet they are very close to the 2005 data when the economy and consumer outlook was much brighter. Overall, the results indicate continued strong demand for RVs in the years ahead.”
In the end, maximizing revenue is about more than rentals and ancillary sales, it’s about customer retention and sustained, manageable growth. To make the most profit through your boat/RV-storage operation, seek to attract that special core customer, and implement as many attractive amenities as possible to keep their business.