I am certain everyone over 18 in the United States has had their lives substantially upended since pandemic restrictions began. Although many like me wish this altered state was temporary, just as many others believe our lifestyles will be changed for a long time, and perhaps never to return to the good old days.
Our RV rental industry is an expert at navigating big changes in the way we operate our businesses.
Some 50-plus years ago, RV dealerships created small rental departments with a few motorhomes and trailers that were often slow to sell. Dealers served consumers who either could not afford typical RV ownership costs or camped so infrequently to justify those costs.
Within a few years, another variation was adapted from the airplane and cabin rentals industries’ model, called leaseback or managed rental.
People who already owned RVs would lease back or consign them to an established dealer’s rental department. Many owners no longer used their RVs, so allowing them to be rented while receiving income and tax deductions seemed like a great solution. Others used their RVs and then rented them to consumers during downtime.
Because the tax code classified RVs as a second home, thousands of small rental businesses were established. In addition to earning income, owners could claim insurance and maintenance expense tax deductions to reduce personal taxes. Some years later, owners then would deduct depreciation from these managed vehicles.
In the 1980s, small, stand-alone rental businesses replaced dealerships that rented as a side business. These stand-alone companies specialized in managing other people’s RVs, often providing owners increased income. Some companies stored the RVs, while others allowed owners to store them on the business’s property. A few companies specialized in marketing or selling RV rentals, usually online, through sophisticated and creative websites.
By the early 2000s, RV owners often complained the independent companies charged too much. Expenses such as insurance, storage, cleaning, repairs, maintenance, rent and advertising were wholly or partly passed on to RV owners. Owners appeared to earn less and less as the companies retained more and more of the revenue. In response to these complaints, hybrid rental agencies appeared.
By the early and mid-2010s, following online rental companies like Homeaway.com and VRBO.com, creative entrepreneurs copied and modified their business models to include RV rentals.
Today, the rental process now follows the wildly successful and profitable peer-to-peer Airbnb business structure. Multiple companies, with slight variations in purpose and direction, lead the new RV-renting generation. Other megabrands not normally associated with rentals, such as Camping World and RV Trader, are joining the crowd.
Are these companies as popular and successful with RV rentals as Airbnbs? It is probably too early to tell. Several companies, aggregated, have raised more than $400 million in venture capital funding. Last month another company boasted $1 billion in bookings since inception. These types of rental companies may be here to stay.
Rental dealers question, “Do we fight them or join them? Can they help our businesses survive and grow stronger? Do we have the resources to compete with them? Will they run us out of business? Should we just ignore them and worry about our little market slice?”
Let’s take a deeper look before we answer these questions.
What exactly are peer-to-peer RV rentals?
KOA.com offers a simple definition: Peer-to-peer (P2P) RV sharing is where RV owners rent their RVs to other individuals. Most often, they use a platform like Airbnb, where campers can search and filter by location, price, size and amenities. In the RV space, a variety of options can be shared peer-to-peer. Think travel trailers, toy haulers, motorhomes, pickup campers, Sprinter vans, vintage vans and even off-road SUVs with tents on top. If they can build it, you can rent it (or list it).
Are my customers choosing peer-to-peer platforms rather than my dealership?
Chances are, yes. It is hard to be sure. KOA’s research from the North American Camping Report in 2021 and 2018 indicates that:
- In 2018, 56% of RV campers said they would consider renting from a P2P platform. Of those who did rent, 6% used a P2P platform, while 13% (twice as many) rented from a rental company.
- In 2020, 61% said they would consider a P2P platform. Of those, renters chose a rental company 18% of the time and a P2P platform 16% of the time.
- In 2018, 59% of millennials and Gen-Xers surveyed said they would consider renting through a platform.
- Last year, the numbers jumped to 77% of millennials and 72% of Gen-Xers potentially using these platforms.
Why would customers consider a private owner over a professional RV business?
They would do so for several reasons, but the most common is price. Many P2P owners are not profit-minded, so their rental prices tend to be lower.
P2P owners offer many items or services at a budget price or for free. An example is outfitting the RV with bedding, pots, pans, dishes and more at no charge. Many motorized RV owners, and almost all towable owners, offer delivery and setup service at a very low price, considering the perk a low-cost add-on to obtain bookings.
These P2P owners often state they are just looking to cover their monthly payments, which are usually only a few hundred dollars. In addition, the P2P platforms have done a fantastic job advertising the “direct from the owner, cut out the middleman” logic, claiming they can eliminate the middleman’s (dealers and rental companies) costs and profits, resulting in lower rental prices. The strategy is extremely effective for Airbnb and seems also to be working in the RV rental industry.
Another reason is many customers assume private owners know their RV better, especially if the vehicle has personality, featuring upgrades, decorations and gadgets.
Finally, consumers like the personal touch of P2P, the peer-to-peer relationships that are not possible renting from corporations.
Are P2P platforms my competitor?
Yes. A direct competitor? Yes. An industry disruptor? Certainly, yes.
The degree to which they compete depends on your dealership’s location and geographic size of your rental market. A simple major platform search will help you quantify how strong a competitor is.
Most owners list their units on multiple platforms, so using one as an example model will give you a pretty good idea of the competitors’ number and quality. For example, I searched arguably the largest platform, claiming more than 100,000 listings. Filtering the search on its website displayed a near accurate survey of the threat facing the dealership offering rentals in the area. From Sept. 17-24, 2021, the site listed 400 Type C motorhomes, 252 RVs 25 foot or longer, 179 RVs with model years 2018 or newer, 39 RVs with less than 20 miles from the 91302 ZIP code and more than 1,300 vehicles overall.
I identified P2P platforms in my market area offering about 39 units that compete with my company’s Type C fleet. My Type C motorhomes start at 25 feet long, and the oldest unit is a 2019 model. The same online filtering identified travel trailers 15 feet and longer. The survey result found 27 units directly competing with me in my market area.
While I may not like the results, my search gave me useful market data to evaluate the competition’s strength. I can use the same website analysis to compare pricing, availability, features, models, actual locations and other criteria. I can even adjust my offerings to differentiate myself and provide a competitive advantage. In effect, I know more about this competitor than probably any other in my market.
Most existing dealers are left with two nagging questions.
How has the P2P platforms’ growth changed the way a dealer should conduct rental business?
First, do not pay too much attention to the platforms’ advertising and self-generated news. Their self-promotion is often inaccurate. Remember, they are recruiting tools meant to entice owners to list their units and to persuade renters to find the perfect RV camping experience.
Second, as I did in the previous section, use the platforms’ websites to gather data of their actual strength and weaknesses in your specific market for your specific fleet segments. For example, say your research uncovers 100 competing trailers in your market, along with 39 Type Cs and zero diesel pushers. If you are renting trailers, you may consider adding some Type Cs and diesel pushers to your inventory. The research may lead you to consider the managed fleet model with motorized units to minimize your risk.
Third, use the abundant existing P2P marketing to identify your real customers, your existing customers and your future customers, and then change your business to better serve them. Even if P2P sites are not particularly worrisome, they will give you ideas you might otherwise have to pay for. A wise man once told me, “First I appreciate, then I appropriate (copy or steal).” So, follow this great motto, and copy your competitors’ good ideas.
My company’s fleet contains mostly Type A gas/diesel pushers and is in a high-rent area, serving the baby boomer, upper-class market. Using the previously listed information, I clearly know I am serving a dwindling customer base.
Should the dealership continue to do business as usual, work with these platforms, or change in other ways?
We all know business as usual no longer exists. Even if we loyally retain past habits, we will quickly discover those practices do not work anymore. I used to have numerous paper documents to sign and initial in my rental contracts, terms and addendums. Sound familiar? Today, the dealership is almost paperless, which my customers love.
I would work closely with at least one platform, but do not just sign up and go with the flow. Get to know the managers and officers well. You can be valuable to them, and they can be valuable to you. Here is how:
- You are their new target market. They have learned working with an experienced professional is much better than with owners who do not know how to run their businesses or work with customers. Because of the situation, you have leverage: better rates, preferential placement on the platform, favorable resolution when customer disputes arise, beta testing and more. You can also help develop new programs and software that will aid your business.
- Many owners who rent are quick to cancel bookings, some with legitimate reasons and many more, not so much. The platform managers will need to switch these bookings to a more reliable party, and that party can be you if they know you well.
- The platforms’ marketing, advertising, reviews and technology can help build your branding. Use their name on your website and marketing materials. “Outdoorsy 5-star owner, RVShare Preferred Dealer” or something similar will help build credibility. If you find getting your own Google or online ratings difficult, a P2P marketplace rating is almost as good.
- Network with other owners by attending all local events in person and other events online whenever possible. Many owners network and help each other outside the marketplace. If you join the social media rental owner sites, you will see many owners offering support, correction and advice to each other. I recently saw a great discussion on the best toilet chemicals and how to use them. I also learned a couple of cool tricks I never would have considered before.
- Rental owners have a high turnover rate, so your immediate rental competitors may change quickly. Keep frequent tabs on marketplace competition.
- Choose and grow with a platform that is sound and innovative to reap the opportunities you could not get on your own. The platform may work out a buying deal with a manufacturer for an exclusive price or unique features. It may market more to overseas vacationers or work out a one-way program that profits everyone. The advantages are plentiful, and the good platforms have the talent and resources to develop these opportunities.
- The platforms have little interests in a renter’s trip after the first one. So, you can easily convert your renters from the platform to booking directly with you on subsequent trips. You will keep the fees you usually pay the platform.
Are there other ways these platforms can help our dealerships grow?
I believe there are. Here are a few:
- Involve your sales department in your platform marketing efforts. Develop a “platform package” with special pricing and rental-friendly features. Let your peers on social media groups know about the package. They will come to you to buy and will want to trade in older RVs, which you can sell on your preowned lot.
- Involve your service department. Those 39 Type C competitors in my market need a good place to go for certain maintenance and repairs. Be sure to give them a package, too.
- Involve your F&I department. Many owners are new to renting and new to RV ownership, and the platform is a way to afford the payments. After consumers rent or buy a unit, they may be interested in your protection products. I have many privately owned units rented, and I always offer to sell the owners an extended warranty if they do not already have one.
- P2P rental platforms are a predictable evolution in the RV rental industry. Because they are relatively new and managed by marketers unfamiliar with the industry, they have growing pains. Experienced rental dealers can use the many resources they bring to strengthen their dealership, and thereby strengthen the entire industry.
Martin Onken has been the owner/operator of Expedition Motor Homes and 1st Choice RV rental dealers in Southern California since 1998. He is an instructor at RV Rental School and is a regular workshop presenter on RV rental topics at the RVDA Convention. He is a past chairman and current member of RV Rentals 20 Group. He also mentors and consults with RV dealers who wish to improve their business.
818.225.8239 | [email protected]