For years, the campground and RV resort industry has focused on the same basic equation: build great sites, attract more RVers, increase occupancy, and steadily push rates.
But what happens when the RV sites are already there — and some of them are sitting empty?
That may be one of the biggest opportunities hiding in plain sight across the outdoor hospitality industry.
At Great Outdoor Cottages, we have been looking closely at the economics of placing rental cabins on existing transient RV pads. The numbers tell a compelling story. In an illustrative 10-cabin deployment, the model projects approximately $337,000 in additional annual revenue, positive cash flow in the first year, $1.74 million in cumulative cash over 10 years, and as much as $3.67 million in added enterprise value when stabilized NOI is capitalized at an 8% cap rate.
The bigger story, however, is not just about adding cabins. It is about getting significantly more value out of the infrastructure campground owners have already built.
You Already Own the Pad
Developing a campground from scratch is expensive. Land, engineering, zoning, stormwater, roads, electrical infrastructure, water, sewer and site work can quickly turn a new development into a multi-year project.
But many existing RV resorts already have that infrastructure in place. A transient RV pad may already have a 50-amp electrical connection, water and sewer. The road system exists. The reservation system exists. The pool, store, activities and amenities already exist.
Most importantly, the guest is already coming to the property.
Placing a park model cabin on an existing pad can potentially transform that site from an RV-only product into a fully furnished accommodation — without asking the resort operator to create an entirely different hospitality business.
That distinction matters. The goal is not to build a hotel inside an RV resort. The goal is to allow the campground to monetize its existing real estate and infrastructure more effectively.
A Cabin Night and an RV Site Night Are Not the Same Product
An RV site and a rental cabin may occupy similar pieces of land, but economically they can be very different products.
A traditional RV site might rent for $40 to $90 per night, depending on the property and market. A well-designed cabin in the same resort may command a substantially higher nightly rate.
Why? Because the potential customer base is much larger.
Only a relatively small percentage of travelers own an RV. A rental cabin opens the resort to families who love the outdoors but do not own — and may have no interest in owning — an RV. Suddenly, the property can market inventory through broader hospitality channels and reach guests searching for cabins, cottages and unique accommodations.
You are no longer limited to the RV customer.
In our illustrative model, we assumed an average daily rate of $231 and 146 booked nights per cabin annually. For 10 cabins, that produces projected gross annual revenue of approximately $337,000.
Those assumptions will obviously vary by market. A beachfront resort in a major tourism destination will perform differently than a seasonal campground in a rural market. That is precisely why we believe the analysis should start at the property level, not with a generic cabin sales pitch.
Cabins Can Help Extend the Season
There is another major difference between an open RV site and a modern rental cabin: weather dependency. When the weather changes, RV traffic can slow significantly.
A properly designed cabin with insulation, heating, air conditioning, hot water and full residential-style amenities gives operators the ability to continue selling nights outside of the traditional camping season.
That does not mean every campground suddenly becomes a 365-day resort. But extending the season by a few weekends, or creating stronger shoulder-season demand, can materially change the economics of a property.
The infrastructure is already there. The staff is often already there. The question becomes whether the property can create additional revenue during periods when some RV pads would otherwise be vacant.
The First-Year Economics Deserve Attention
The financing and tax treatment of cabins can also create an interesting investment case.
The example we modeled assumes 10 cabins at a landed cost of $120,000 each, for a total $1.2 million investment. With 20% down, the resort invests $240,000 in cash and finances the remaining $960,000 over five years. Even after projected operating expenses and debt service, the model generates approximately $54,000 of positive first-year operating cash flow.
Potential depreciation benefits may further change the first-year economics. Depending on the specific unit, ownership structure and taxpayer circumstances, qualifying cabin property may be eligible for accelerated depreciation treatment, including Section 179 or bonus depreciation. The flyer models a potential $1.2 million first-year depreciation deduction and illustrates the effect using a 45% effective tax rate.
Of course, tax treatment is specific to each owner and transaction. Resort owners should work directly with their CPA and tax advisors before relying on any depreciation strategy.
But the broader point is important. A cabin investment should not be evaluated solely by dividing the purchase price by nightly rental income. Financing, depreciation, cash flow and the eventual impact on property value all need to be part of the equation.
Then the Debt Goes Away
One of the most interesting parts of the model occurs after Year 5. The equipment loan used in the example is fully amortized. The cabins are still generating revenue.
In the illustrative scenario, the annual cabin program then produces approximately $293,000 in cash flow before taxes and other owner-level considerations. Over the 10-year period modeled, cumulative cash flow reaches approximately $1.74 million.
That is why I believe campground owners need to think about cabins as more than another amenity.
A jumping pillow is an amenity. A splash pad is an amenity. A cabin is a revenue-producing asset — and that asset may continue producing revenue for years after the debt used to purchase it has been retired.
The Real Opportunity May Be at Exit
Perhaps the most overlooked part of the cabin conversation is enterprise value. Campgrounds and RV resorts are generally valued based, at least in significant part, on income. Increase stabilized NOI and, theoretically, you increase the value of the property.
Our illustrative 10-cabin model generates approximately $293,000 in stabilized cabin NOI once the equipment debt is retired. Capitalized at an 8% rate, that income represents approximately $3.67 million in potential enterprise value.
Again, real-world valuations and cap rates vary significantly. But campground owners should ask themselves a very simple question: What is the long-term value of turning an underperforming RV pad into an accommodation capable of producing tens of thousands of dollars in annual revenue?
Multiply that answer by five sites. Or 10. Or 25. The conversation gets interesting very quickly.
Start With the Property, Not the Cabin
I am obviously in the business of building cabins. But I do not believe the right answer is simply, “Buy 10 cabins.” The right answer is to look at the campground.
- Where is it located?
- What are local hotel and vacation rental rates?
- What is the existing RV occupancy?
- Which sites are underperforming?
- What cabin product fits the guest demographic?
- How many units can the market realistically absorb?
- And most importantly: What happens to cash flow and enterprise value if the cabins perform?
That is the analysis campground owners should be doing.
At Great Outdoor Cottages, we are offering to build that property-specific analysis at no cost. Give us the location of the park, the approximate pad count and the current average daily rate, and our team can begin evaluating the local market, potential cabin placement and a 10-year illustrative financial model.
Because the biggest growth opportunity at your RV resort may not require buying more land. It may already be sitting there, empty, with a 50-amp pedestal next to it.