Buyer’s Workshop

EXPANDING CAMPGROUNDS:

‘Crazy’ Ambition Leads to Quadruple Results in Des Moines

 

One of the new RV Patio Sites & Glamping tents at the Des Moines KOA Holiday.

In 2017, the Des Moines West KOA Holiday embarked upon an ambitious project to add 34 full-hookup RV sites, 10 water/electric tent sites and four Deluxe Cabins, as well as enclose their existing open-air pavilion while adding two family-style bathrooms and storage.

Chris and Jamie Rademacher also added a new playground, gaga ball pit and glamping tents. They expanded the driveway and filled in a marsh for use as a non-electric tent area.

“Ambitious is a nice way of saying ‘crazy,'” said Jamie, who noted the park expanded to a total of 148 sites and accommodations.

The scope wasn’t initially that large, but they seized on an opportunity. They bought additional property, which gave them dirt for this project and provided more room for future expansion.

“We originally planned a maintenance building with a bathhouse and commercial laundry,” said Chris. “We nixed that to get the extra eight acres to make sure the expansion was done the right way.”

The permitting process was simple, but the land wasn’t cheap. As farmland, it was valued at $8,000 per acre, but the couple bought it for $16,000 per acre. The extra land leaves room for 60 RV sites later.

KOA Director of Facilities Development Doug Mulvaney redrew the plans from the original 14 sites to the enhanced 30-space site.

The project was complicated by a contractor issue that required Chris to re-level all the sites and correct a drainage problem as well as faulty roadwork. He was able to fix the problems to salvage the project, but the final resolution may wind up in court.

“Luckily, Chris has everything documented by email,” said Jamie. “Just be very clear what you’re going to need upfront and get it in writing. Then, if the plan changes, everything should be communicated in writing and summaries of conversations confirmed by email.”

The initial cost was $800,000 for cabins and 15 RV sites, but Independence Bank amended the loan to $1.1 million to cover the new plan. But, that doesn’t include more than $100,000 to mitigate problems and get legal advice.

“It’s almost as much as we paid for the park nine years ago,” said Jamie. “However, we have seen our income quadruple during that time with camper nights almost tripling.”

Based on occupancy, the Rademachers will have raised their gross revenue by more than $375,000 since 2016.

“We are looking to close out the season at $400,000 to the bottom line, which is up $50,000 since 2016,” said Chris.

“In the two seasons leading up to 2019, we were 100 percent sold out on weekends, and at 85 percent occupancy during the week,” he added. “We didn’t have any weekday or weekend availability,” said Jamie. “We were turning away 20 to 30 people per day on the weekends and roughly about the same during the week.”

“We already employ rate management techniques, but we realized that if we were going to grow the business, then we had to expand to increase revenue,” he added.

The Rademachers knew they were not fully realizing the campground’s market potential. Located 1.5 miles off Interstate 80, it was already a popular stopping point for travelers. By creating a family-friendly staycation environment, they attracted local families, too.

“We have a lot of long-term business from construction workers, so we knew expansion wasn’t a gamble,” said Chris. “If we couldn’t fill sites with overnight and local guests, we were confident we could fill them with long-term or monthly guests, if needed.”

“The previous owners wanted to fill the park at 5 p.m. and empty it again at 9 a.m. the next day,” said Jamie. “They didn’t want locals or kids. That was not our vision.

“We implemented family activities on weekends and established a loyalty program for local guests,” she added. “We got a lot of word-of-mouth advertising and saw a lot of repeat business.”

The strategy paid off with income quadrupling from $272,000 to $1.08 million in nine seasons.

“While the level of growth is fantastic, the business was there, and we were willing to take the risk,” Chris explained. “We are hitting our occupancy levels to the point we could probably add another 30 sites and fill it on most weekends.”

Sample of KOA System Development Design Services