Long, but informative, article on the 45th Annual RV Trade Show held last week in Louisville, KY.
<BLOCKQUOTE class="ip-ubbcode-quote"><div class="ip-ubbcode-quote-title">quote:</div><div class="ip-ubbcode-quote-content">BREAKING NEWS
N.Y. Times: OEMs Offer Full Gamut of Vehicles
RV Business
Monday, December 3, 2007
EDITOR'S NOTE: The following account of the 45th Annual National RV Trade Show appeared in Sunday's (Dec. 2) New York Times, penned by reporter John Schwartz. The Times was representative of a strong national media presence that attended the Nov. 27-29 show in Louisville, Ky., the result of public relations efforts by the host Recreation Vehicle Industry Association's (RVIA) staff and Philadelphia-based Barton-Gilanelli and Associates Inc. Schwartz's article offers a walking tour of the show, including a look at the million-dollar "land yachts" contrasted by the free-spirited toy hauler craze.
The magician, dapper and gray-haired, got laughs with card tricks and other feats that were already old when he was still young. And as he deftly linked and separated steel rings, Dick Stoner drew a crowd around an enormous banner that read "Crossroads" " the company paying him so that it could stand out from more than a hundred other manufacturers at the RVIA's annual trade convention in Louisville's cavernous Kentucky Exposition Center.
It's no small trick to attract throngs from some 15,000 footsore attendees at a show that covers 925,000 square feet and is packed with vehicles costing $5,000 to $1 million. But Mr. Stoner is very good at his craft, and his patter is timeless. He blends punch lines and prestidigitation with frequent repetition of the Crossroads moniker.
After all, the $15 billion RV industry could use a little magic just now. To read news releases, of course, things are going really, really great! Public relations materials sent to reporters in the weeks before the trade show noted that the current five-year sales period was the best in the last 30 years and that a consumer survey from the University of Michigan had projected a 3.8% rise in shipments to manufacturers in the coming year.
In fact, though, things are not really, really great in RV land. Sales are slipping. Winnebago Industries Inc. announced during the show that its revenue was falling for the first time in six years. And the industry association released updated projections indicating that industrywide sales would probably decline 4.8% next year compared with 2007.
It's easy to see why sales are off. With an uncertain economy, tightening credit and gas prices through the roof, many would-be captains of land yachts are rethinking their dreams. Other issues also loom in a world increasingly worried about waste, sustainability and global warming. It might be getting harder to love a beast that gulps a gallon of fuel every seven miles.
Little wonder, then, that one word is on many lips. Bruce D. Hertzke, the chief executive of Winnebago, acknowledges that the times are "challenging." In an interview, Richard Riegel, chief operating officer of Thor Industries Inc., the parent company of 11 RV makers, including Crossroads and Airstream, invoked the specter of a "challenging market."
Mark Warmoth, whose Weekend Warrior Trailer Manufacturing Inc. pioneered "toy haulers" " RVs with garage space in the back for all-terrain vehicles, motorcycles and other implements of ear-splitting outdoor fun " is less prone to euphemism. "A lot of people," he said, "are laying down and dying."
But before you start into a "serves them right" sermon about wretched excess, fuel consumption or the driving habits of snowbirds, consider this: Challenging times for the industry generally mean challenging times for many other Americans as well, because RV slumps tend to precede economic recessions.
RVs are a "highly discretionary" purchase, said Matt Howard, the vice president for marketing at Country Coach Inc., a manufacturer of luxury craft that are roughly large enough to have their own ZIP code. "The only reason somebody needs our motorcoach is because they tell themselves they need our motorcoach," he said.
Manufacturers say they are optimistic that the downturn is temporary and that they will bounce back before long. "We will be affected, like a lot of the industry when the economy goes up or down," Hertzke said, noting that such shifts have occurred many times over the five decades that Winnebago has been in business. "Each time we come back to a stronger, higher level."
Until things do turn around, there is still some joy in the market. It may seem counterintuitive, but the biggest, baddest " and, of course, the most expensive " RV's are doing well, according to Howard. The very high end, he points out, "is where our growth is."
At the high end exists that peculiar breed of shopper that, to use a technical term from the world of economics, let's call the Rich Dude. They have sacks of money " as the novelist Terry Pratchett puts it, "so much gold in your pockets that you would have to employ two people just to hold your trousers up." And there are still many, many Rich Dudes out there. What does Rich Dude's money buy? At Country Coach, Rich Dude buys rolling palaces that can cost $1.7 million and come with Italian marble floors, high-tech controls, window-size flat-screen high-definition televisions and always-connected satellite systems for Internet and satellite TV. Do you want an electronic palm reader to unlock the door? "We've done it," Howard said.
Stepping into the Magna 630, a sort of blue whale on wheels, Howard explained in a tone as smooth as a crème brûlée that the idea behind the Country Coach vehicles is "residential luxury " it's not a camping experience."
Which is why these models have two bathrooms.
Two?
Well, yeah. "When I'm at home, I don't have to share my bathroom" with guests, Howard said. The master bath is large, with a full-size shower. The old joke about standard RV bathrooms, he says, is that they are so small that the most effective way to shower is to "soap up the walls and spin around."
Who buys such behemoths? These days, increasingly, Baby Boomers are hitting the age that historically coincides with motorhome purchasing " a vacation vehicle as nicely turned out as their Lexus or Mercedes. According to Howard, the target age of his buyers has been 63 to 68 years old. But a new market segment has opened and is growing fast: relative youngsters from 53 to 61.
"The boomers aren't waiting to retire to buy a coach," he noted. They "want to manage their portfolio online and then take a walk on the beach."
Life without compromise is not cheap. At $700,000, the Magna is about three times as expensive as the average single-family home, and its 650-hp engine burns diesel almost as fast as it can be pumped into the 150-gallon tank.
RVIA President Richard Coon argues that rising gas prices aren't a big issue for the owners of high-end RVs, whose attitude can be summed up as: "I just paid $400,000 for this motorhome. Do you really think I give a rat's about the price of fuel?"
Not missing a beat, Coon also pointed out that "it's hard to say that in public, but that guy can afford the gas."
Howard estimated that even if a rolling condo got only 7 or 8 miles to the gallon, the spending increase for serious travelers as gas prices have climbed is, perhaps, a few hundred dollars a month.
The decadence " not just conspicuous consumption, but flamboyant consumption " continues across the west wing of the Exposition Center in the territory staked out by the Newmar Corp., where the company shows off an eye-popping vehicle that can probably be spotted from the International Space Station. It has been configured specifically to make the scene at sporting events. "We are targeting the tailgaters," said Holly Nunemaker, a spokeswoman for the company.
The $270,000 All-Star UTV " for "Ultimate Tailgating Vehicle" " is more than 40 feet long and nearly 13 feet tall and has so many gadgets and fold-outs that it looks like something Batman might plunk down the Wayne millions for in his golden years.
The UTV has two bathrooms, sure. But this one has two kitchens as well. There is a small galley for intimate family cooking and another for preparing and presenting the big feed before the game. One side of that kitchen is an industrial roll-up door that opens the room and its two stainless-steel countertops to the outside.
Open a panel on the outside, there's the heavy-duty Jenn-Air gas grill, which slides out on a shelf and can swivel so the chef is upwind. An exterior panel pops up to expose a 52-inch flat-screen TV " the largest of the four on board. Friends can set up the lawn chairs around it in a kind of reverse drive-in, watching video under the two 17-foot-wide awnings while powerful external speakers blare out the audio.
Did I mention the two flagpoles? You pop them up after you park.
All is not over-the-top excess, however, at the show. Over in the Thor domain, the distinctively rounded, aluminum-clad Airstream trailers attract those with an interest in style and design. In new models like the 16-foot-long $45,000 Bambi, an Ikea-meets-the-Jetsons interior matches the nostalgically futuristic exterior and has become a draw for yuppies.
Riegel said a visitor focusing on the biggest and most expensive RVs at the show would miss the point that companies like his want to make. "We don't build rock star buses and race-car driver coaches," he said. "There are a couple of hundred of those sold in a year. We build for the mass market, generally."
That means Thor shoots for annual sales of 100,000 RVs and trailers. It offers luxurious coaches from its Mandalay division, with $325,0000 models, but it also markets $6,000 starter RVs. That middle range, he said, is "where the meat of the market is " not in the rock star bus pricing." But he laughingly concedes that the land yachts are "sexy."
At Winnebago, meanwhile, the company is opening a midsize line of recreation vehicles, including some that get 15 miles a gallon " by RV standards, virtually a Prius. Americans yearn for the open road, said Hertzke. "Nobody has a retirement plan that is just for them to just stay home."
Kelli Harms, a spokeswoman for Winnebago, said that some of the surging interest in RV travel in recent years came after the Sept. 11, 2001, attacks. "Everybody re-evaluated what they're doing with their lives."
Rather than travel abroad, she said, more decided to "see the great features of America." Yes, she conceded, you might see Paris and the Eiffel Tower if you venture overseas, but "when is the last time you went to see Mount Rushmore?" And a cross-country trek in an RV also gives you another kind of clarity: "You do appreciate more what you have " the freedom you have."
This sounds much nicer than an alternative explanation: that Americans became skittish about flying. Or maybe they were tired of being treated like potential terrorists just to go from Point A to Point B. You know, forced to throw away their yogurt in the security line, stuff their tiny shampoo bottles in just the right plastic bags, and take off their shoes for a weapons scan. Or the airline food itself, or "
Oh, wait a minute. Is this still about RVs? Rather than focusing on the drudgery of air travel, Harms went on to talk about community. Owning an RV creates camaraderie with other owners, she said, who socialize at campsites and build friendships. "When you buy an RV, you're purchasing the lifestyle, too."
Yet even the democratizing effects of shared campsites could be shifting, with the emergence of the ultra-high-end vehicles. Monaco Coach, a luxury manufacturer whose vehicles can cost $700,000 or more, is building high-end "destination resorts" for super-RVs so that they won't be the biggest, gaudiest vehicles at the campground.
The plots of land cost hundreds of thousands of dollars, said Jim Sheldon, a senior executive at Monaco, and the communities offer golf courses and upscale restaurants. "For someone who has invested $500,000 to $700,000" on an RV, he said, "spending another $200,000 for a destination location is very plausible."
Such talk might seem antithetical to the "we're all just campers here" ethic that has long characterized RV communities. But there's still plenty of room for the rest of us, said Warmoth, the founder of Weekend Warrior. In a black T-shirt and blue jeans, with his double-peaked goatee and graying curls that peek out from under his black gimme cap, he stands apart from the suit-and-tie armies of manufacturers' representatives at the show.
Warmoth's innovation was trailers that offer full living space, but with a large room at the back that can be easily cleared of furniture. The back wall folds down to create a ramp and mobile garage for all manner of recreational, off-road equipment. "It's brought in a younger group of people," he said. He says the toy haulers have contributed mightily to the company's $200 million in annual sales, and have inspired imitations throughout the industry.
Sitting on a leather couch in what he calls his "top-dog, double throw-me-down huge" trailer, called Full Throttle, which costs $75,000 and shows the "warrior wing" logo on every surface, Warmoth, 51, observed that "this industry is very mild, and we're not. We're wild."
Warmoth's youngish weekend warriors are a bright spot for the industry. That is one reason Michael A. Schneider, the chief executive of the RV trade magazine publisher Affinity Group Inc., says that "most of us who have been around a while" see the recent downturn as "a temporary blip." People try the behemoths and just fall in love, he said.
Recessions come and go. Gas prices rise and, well, rise. But "once somebody gets hooked on the lifestyle, sure, it's not pleasant when gasoline goes up," Schneider added. "But they adjust, because they're passionate about the lifestyle." </div></BLOCKQUOTE>
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