GoRVing Endorses Rentals

by Bert Alanko

This RV business sure is a wonderful industry to be involved with these days; it is almost a giddy atmosphere, so let’s Go-Go RVing! So many business and industry sectors are singing the blues but the RV industry is flying high, sailing along. Airlines are hurting, the cruise ship industry is adrift, Vegas is trying to redefine itself having given up on the family approach, boating has lost power and here we are, suddenly RVing is ‘cool’. What the heck is going on, did you ever think that what you are doing would be cool?

Louisville produced a terrific show this year. Due to the fact that the industry is doing so well everyone was in a positive mood with smiles on their faces. Prospects for this next year and into the future look strong for all sectors of the industry.

MBA has been around a long time, 2003 will be our 25th year in the RV business, (as I like to say we started long before I had gray hair). I am here to testify, that in the years that we have been involved with the Louisville show, I have never heard more positive opening day remarks regarding rentals than at the GoRVing presentation.

There was positive karma regarding everything RVing, but for the first time that I can recall there was positiviosity, positive positivism, good vibes sent out towards the rental sector. That’s right - RENTALS, believe it or not. It seemed that every presentation and every presenter had something positive to say or provided a favorable impression or opinion of renting RVs.

Even our good friend and quarterback of the RVIA, Dave Humphries, made positive reference of the fact that rental is an important part of the industry and up 30% in 2002. Well folks, I almost fell out of my chair. As I recall that morning, I would guess that about half of the TV clips shown made some sort of reference to renting.

All of this for good reason, our rental industry segment is up, way up. For almost everyone 2002 was a banner year. For all of the reasons that have been mentioned before in article after article - time and again, rentals are strong. At MBA we can see no reason why 2003 and beyond will not be as strong and getting stronger.

All data and reasons indicate that those factors that have accelerated the rental success will remain in place for years to come. The rental market’s target audience, their numerical size, their income level, spending habits, life style preferences, family orientation are all on the plus side of the ledger when we look at the future for rentals. Barring some major disaster, there will be no stopping the demand for rental motorhomes and trailers in years to come.

We preach all the time about the reasons to be in the rental business so I will not bore you or myself with the list. I’ll just say, think about getting into the rental business if you are not there now, or increasing the fleet and becoming a more professional operation if you are currently renting.

Manufacturers and dealers have to realize, and I think are slowly coming to the realization, that not all RVers are potential vehicle buyers. There are many individuals who want to be a part of the RVing experience, who for whatever reason will never buy one of those things. That group is of course huge; you and the industry should not overlook the renter. It is up to us, up to you, to see that the customers receive a positive experience from the use of our products.

This group wants to RV and they will RV. They will rent. They will rent from someone. They may rent multiple times in multiple years. They will spend money RVing. Someone, some dealer, somebody is going to provide that rental service. Someone is going to collect that money from that renter. Whether or not you profit from this segment is up to you. OH, and by the way, I am told that some of those who will never buy -- actually do.

A focused, professional approach to renting is the key to success. We hear from some dealer’s statements such as “We tried it before and couldn’t make it work”, “it wasn’t profitable, there is no money in rental”. OK, if that were the case there sure are a lot of companies out there having fun at losing money. Or, maybe they are making money. Certainly a rental operation is not for everyone. Rental takes work, planning and personnel. It takes commitment to be successful, so what doesn’t?

Scott Krenek, a dealer of new, used and rental motor-homes and trailers, says of renting, “there are so many ways to do it wrong, and a few keys to doing it right”. Scott also says “I cannot believe that every dealer does not rent, it’s so natural”.

Rentals... do it right. What does that mean?

First, what is wrong?

1. Wrong is not understanding your vehicle cost structure through the rental period?
2. Wrong is simply looking at your competitor’s pricing and copying it or trying to be just a little less.
3. Wrong is not being able to sell the rental experience.
4. Wrong is not having the very best mix of vehicles in the rental fleet.
5. Wrong is not demanding profit out of the rental sector.

What then is right?

1. Right is the understanding of the true cost factor per mile.
2. Right is realizing that the competition may be going out of business at their price point; forget about them.
3. Right is an understanding that the good customers will pay for quality.
4. Right is making rental a profit center.
5. Right is realizing that at some point the rental department will require a rental manager just as does parts and service or any other department in your business.

MBA has a customer who, with a couple of minor changes to his operating system, has increased his average revenue from $1.10 to $1.77 per mile on his total fleet for the 2002 rental season. This gentleman has been renting since forever, and yet because he was open to new systems and processes, was able to dramatically increase his profitability. You do the math, 30 vehicles x say 20,000 miles x 1.77 per mile. Then he sells the clean used vehicle with a current model year title in the fall. Life is good.

We feel that the manufacturers realize that rental vehicles are not a threat to vehicle sales. A vehicle sold, whether into the rental fleet to eventually be sold as used, or sold initially to a new customer, matters not, it is all the same, it is a vehicle out of the plant, down the road.

You will find that almost all of the manufacturers have programs for rental vehicle purchasing. Everyone seems to have figured out that rentals are a good thing. Rental is a major part of that elusive thing called market expansion. Rental can be one of the best ways to promote the industry and the RV lifestyle.

As one dealer said to me at the show, “I must get ten calls per day in the summer looking for a rental unit”. Does that sound familiar - ring a bell? I responded “you mean that ten people a day are asking if they can give you up to a $1,000, $2,000 or more and you are saying, no we don’t accept that kind of money, come back when you are ready to give it to us the way we want to do business”.

Anyway, that dealer wants to get into rental. He will attend our rental school in January to get instruction on doing it right. At Louisville he ordered rental units from Forest River. He will be purchasing rental software. He will be growing his business, will be advertising in new areas, and will be expanding his market presence. Most importantly, he will start accepting money from a new segment of the market.

Last but not least, from our standpoint, this dealer will become our approximately 1075th current rental dealer customer. There are a lot of rental operations out there in this U.S.A. MBA still insures our very first dealer from 25 years ago.

Rentals can be good - are good. It has been a fun journey these past 25 years. As suggested by RVIA, the GoRVing Coalition and the growth that we have experienced, the best is still in the future, out there in front of us all.

The RV industry is a blast; we at MBA are having a blast. The old saying “don’t give up your day job” applies to us. To that we say fine, OK by me, but what else do we have to do that could be this much fun. Give us at MBA a call if we can help you.

Bert Alanko is President of MBA Insurance and Chairman of the Recreation Vehicle Rental Association.

Credits: RV News Magazine Feb 2003