Saturday, August 16, 2008
THE RV LIFESTYLE ON $4 A GALLON
From the Wall Street Journal
By JONATHAN WELSH
August 14, 2008; Page D1
At a fuel stop where drivers pay before pumping, Ted LeBaron recently surprised others in line when he asked the attendant for $300 worth of fuel. "The guy behind me just about came unglued," Mr. Le-Baron says.
At the time, the plumbing-company owner from Camarillo, Calif., was driving his 34-foot Winnebago motor home, which despite its size, he says, is more efficient, pound for pound, than a big SUV. Still, he concedes, he feels a bit conspicuous while filling up, though the reaction he usually gets is one of sympathy.
Drivers who feel they suffer by paying $100 to fill the tank of their sport-utility vehicle should try road-tripping in a motor home or other large recreational vehicle. Filling up one of these rolling manses can cost anywhere from $350 to nearly $500.
Most of the large "type A" motor homes run on diesel fuel, which can cost as much as $5 a gallon or more, depending on the region. They have tanks that hold up to 100 gallons, but the fuel goes quickly at seven to 10 miles per gallon. Travelers pulling large trailers with pickup trucks get similar fuel economy, as do smaller "type C" motor homes that often run on gasoline.
As a result, many RV owners are altering their travel plans. Some are simply leaving them home or driving to a campground and staying put, while others are cutting the number of destinations and side trips on their next long journey.
"People are still RVing, but they definitely aren't going as far," says Susan Bray, executive director of the Good Sam Club, which calls itself the world's largest RV owners' club.
Roxanne Camron and her husband, Robert, had planned for years to take their recreational vehicle on a trip to Alaska, and this was to be the year. But the high price of diesel fuel for the large pickup truck they use to tow their RV made the Paso Robles, Calif., couple reconsider. Instead, they took a shorter, 2,600-mile multistate trip that included Jackson Hole, Wyo., and Yellowstone National Park. Even their shorter trip got squeezed, though, as the Camrons sought to further trim the fuel bill.
"We actually cut out Mount Rushmore," says Ms. Camron, a freelance editor. "Still, there were days when we'd spend a couple hundred dollars on fuel alone."
Even as prices at the pump have fallen in the past few weeks, RV drivers worry that they could surge again, say industry observers. The average price of regular gasoline is about $3.81 a gallon this week, down 7 cents from last week but up more than $1 from a year ago, according to the U.S. Department of Energy. Diesel was $4.35 a gallon, down almost 15 cents from last week but up $1.50 from last year.
For many seasoned RV travelers, the price of fuel is an uncomfortable topic -- akin to a family secret no one wants to talk about. Dave Morgen, a retired tobacco executive who is leading an RV trip of Good Sam Club members around the Great Lakes, says he tries not to dwell on the bill when he fills up his motor home. "You just sign the ticket and go," he says.
Robert and Roxanne Camron put off an Alaska trip because of high fuel costs.
The surge in fuel prices is more alarming for the $14.5 billion RV industry -- which includes dozens of small manufacturers as well as a few big players, such as Fleetwood Enterprises Inc. and Thor Industries Inc. -- than it is for RV owners, since it appears to be scaring off potential new customers. Sales of the vehicles, which range from $5,000 popup camping trailers towed by a car to $400,000 hulking motor homes as large as a bus, have declined 14% this year to a projected 304,000 vehicles by year's end, according to the Recreation Vehicle Industry Association, a trade group in Reston, Va.
That's not much worse than the 11% drop in sales of cars and light trucks. But while most people will eventually need new cars, RVs are the kind of extravagance consumers tend to forgo when they feel financially pinched.
Winnebago Industries Inc., which makes RVs in a range of sizes and styles, recently reported a 73% decline in net income for its fiscal third quarter. The Forest City, Iowa, company, which some consider a barometer of consumer confidence, attributed the decrease in part to inventory reductions by dealers responding to falling demand. Deliveries of its large, high-profit type-A motor homes fell 53% in the quarter ended May 31, according to a recent earnings report, while its backlog of orders fell 68% for type-A vehicles and 51% for smaller type-C models compared with the year-earlier period.
To be sure, it's no surprise that sales of recreational vehicles are down. What's more surprising is that the downturn isn't worse, especially because RVs are squeezed between two sinking markets: autos and housing. Many people who bought RVs in the past decade, especially in the industry's post-Sept. 11, 2001, boom, financed the purchases with home-equity loans. Many prospective buyers can't get such loans in today's tight credit market.
One reason RVs are faring better than some might expect is because fuel economy isn't necessarily as much of a concern to buyers as comfort and convenience features. Travelers are likely to compare the cost of operating motor homes or large trailers not just to the cost of driving the car, but also the price of hotel rooms and restaurant meals. Compared with the cost of driving a car and staying in hotels for family vacation, using an RV saves between 27% and 61%, according to the Recreation Vehicle Industry Association.
Sophie Adler, with sons Steven and Shawn, hasn't given up her RV -- yet.
Ms. Camron from Paso Robles, for example, said she and her husband spent about $2,500 on their monthlong trip. Another couple traveling with them but driving an SUV and staying in hotels "spent at least twice as much," she says.
Indeed, the price of fuel may be just one of many factors that drive some owners away from what RVers call "the lifestyle."
Last week, Lance and Sophie Adler sought shelter in a Montclair, N.J., restaurant with their sons Shawn, 12, and Steven, 9. Mr. Adler was using his laptop to find a shop to replace a damaged tire on their Winnebago Outlook motor home that sat conspicuously in the parking lot. The family was on its way back to Ft. Lauderdale, Fla., after vacationing in Montreal.
Ms. Adler said she's upset that $100 -- which covered about three-quarters of a tank this time last year -- barely buys half a tank of gas this summer. But other hassles, such as hard-to-find parts and a water heater that just "died," are more urgent.
Mr. Adler looked up wearily and said, "Gas is the least of our worries."
Write to Jonathan Welsh at jonathan.welsh@wsj.com
By JONATHAN WELSH
August 14, 2008; Page D1
At a fuel stop where drivers pay before pumping, Ted LeBaron recently surprised others in line when he asked the attendant for $300 worth of fuel. "The guy behind me just about came unglued," Mr. Le-Baron says.
At the time, the plumbing-company owner from Camarillo, Calif., was driving his 34-foot Winnebago motor home, which despite its size, he says, is more efficient, pound for pound, than a big SUV. Still, he concedes, he feels a bit conspicuous while filling up, though the reaction he usually gets is one of sympathy.
Drivers who feel they suffer by paying $100 to fill the tank of their sport-utility vehicle should try road-tripping in a motor home or other large recreational vehicle. Filling up one of these rolling manses can cost anywhere from $350 to nearly $500.
Most of the large "type A" motor homes run on diesel fuel, which can cost as much as $5 a gallon or more, depending on the region. They have tanks that hold up to 100 gallons, but the fuel goes quickly at seven to 10 miles per gallon. Travelers pulling large trailers with pickup trucks get similar fuel economy, as do smaller "type C" motor homes that often run on gasoline.
As a result, many RV owners are altering their travel plans. Some are simply leaving them home or driving to a campground and staying put, while others are cutting the number of destinations and side trips on their next long journey.
"People are still RVing, but they definitely aren't going as far," says Susan Bray, executive director of the Good Sam Club, which calls itself the world's largest RV owners' club.
Roxanne Camron and her husband, Robert, had planned for years to take their recreational vehicle on a trip to Alaska, and this was to be the year. But the high price of diesel fuel for the large pickup truck they use to tow their RV made the Paso Robles, Calif., couple reconsider. Instead, they took a shorter, 2,600-mile multistate trip that included Jackson Hole, Wyo., and Yellowstone National Park. Even their shorter trip got squeezed, though, as the Camrons sought to further trim the fuel bill.
"We actually cut out Mount Rushmore," says Ms. Camron, a freelance editor. "Still, there were days when we'd spend a couple hundred dollars on fuel alone."
Even as prices at the pump have fallen in the past few weeks, RV drivers worry that they could surge again, say industry observers. The average price of regular gasoline is about $3.81 a gallon this week, down 7 cents from last week but up more than $1 from a year ago, according to the U.S. Department of Energy. Diesel was $4.35 a gallon, down almost 15 cents from last week but up $1.50 from last year.
For many seasoned RV travelers, the price of fuel is an uncomfortable topic -- akin to a family secret no one wants to talk about. Dave Morgen, a retired tobacco executive who is leading an RV trip of Good Sam Club members around the Great Lakes, says he tries not to dwell on the bill when he fills up his motor home. "You just sign the ticket and go," he says.
Robert and Roxanne Camron put off an Alaska trip because of high fuel costs.
The surge in fuel prices is more alarming for the $14.5 billion RV industry -- which includes dozens of small manufacturers as well as a few big players, such as Fleetwood Enterprises Inc. and Thor Industries Inc. -- than it is for RV owners, since it appears to be scaring off potential new customers. Sales of the vehicles, which range from $5,000 popup camping trailers towed by a car to $400,000 hulking motor homes as large as a bus, have declined 14% this year to a projected 304,000 vehicles by year's end, according to the Recreation Vehicle Industry Association, a trade group in Reston, Va.
That's not much worse than the 11% drop in sales of cars and light trucks. But while most people will eventually need new cars, RVs are the kind of extravagance consumers tend to forgo when they feel financially pinched.
Winnebago Industries Inc., which makes RVs in a range of sizes and styles, recently reported a 73% decline in net income for its fiscal third quarter. The Forest City, Iowa, company, which some consider a barometer of consumer confidence, attributed the decrease in part to inventory reductions by dealers responding to falling demand. Deliveries of its large, high-profit type-A motor homes fell 53% in the quarter ended May 31, according to a recent earnings report, while its backlog of orders fell 68% for type-A vehicles and 51% for smaller type-C models compared with the year-earlier period.
To be sure, it's no surprise that sales of recreational vehicles are down. What's more surprising is that the downturn isn't worse, especially because RVs are squeezed between two sinking markets: autos and housing. Many people who bought RVs in the past decade, especially in the industry's post-Sept. 11, 2001, boom, financed the purchases with home-equity loans. Many prospective buyers can't get such loans in today's tight credit market.
One reason RVs are faring better than some might expect is because fuel economy isn't necessarily as much of a concern to buyers as comfort and convenience features. Travelers are likely to compare the cost of operating motor homes or large trailers not just to the cost of driving the car, but also the price of hotel rooms and restaurant meals. Compared with the cost of driving a car and staying in hotels for family vacation, using an RV saves between 27% and 61%, according to the Recreation Vehicle Industry Association.
Sophie Adler, with sons Steven and Shawn, hasn't given up her RV -- yet.
Ms. Camron from Paso Robles, for example, said she and her husband spent about $2,500 on their monthlong trip. Another couple traveling with them but driving an SUV and staying in hotels "spent at least twice as much," she says.
Indeed, the price of fuel may be just one of many factors that drive some owners away from what RVers call "the lifestyle."
Last week, Lance and Sophie Adler sought shelter in a Montclair, N.J., restaurant with their sons Shawn, 12, and Steven, 9. Mr. Adler was using his laptop to find a shop to replace a damaged tire on their Winnebago Outlook motor home that sat conspicuously in the parking lot. The family was on its way back to Ft. Lauderdale, Fla., after vacationing in Montreal.
Ms. Adler said she's upset that $100 -- which covered about three-quarters of a tank this time last year -- barely buys half a tank of gas this summer. But other hassles, such as hard-to-find parts and a water heater that just "died," are more urgent.
Mr. Adler looked up wearily and said, "Gas is the least of our worries."
Write to Jonathan Welsh at jonathan.welsh@wsj.com
