In the seven months since Camplify went public, two questions hang over the company. Are there enough profits and growth in motorhome rentals to make this online segment robust? Or are Camplify and its peers riding a pandemic trend?
“Since day one in 2014, we’ve always had more demand than supply,” said Founder and CEO Justin Hales of Camplify, which connects recreational vehicle (RV) owners with potential renters.
Camplify benefited from a pandemic-related trend in people dreaming of outdoor experiences and Airstream vacations. Almost 12 million Instagram posts have been tagged “vanlife.”
But the company said it had momentum beyond a pandemic bump.
“One of our typical customers is parents who want to give their family fantastic outdoor experiences, but find that staying in a tent can be a real pain when you have kids,” Hales said. “For these parents, an RV they can access on demand in their neighborhood – without having to own it – earns them a small premium.”
One of the travel industry’s underrated storylines is that the van life is becoming a van lifestyle, as Skift CEO Rafat Ali said in a recent podcast.
New financial details
During its IPO, Camplify, based in Newcastle, Australia, disclosed some details about its business that its private competitors have yet to disclose.
Its numbers help benchmark the segment, which includes its US-based counterparts Outside and RVShare; germany GoBoony and Paul Camper; Switzerland Nomadic; the Netherlands’ CampToo; and the UK ShareACamper (just bought by Camplify).
Camplify’s performance suggests that the motorhome rental model could generate long-term profits.
The company’s “catch rate” or transaction revenue was 25% in the fiscal year ending June 2021. The company had 30,651 bookings, which allowed it to more than double revenue for reach $6.1 million (A$8.4 million). Camplify also increased its gross transaction value during the year by 171% to $23.6 million (A$32.9 million).
In contrast, Expedia Group and Booking Holdings had a mixed ownership of only 12 percent before the pandemic, according to Skift Search.
“I’m confident we’ll have a turnout of at least about 25% for a while,” Hales said.
Professionalization of RV rental
Just as Airbnb started with freelance hosts but now has growing inventories of professional property managers, Camplify and its competitors are starting with a market of mostly freelancers but working their way up to professionals.
This mix is an important factor in the long-term profitability equation. Fragmented markets devoid of many sophisticated professionals can lead to high participation rates for online intermediaries for years.
Today, Expedia Group and Booking Holdings have far lower participation rates than two decades ago because they sell a mixture low-profit tickets from around 200 airlines and low-profit hotels from a few hundred brands and groups. In their early years, the conglomerates benefited greatly from profitable bookings at hundreds of thousands of independent hotels, as Skift Research noted. Hotel rate parity ruined the party.
Likewise, the outdoors is becoming more professional. Startups such as based in the United States Hut to suggest Branded, glamping-style rentals RV rentals are a must.
“I would say a third of our fleet would be professionally owned, defined as people who have registered businesses,” Hales said. “The biggest has about fifteen vehicles. Mom and Dad, the regular people provide the majority of the supply, however.
Camp racing on the highway
Camplify is certainly a small player that is still proving itself in its market. His company’s initial public offering on the Australian Stock Exchange raised approximately $8.5 million (A$11.5 million).
As of September 2021, the company had 6,469 vehicles in Australia, New Zealand, Spain and the UK, and it had over 51,000 rental accounts.
So far, growth has been rapid. In September, the Australian Financial Review rated Camplify as the 17th fastest growing company in the countryside.
In October, Camplify announced its acquisition of two companies, Mighway and ShareACamper for approximately $5 million (A$7.37 million).
Fad or long-term trend?
will be the growing interest in camping and outdoor experiences last beyond the pandemic?
Hales argued yes. Despite its growth to date, Camplify holds less than 2% of the market. In January 2021, Australia had 741,000 registered RVs, and most owners had yet to rent them.
Camplify makes the vehicle rental process easy for owners. It offers owners different levels of insurance paid on a monthly subscription basis rather than an expensive third-party pay-as-you-go.
The company offers optional tracking devices for vehicle downers so owners can find out where their vehicles are, if they’ve been taken off-road, how many miles they’ve accumulated. It offers optional biometric locks to reduce customer interactions.
In a bid to increase supply, Camplify last year began making it easier to order motorhomes directly from manufacturers. These motorhomes and motorhomes are designed to be rented out. For example, it replaces inconvenient internal cooktops with gas-powered slide-out external grills, and it installs slide-out awnings that resist breakage by novice users.
Part of Camplify’s marketing is simple. The vehicles themselves are like animated advertisements. Hosts can display a QR code so people passing through a campsite can scan it for booking details in the future.
Viewing costs
As the company ramps up its marketing, it might see pressure on its customer acquisition costs. In its 2021 financial year, Camplify realized an average acquisition cost of $92 (Australian $129) per RV owner acquired and $6.60 (Australian $9.25) per new tenant.
Hales acknowledged that the loss-making company will see its customer acquisition costs rise as it tries to expand into overseas markets. But he added that his “turnout” had also increased over the past four years.
“We look beyond the basic, standardized offering to other products that our customer segments are looking for,” Hales said. “We are diversifying our revenue, and thus growing our revenue at a higher rate, by adding premium upsells around our core offering.”
However, he will have to watch the costs. In the year to June 2021, it suffered a net loss of $1.5 million ($2.1 million) measured as earnings before interest, taxes, depreciation and amortization, a measure of profit.
Overall, the danger of trying to be the Airbnb of motorhomes is that Airbnb might decide to do it itself. In the still fractured short-term rental market, Airbnb enjoys an acceptance rate of between 14% and 25%. Once the pandemic subsides, she could afford to branch out explicitly into the van life.
Meanwhile, whichever motorhome rental company holds a global leadership position in the category, it will have to innovate more than everyone else.
“It took a long time for customers to feel comfortable renting their vehicles the same way Airbnb deals with short-term rentals,” Hales said. “We’ve worked hard to prove this is a viable option for customers, which in turn encourages more professionalism from owners, which creates a virtuous circle.”
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