From dream to reality: How to start your own RV rental business

14 min read

The recreational vehicle (RV) rental market has grown considerably in recent years. COVID-19, remote working culture, and social media have made the holidays on wheels more appealing. However, that's just one part of the picture.

RV rentals allow people to explore and adventure in the outdoors. The sightseeing, nature, and independence mix is perfect for holidaymakers looking for a more unique, off-the-beaten-path experience.

The freedom and versatility that RV rentals offer is unparalleled. However, a well-serviced, modern campervan is expensive for most people. Starting an RV rental business means you can make these special holidays accessible to everyone. 

The availability of fuel-efficient vehicles means that campervan vacations are cost-effective and environmentally friendly compared to other holidays. Rental models also meet the growing trend toward sharing goods that aren't needed daily. RV rentals could be the way to go if you want to start a business in the travel and tourism industry that brings people joy while offering a more eco-friendly option for their holiday trips.

The global RV rental business market is growing. Worth around $800m in 2021, the RV rental market is projected to surpass well over $1bn dollars over the next few years, thanks to a compound annual growth rate of 7.4%. With nightly rental rates of around $200 or more per campervan, this can be a lucrative business when done right.

Let's look at the essential steps required to start a successful RV rental business.

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Create an RV rental business plan

Running a profitable RV rental business starts with a solid plan. You need to understand your market, your competitors, and the overall finances of the niche.

Starting an RV rental business requires a significant investment. A business plan is essential if you want to raise capital or for your business. So make it as deep and well-researched as possible.

Here are some critical parts of an RV rental business plan that you must include.

Market research and competitor analysis

Before you start an RV rental business, you need to do a lot of research. So explore the market and your competitors, and think about seasonality.  

Identify your target audience

RV owners and renters have roughly similar demographics. A recent comprehensive study by the RV Industry Association shares some incredible insights into the typical target market for RV rentals.

Here are a few stand-out statistics from the report that can help you identify your target audience. 

  • RV ownership has increased by 60% over the last 20 years

  • RV owners and renters are split evenly between those over and under 55s

  • Remote workers are increasingly taking "hush trips," i.e., unauthorized working holidays

  • Millennials are the most significant growth market

  • RV deliveries are becoming increasingly popular

Other things to consider are your location. If you live within driving distance of holiday attractions or hotspots, you can target travelers to those areas.  

Perform a competitor analysis

Competitor analysis is an excellent source of information. Things that you want to find out include:

  • What are your competitor's rental fees?

  • What services do they offer?

  • How many campervans do they have?

  • What do they do well, and where are they failing?

  • What areas do they service?

  • What are their pickup and collection policies?

  • Do they deliver RVs? 

The answers to all these questions can help you spot underserved market segments and opportunities. Some of your rivals will be big faceless corporations. Others will be RV owners who want to earn money from their RVs. On the other hand, you should aim to find areas where you can offer better value, vehicles, or services to attract customers.

Evaluate seasonality

RV rental businesses are heavily affected by seasonality. Depending on your location, the holiday season could be just a few months long. So, that's something you need to work into your plan.

If you buy a fleet of RVs, you must pay for them each month. So ensure that you can collect enough rent during the high season to come out ahead.

Business planning

An RV rental business requires a significant initial investment. The rise in demand during COVID-19 saw motorhome prices shoot up. While starting an RV rental business is more expensive than in the past, the high costs have also significantly bolstered the need for a rental market.

Here are a few things to consider during the business planning stage.

Define your value proposition

How will your RV business stand out? That's the big question you need to ask. If there are a lot of RV rental companies in your area, you need to find a way to get an edge.

While competing on price is an excellent way to win new customers, high costs and business expenses will cut your profits. So consider offering high-quality rentals, more convenience with pickups and drop-offs, or next-level service.   

Think about your target audience and what they want. Understand their needs and communicate how your RV rental business can accommodate these desires and more!

Describe your business model

You need a concrete financial plan to raise money for your camper van rental business. So get your business model and pricing strategy down on paper so you and your potential investors understand precisely how you'll generate money.

RV rental income will make up the bulk of your revenue. But you should explore other areas where you can earn money. For starters, you can offer extras and upgrades that people might need during their vacation. That could be something as simple as selling coffee and drinking water or offering extra equipment to make life on the road more fun.

Project your finances

Financial planning is a crucial stage of starting an RV rental business. You need to find an answer to the question, "Is an RV rental business profitable?"

The good news is that you can charge around $200 or more per night for an RV rental. Motor Biscuit suggests the average monthly payment for RV financing is between $225 to $650 monthly. Crunching those numbers shows that renting RVs can be very profitable, especially if your inventory is constantly used during the high season.

However, before you start working out how soon you can retire, you must consider the expenses that can eat into those profit margins. Let's take a look.

Startup costs:

  • Downpayment for your RV fleet

  • Equipment

  • Marketing

  • Website

  • Rental facility

  • Permits and licenses

  • Accounting and legal advice

  • Business and admin tools

Ongoing expenses:

  • Insurance

  • Rent for

  • Maintenance

  • Marketing

  • Utilities

  • Credit card fees

So, while rental fees have a solid gross margin, there are plenty of business expenses to consider. Experts suggest you target around 60% profit margin on your rentals.

Create a marketing plan

Once you have your costs and business model down, it's time to think about how to reach your target market. Consider both online and offline channels. Content marketing and SEO can turn your website into a well-oiled booking engine, but don't ignore the power of social media platforms. PPC ads are a cost-effective way to get instant results.

Ensure your business plan has a solid go-to-market strategy. It's not something you can figure out on the hoof.

Establish a legal entity for your RV rental business

To start your own RV rental business, you must do things by the book. Here are the major things you'll need to take care of to ensure your business is legal and above board.

Choose a name for your business

Coming up with a business name is an exciting time. Pick something catchy and memorable that makes it clear what business you are in. Check your desired name against local business registries, social media accounts, and websites. You don't want any confusion.

Form a business entity

You have a few options when deciding on a legal structure for your business. Pick carefully because each kind has tax and legal implications.

  • Sole Proprietorship: This business entity can be set up with just a social security number (SSN). However, there are two major downsides to consider. Firstly, you'll need to pay tax on your business and personal earnings. Secondly, you're liable for any debts or damages which could affect your personal assets.

  • Partnership: A partnership has many similarities to a sole proprietorship. However, it's the business structure to use when you have a business partnership. But choose carefully because you'll be liable for your business partner's actions and decisions.

  • LLC (Limited Liability Company): An LLC is a good structure for an RV rental business because it allows for pass-through taxation while limiting your liabilities in the event of bankruptcy or legal action.

Before you choose your business structure, speak to a legal professional to get a recommendation that suits your needs. Rules vary from country to country, so ensure you get some advice or, at minimum, do some research.

Register for taxes

You'll need to pay taxes on your earnings. However, the exact process depends on the country you are operating in. If you're in the US, you must apply for an Employer Identification Number (EIN) before registering for state and federal taxes. 

Your local government websites should offer you all the information you need about taxes in your region.

Set up a business bank account

Setting up a business bank account is an essential step. There are several benefits to consider. For starters, if you want the liability protections afforded by an LLC, you need a business account. Furthermore, it's a bad idea to commingle personal and business funds.

Finally, setting up a separate account for your RV company means you can build credit, get a business credit card, and avail of loans. This can help with cash flow, which is crucial for small businesses of any kind.

In the US, you can set up a business bank account with an EIN. Check your local requirements to ensure everything runs smoothly. 

Legal and regulatory considerations

Starting an RV rental business requires more than just registering your business. There are also legal and insurance matters that you need to take care of. Failure to do so could result in fines or business closure, so don't take this step lightly.

Permits and licenses

Small businesses need to apply for a variety of permits and licenses. Requirements vary depending on where you do business. So ensure you check government websites to ensure you comply with local regulations.

Insurance coverage

You'll need business insurance to protect your inventory and employees. However, you'll also need RV Insurance to cover your vehicles while they are being rented.

Some of the insurance policies that you'll need are:

  • Property insurance for your RV rental premises

  • Business property insurance for your RVs and equipment

  • Commercial auto insurance for your company vehicles

  • RV breakdown insurance

  • Professional liability insurance

Shop around to get the best packages and ensure you get advice from a professional.

Rental contract and waiver policies

An RV rental firm needs rock-solid contracts to protect your inventory and business. Accidents happen on the road, and you can't be liable for your renter's actions. 

So get the advice of a legal professional and ensure you are protected in the event of damages or loss. What's more, you must also build in protection for your inventory. You are renting out goods that can cost more than six figures, so make sure you have policies that guarantee they return to you within the specified time frame. 

You'll also need to ensure that any damages are charged to your customers. This includes windscreen damage, punctures, dents, and scapes. So draw up a contract that protects your RV.

Inventory management

RV rentals involve some logistics. While customers can sign rental agreements digitally, you'll need to ensure you collect documents, set up insurance, and give out and collect the keys. 

Here are a few things you need to consider.

Sourcing RVs and equipment

Buying an RV fleet is expensive. While you could buy used vehicles, RV renters are increasingly looking for fresh campervans. Additionally, having a fleet that is under warranty means you're protected from mechanical issues.

Buying in bulk can get you a better price. But if you're starting, it might be best to start with just a few RVs while you get into the groove. 

Tips for maintaining and organizing inventory

Rental inventory management software is crucial. You can also connect these programs to your website, allowing potential customers to see availability and book online. 

You need a solid process for checking vehicles in and out. Ensuring your RV's are roadworthy is essential. Any negligence will destroy your business and your reputation. 

RV shops are expensive. So, if you're mechanically minded, you can save a lot of money on maintenance and repairs. Otherwise, buying new and reliable models can keep maintenance costs down.

Marketing and customer acquisition

Your dreams of starting an RV rental business can only come true with good marketing and advertising. Here are some helpful tips.

Identifying your target market

RV renters come from lots of different backgrounds. But reaching all of them is a challenge. Your best bet is to figure out who you want to target. For example, families, RV renters with pets, adventurers, etc. Catering to these cohorts will require distinct messaging.

Another thing to consider is how the campervan will be used. Some renters will want to drive thousands of miles over rough terrain and camp under the stars. Others will want to drive to a campsite and stay there for their RV vacation. The wear-and-tear implications are totally different.    

So figure out who you want to serve and where they congregate.

Build a memorable brand for your business

Branding is essential in the RV rental business. But you need to strike the right tone. Appealing to your client's sense of adventure is a good start. However, most holidaymakers want to rent from a dependable and trustworthy business.

All this comes downstream from knowing your target audience. Understand their needs, and project them with your brand.

Effective marketing strategies for an RV rental business

Millennials represent a significant source of growth in the RV rental world. Digital marketing is the best way to connect with this demographic. So consider a mix of short and long-term strategies. 

A content marketing strategy that produces updated and exciting information on campervan holiday routes can help draw long-term traffic to your website. When paired with SEO, this can be a great way to bring a steady stream of customers.

However, if you're just starting out, digital ads on Meta or Google can help you connect with your audience. And don't forget about using a solid local SEO strategy, either.

Ensure you have social media accounts too. Post regularly, be helpful, and engage with RV-oriented groups, and you'll make the connections that can make a difference.

The role of a website and online user experience in driving bookings

The way that consumers shop has changed remarkably over the last few years. Today buyers want to do their research and find the best deals. So make it easy for them by providing photos, vehicle specs, and transparent prices. 

Ensure the user experience is as frictionless as possible. Don't make them need to call you up to enquire about availability or prices. Make sure all the essential info is at their fingertips. 

Here is a step-by-step guide to building a rental website. Make it as functional, professional, and reassuring as possible to boost conversion rates

Operations and customer service

You need smooth operations and excellent customer service to build trust, loyalty, and a reputation. Here are two areas you need to consider.

Managing daily operations

You must build clear internal policies for handling the pickup and drop-off of your vehicles. Additionally, because you'll be dealing with driver's licenses and personal information, you need solid data management too. 

The most important thing is ensuring your fleet is going out and coming back in good condition. Thorough inspections and a good maintenance schedule are essential.

Delivering excellent customer service

Excellent customer service keeps people coming back. Be attentive, knowledgeable, and compassionate, and you'll make your customers feel cared for. 

Problems will happen. But deal with them responsively and with kindness, and you'll protect your business reputation.

Growth and expansion

Of course, the work never truly ends. Starting a business is just the first phase, but if you want to generate more revenue, you'll need to grow and scale.  

Key Performance Indicators to monitor

KPIs are a great way to track performance. Here are a few RV rental-specific KPIs that you should monitor.

  1. RV fleet utilization = # days rented / # days available

  2. Rental rate = total rental revenue / # of rental contracts

  3. Capital utilization = annual rental revenue/cost of acquisition

  4. Average order value = total revenue/# of bookings placed

  5. RV to rental ratio = # of RVs available for rent/ total # of RVs

Strategies for growing the business

High business expenses and extreme seasonality mean that RV business owners need to look for additional revenue streams. Thankfully, there are a few ideas that can help you make the most of the busy season.

While RV rental will bring the lion's share of revenue, you can explore add-ons to increase the value of each rental. Depending on the surrounding area, you can offer extra services. For example, you can provide mountain bikes that attach to the RV, disposable BBQs, fishing rods, or anything that helps your customers achieve the RV holiday of their dreams.

Other things to consider are mileage charges. These extras would cover wear and tear. Additionally, you can explore airport pickup and drop-offs to target international travelers at an additional cost.

Make the most of local attractions and events. Additionally, you might be able to establish partnerships with surrounding campsites that welcome RV visitors. Be brave enough to think also outside the box.   

Potential challenges and how to overcome them

RV rental businesses face some challenges as the market grows and matures. Here are some key concerns that you need to consider.

Peer-to-peer popularity: Peer-to-peer (p2p) rentals are rising in popularity. This model involves an RV owner and RV renter doing business over an online platform. The best way to compete here is by offering new models and outstanding service.

Seasonality: Depending on your location, motorhome demand will drop off during winter. If you're sitting on a fleet of RVs, you're paying out costs without any return. Short-term leasing agreements can allow for a more dynamic inventory that responds to demand. But they will also be more expensive. So crunch the numbers.

Insurance costs: Rising RV insurance costs can eat into profits. However, some innovative options on the market allow you to pay for insurance only when you need it. These policies can counter the downsides of seasonality too.

Conclusion

Becoming a new RV rental business owner could be a great way to earn a living. The sector is growing steadily due to the demand for more unique and sustainable holidays.

Running a successful RV rental business takes hard work and a significant financial investment. But once your campervans are on the road, you can sit back and take profit with minimal hassle. 

RV rental is becoming more popular with Millenials and Gen Zs. Reaching these demographics requires a solid digital marketing strategy alongside a website and booking portal.

If you think RV rentals are the life for you, get out there and make it happen!

Article written by Akseli L.

A marketer who gets excited about all things e-commerce. Outside of office hours, you'll most likely find Akseli from the countryside, hiking and shooting landscapes.

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