Caravan Park Planning: Is It Worth Adding New Cabins?
When it comes to caravan park planning, timing is everything. If you manage a regional caravan park, you’ve probably noticed how shifts in local growth and tourism trends can really impact your business. Let’s take a moment and analyse the decision many face—whether or not to invest in four new cabins for my park.
So, is it worth it? let’s explore the dilemma that one of our clients decided to undertake.
The Investment in New Cabins
Our clients decided that they would like to sell off 2 older cabins and purchase four new ones as part of their 5-year planning strategy
Adding four new cabins would cost, let’s say, around $85,000 per cabin, plus $10,000 each for fit-out, bringing the total to $380,000. Assuming you can sell off two older cabins for an estimated $60,000, this would reduce the net investment to $320,000.
This kind of caravan park upgrade isn’t cheap, so it’s critical to consider whether the return on investment justifies the expenditure.
Existing Revenue vs Potential Growth
Currently, the average nightly rate per annum at this park is $135, with an average occupancy of 72% in summer and 51% in winter. That gives me around 225 booked nights per year, earning roughly $30,375 per cabin annually.
If they upgraded to new, modern cabins, they can reasonably charge $150 per night. I also expect a 10% increase in occupancy over the next few years due to improved facilities and rising demand in our growing town. Maybe more, but let’s stick with this and any more up side is a bonus.
That means:
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239 nights per year × $150 = $35,850 per cabin
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That’s an extra $5,475 per cabin, or $21,900 across four cabins annually
Not to mention, they would be increasing capacity by replacing two cabins with four — a major revenue boost in itself.
Why This Makes Sense for Caravan Park Owners
Modern cabins offer more than just extra income. They:
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Attract higher-paying guests
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Reduce maintenance costs
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Improve your caravan park’s image
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Future-proof your business against growing competition
When you’re reviewing your long-term caravan park planning, it’s these upgrades that give you the edge.
The Bottom Line: Would I Do It?
Yes, when we look at the numbers — increased nightly rate, better occupancy, added capacity, and a stronger brand image — the investment makes sense. It’s not just about this year’s bookings, it’s about where the park will be in five to ten years.
Of course, the cost of capital needs to be factored in, so the aim will be to raise the average nightly rate for these cabins over the year, hopefully from my conservative average to $175 per night.
Of course as part of your plan, maybe glamping tents – lets explore this in my next blog
If you are thinking of starting a new caravan park we can help you in the business planning . Here is a great little article on the permits and regulations about starting a park .
If you’re exploring ways to grow your park or thinking about your next move in caravan park planning, I’d love to hear from you.
