06/04/2018

6 April 2018
6 April 2018, Comments Comments Off on Frank Hugelmeyer – RVIA
Frank Hugelmeyer - RVIA

Full steam ahead, Mr. President

 

Interview with Frank Hugelmeyer, President of the RVIA (Recreation Vehicle Industry Association), on market growth and future strategies.

Words and photo Antonio Mazzucchelli

Aboutcamp BtoB: How long have you been at the RVIA?
Frank Hugelmeyer: I started with the RVIA just over two years ago, in October 2015. I took over from Richard Coon who had been in the seat for 10 years.

Aboutcamp BtoB: What is your previous experience?
Frank Hugelmeyer: Before the RVIA I had come out of the outdoor and sporting goods industry. I ran the Outdoor Industry Association (OIA) in the United States, which is the largest association for outdoor products – that included companies like Patagonia, The North Face, Columbia and anyone who made apparel, footwear or outdoor equipment like camping, climbing or backpacking and all of those activities. I led that group for 15 years. Before that I was in brand development. I ran a mountaineering and apparel company – the US division of Lowe Alpine – and before that I was in the fitness industry, and I also came out of retailing sporting goods.

Aboutcamp BtoB: What are the objectives of the RVIA?
Frank Hugelmeyer: A trade association in the US usually focuses on several areas, and the OIA as well as the RVIA are very similar. One area would be government relations, so working with local and federal governments to make sure you are growing the market and have a strong business climate to grow. The other component would be market research to help your companies and members understand where the consumer is going, how the market trends for business are moving forward and impacting the industry, and where there might be opportunities the industry could be going after in terms of market development. We also work on marketing campaigns; obviously the ‘Go RVing’ campaign is a very large part of RVIA’s portfolio. We’ll spend $23m promoting the RV lifestyle in the US in 2018 alone. That includes print ads, television and radio, and about 40% of that is online marketing where we are working with actual users of RVs and they are telling their stories through video and blogs. The RVIA as an association has a $17m budget per year that’s focused on standards development for the US, market research and government relations. So the total budget within RVIA, between the RVIA trade association portion and the ‘Go RVing’ portion, is around $40m a year.

Aboutcamp BtoB: What are the RVIA’s best results and how did it achieve them?
Frank Hugelmeyer: I think some of our most important results as an organisation are from our work with the federal government. We are an unregulated industry in the US because of our government affairs and standards work. We inspect each and every manufacturing plant in the United States every eight weeks. Our RVIA inspectors go in and make sure each manufacturer is building models to the safety standards of the United States. That keeps us out of a lot of litigation and keeps the federal government from actively regulating RVs in America. Essentially, the RV suppliers and manufacturers all work together to create a high standard of product construction, then we as an association make sure our members meet that standard for safety.

Aboutcamp BtoB: Is this mandatory?
Frank Hugelmeyer: No, it’s voluntary. The seal that is on every unit made in the United States is achieved by those companies keeping that manufacturing standard. If they fall below that, they go on probation and have to raise their manufacturing performance. It is a voluntary seal that is enforced by us making sure they are doing it through our inspection process. They go through a probationary period and a report period if we find a default or deficiency. It is an education partnership with our members.

Aboutcamp BtoB: Tell us about the ’40 under 40 Awards’ the RVIA launched at the National Trade Show?
Frank Hugelmeyer: We launched the ‘40 under 40 Awards’ to recognise each year the leading executives and up-and-coming, best and brightest within the industry who are under 40 years old. They could be in manufacturing, retail, dealers, or could be in service areas, campgrounds, media, or the association portion; so we’re looking at each and every sector of the industry to identify the best and brightest. Our plan is to engage them in our association committees and in helping to develop the strategies for the future because what we know about the next generation is they buy differently, they shop differently, they think differently. As an industry that has made such a great success of really understanding the ‘boomer generation’ and ‘X generation’, we now have a fundamental shift in how business is being done in America, and around the world, by these new generations and digital natives, so it is important for them to be part of the conversation. That is why we are recognising them and engaging with them going forward in terms of think tank opportunities – to help us to develop strategies to grow the RV market into the future.

Aboutcamp BtoB: What other associations is the RVIA working with?
Frank Hugelmeyer: The RVIA has been one of the founding members, along with the RVDA, of the Outdoor Recreation Industry round table. The goal of this group is to pull together the leading trade associations in outdoor recreation in America, to set a business growth agenda for the country. We’re working with the federal government and state governments to highlight outdoor recreation as an economic driver and an important economic sector that needs to be recognised and invested in; and to identify the policy changes that could help increase the economy around those who are in the business of outdoor recreation. This has never been done before. It is something I was working on when I was at the OIA. While I was there, I led the first ever research project to identify the full outdoor recreation economy in America. It’s massive – it’s an $877 billion industry, and the RV industry is a $50 billion portion of that, so our goal is to bring all of the other trade associations – marine, sport fishing, outdoor, ski, bike, hunting, fishing – and every aspect and sector of recreation to work together to help create a business growth strategy. Other industries do it around the world and we are a vital economic engine in America. We deserve a very strong and important seat at the table at Washington DC and with any administration, so this coalition is going to make this happen.

Aboutcamp BtoB: What’s your strategy to deal with the increasing demand for campgrounds?
Frank Hugelmeyer: This has been a problem in America that’s been long coming and in my opinion needs to be a much higher priority conversation; I’m proud to have had a role in starting that conversation. We have record sales. We have 500,000 new RVs a year coming in to the market place. They need high quality experiences and places to park their RVs, and if they get frustrated with that experience they will stop being RVers. We have two issues: One, we don’t see a big increase of new campgrounds occurring in the country and we need to help that happen – it’s a good business opportunity actually, if you think about it; and what we also have is our iconic destinations and we have many, many campgrounds in national parks, in forest service lands and state parks in all 50 states; we have a very large inventory (of campgrounds). Many of those campgrounds were built during Dwight Eisenhower’s administration in the 1950s. In the 1950s the RV didn’t have a slide-out. In the 1950’s the RV was not 42 ft long. They have not been built for the innovation and quality of the products that we make today. We have to go through a significant modernisation process so that someone who spends $10,000 or $100,000 on an RV is able to go to our iconic destinations in America and have that camping experience with their RV and not be frustrated. That’s really at the heart of what we’re trying to solve. How do we quickly modernise our federal and state campgrounds, and how do we get the private campgrounds to continue to expand and grow and create new and more exciting experiences for the hundreds of thousands of RVers that are coming in to the market place? This is a critical issue for our industry to grow long term, and it’s going to require financial resources from the federal government. It’s going to require financial resources from the state. It’s going to require private investment. It is why highlighting the economic strength of the industry is so important, because if you want to grow a strong economy you have to not just look at the businesses which focus on the business of work; we’re in the business of recreation, we’re in the business of fun and that often isn’t looked at as a business. It’s often looked on as a ‘nice to have’ but we’re a big economy in the US and by focusing on that economic impact you’re telling everyone you’re going to be growing the job sector, you’re going to be showing the wage increases and more importantly we’re able to create a happier citizen. We’re in the pursuit of happiness business and that’s in the founding documents of America.

Aboutcamp BtoB: Can RVers park on the road in normal parking spaces?
Frank Hugelmeyer: There are places on the road like that. Every Walmart allows you to park free with an RV. You can sleep in their parking lot. I think more and more people will realise there’s such a large pool of RVers and the opportunity for them to be served. If you think about it, people use their RVs to go camping; people use RVs to go tailgating at football games and soccer games and concerts and NASCAR racing events. They use their RVs to go play and at the same time may use them as a mobile office. There is a big increase in terms of the multitude of ways people are using RVs and that’s part of the success in the United States is that there are a lot of great places for people to camp, there’s a lot of open space, and we have a lot of open public lands. That accessibility and the quality of those campgrounds is so critical to the future health of the industry that we really need to stay focused on it..

Aboutcamp BtoB: The ‘towable’ market is almost seven times the motorhome market in the US. How many of these are used regularly?
Frank Hugelmeyer: Towables will end 2017 with 440,000 units sold, and next year we expect it to rise to 455,000 towable units in 2018. Sales and shipments of motorhomes will rise to 62,000 units in 2017 then grow to 66,000 units next year in 2018. In total, we will have 506,000 units of RVs sold in America in 2017, and next year we’re looking at a range of shipments which we expect to be somewhere between 510,000 to 525,000 units. The overwhelming majority are used for family camping adventures. They’re often a second home. You get a mortgage reduction as a second home for RVs in America, and you can finance them very well. There’s obviously some who are downsizing or retiring and using them to travel the country and live in them full-time, but that’s not the majority. The overwhelming majority is vacation and weekend use.

Aboutcamp BtoB: Is it a case of ‘the bigger, the better’ for American RV customers?
Frank Hugelmeyer: Sometimes, but we’re actually seeing growth in the smaller towable units and the smaller B and C class. That influence is largely because you’re seeing a lot of the younger buyers coming in and they want smaller. So the new type of buyer – not the boomer who wants the bigger and better and wants that space – the real growth in the market is the smaller units, the teardrop types, the A-frame, the A-liner types; if you go and walk around you will see Forest River, Thor and Winnebago, focusing on the smaller units right now. And this is absolutely a trend.

Aboutcamp BtoB: There’s been a lot of growth in the big groups of companies, but how do you see the future for the smaller companies?
Frank Hugelmeyer: Well, the good news is they all have a future acquisition exit strategy that’s right in front of them! Grow a successful business and you’ve got a strategic buyer right there, and maybe a couple of them fighting for your business. There’s always opportunity in a market. I’ve never seen a more entrepreneurial market, and so if you’re an entrepreneur and you’re interested in changing the conversation, I couldn’t think of a better industry to come in and attempt to build a brand, a company and find success. I think entrepreneurs are always rewarded, but obviously it’s getting more difficult. I think you have to be very smart with your strategy, but if you build a good strategy and you execute on it, the opportunity to succeed still exists.

Aboutcamp BtoB: With some US companies like Lippert acquiring businesses in Europe, and European brands like Hymer arriving in USA. Do you think the USA market will be influenced by European styles?
Frank Hugelmeyer: Yes, I do. I believe that you are already seeing the US market being influenced by some of the fit and finish that you see when you go over to the European shows. I love the interiors of the European models, and I think you’re starting to see some of the suppliers that you see common over in Europe starting to see success over in the US. That’s largely because they’re starting to bring in a new design sensibility – whether that’s something like Tecnoform or Truma, there are definitely design solutions that our market is going to be looking for. In the end, when you’ve got so many companies doing so well, they all want to try to differentiate themselves. How do you differentiate? That’s through design and innovation. Again, that leads you into a ripe market for someone who is very entrepreneurial and innovative, and also opens you up to maybe someone who is coming from outside the market to bring some fresh solutions, and maybe find someone who wants to be a strategic partner with them.

Aboutcamp BtoB: Do you think China could become the second largest market in the world?
Frank Hugelmeyer: We’re seeing growth in China. I’ve visited the country a couple of times now and I’ve seen that market. I’ve had some experience in the outdoor market and watched it grow and mature and I think we’re about to see a real explosion of growth coming out of China as more and more consumers exit a production economy and move in to and create a class economy; and when they’ve got the wealth, they want to invest in a leisure lifestyle – and they’ve also got a great country to explore and see. That’s also one of the reasons why we are looking to host the world RV conference in China in October 2018. It is important for the European market to be watching what’s happening in China, and it’s important for the Americans too. I’m a big believer in harmonisation of standards. It is a good thing because it allows any business to be able to be successful around the world and become a global economy. I’m not someone who fears competition. I think it actually sparks innovation so, hopefully, the market continues to grow and stay strong and we see the global economy continue to strengthen. There’s no reason why we can’t see each of the markets – Europe, Asia and the US – be strong for all of us.