Utility Trailers and Recreational Vehicle Rental

Industry Snapshot

The utility trailer and recreational vehicle (RV) rental industry is comprised of two distinct operations. Utility trailers generally are rented by establishments that also rent trucks for the consumer market, such as industry leader U-Haul International. Most of those establishments are automotive service centers or centers affiliated with a major truck rental company. Recreational vehicles (RVs) generally are rented by establishments that focus exclusively on renting RVs for the vacation market or by RV dealers for whom the rental market is a sideline to RV sales and service. Some establishments rent utility trailers and camper-trailers, considered the low-end of the RV rental business. According to a 2009 Dun & Bradstreet report, an estimated 1,893 establishments rented utility trailers, recreational vehicles, or both. Other, more minor categories within this industry include businesses that rent mobile homes (except on site), pop-up campers, recreational buses, and mobile offices and commercial units. In total, the industry generated revenues of $913 million and employed over 11,100.

Most of the larger establishments renting recreational vehicles belong to the Recreation Vehicle Rental Association (RVRA), a division of the Recreation Vehicle Dealers Association (RVDA). According to the RVRA, RV rentals were on the increase during the late 2000s, and most dealers were showing positive gains, even as sales slowed due to a recessive economy and high fuel prices.

Background and Development

L. S. Schoen, the founder of U-Haul International, generally is credited with turning the haphazard rental of utility trailers into an organized industry. In 1945, Schoen, then in the military, rented a beat-up trailer from a service station to move his family's belongings from Los Angeles to Corona, California. That night he made an entry in is his diary: "I am intrigued by the business potential of this idea especially from the standpoint of one-way rentals."

Schoen was discharged from the military later that year and moved his family to Portland, Oregon. Within two weeks he had bought his first trailer. He painted "U-Haul Co.--Rental Trailers--$2.00 per day" on the sides. By 1946, Schoen had a fleet of 70 trailers stretching from Seattle to Los Angeles, and in 1948 he decided to go national. He offered one-way rentals from the West Coast to anywhere in the United States. The only catch was that customers had to find service station managers at the end of their trips who were willing to become Schoen's agents. The plan worked, and by the end of the year, Schoen had a fleet of 200 trailers and a network of agents nationwide.

In 1951, Schoen launched a low-risk program for independent fleet ownership as a way to raise money and expand the U-Haul network even faster: investors would buy trailers from U-Haul and assume full responsibility for insurance, maintenance, and distribution. Each month, fleet owners would receive a report and payment for rental activity on their trailers. Schoen raised $2 million in the first two years. By 1955, there were more than 10,000 U-Haul trailers in 200 fleets scattered around the country, and Schoen was adding 600 trailers a month.

In the late 1960s, U-Haul trailers were available at more than 14,000 service stations. Although the number of outlets declined during the 1970s, when many service stations closed, U-Haul remained the leader in utility trailer rentals. U-Haul also began renting trucks in the late 1950s, and came to dominate the consumer truck-rental industry as well. For 1997, U-Haul had revenues of $1.2 billion. AMERCO became the holding company of U-Haul International in 1997.

In 1999, U-Haul rented its trailers, trucks, and tow dollies through 1,100 company-owned centers and 15,000 dealers in the United States and Canada, and sales topped $1.5 billion. This was not enough to top industry leader Ryder System, Inc., who had 1999 sales of $5 billion. Penske Truck Leasing placed second with 1998 sales of $1.8 billion. Other utility trailer rental companies include Transamerica Leasing Inc., which had 1997 sales of $734 million, and XTRA Lease Inc., which had 1998 sales of $300 million.

Recreational vehicles became widely popular in the United States during the 1960s, and, in 1970, RV dealers formed the RVDA. The RVDA worked to enhance the image of RV dealers and to improve warranty programs offered by RV manufacturers. By 1982, RV rentals had emerged as a separate industry, which led to the formation of the RVRA. The group later became a division of the RVDA. In 1988, the RVRA began publishing Rental Ventures (now called RVRA Rental Directory), a consumer guide to renting recreational vehicles. That was followed in 1991 by the Rental Operations Manual, which provides guidelines and marketing suggestions for RV rental dealers. The RVRA also publishes an annual membership directory.

In the late 1990s, baby boomers, who liked to rent or lease all types of products, were boosting demand for RV rentals and causing the traditional rental season to lengthen. Their most common rental choice was a Class C RV, or mini-motor home.

In 2002, according to the U.S. Census Bureau, there were 6,389 establishments engaged in truck, utility trailer, and RV rental and leasing. Combined, they generated revenues of approximately $13.6 billion. There were 54,000 employees within the industry who shared $1.8 billion in annual payroll. In 2003, the utility trailer and RV rental and leasing industry generated revenues of more than $12.4 billion in 2003, down 1.1 percent over 2002. In 2004, there were 2,360 establishments in the utility trailer and RV rental and leasing industry employing some 10,451 people. Trailer rental represented the largest sector of the industry with 869 establishments, or 36.8 percent of the market. Combined, they generated revenues of more than $674 million. Utility trailer rental accounted for 414 establishments, as well as 17.5 percent of the market and industry revenues of $120 million. Mobile home rental, except on site dominated 15.6 percent of the market and $65 million in revenues. RV rental generated more than $106 million, with 11.5 percent of market share. Together, industry revenues totaled more than $1.19 million.

According to a survey conducted by RVRA, RV rentals increased an average of 24 percent in 2004, 36 percent in 2005, and 24 percent in 2006. Fleet owners planned to continue to expand their fleets by 14 percent in the late 2000s. The Class C RV remained the first choice among the most rented RV, followed closely by the towable RV (folding camping trailers/travel trailers). Rentals of smaller units were increasing faster than average, due to lower fuel costs.

The vast majority of the 2,200 establishments in this industry were small operations, with fewer than five employees. Nonetheless, the industry reported healthy 2006 revenues of over $1.1 billion. Daily prices averaged between $150 and $200 per day, with mileage also added on. More than 64 percent of renters reported that they rented for more than 10 months during the course of a year, and 8 percent of rentals came from international visitors. Demand continued to rise, spurred on by such promotions as tie-ins to the 2006 DVD release of the Robin Williams movie, "RV."

Current Conditions

As the economy fell into a recession during the late 2000s and the housing market collapsed, the two main segments of this industry were affected differently. Whereas the RV rental segment actually found some benefits in consumers' desire to vacation on a limited budget, trailer rental firms, such as U-Haul, suffered negative effects of a collapsed housing market. Earnings from the company's moving operations in fiscal 2009 was $112.1 million, down significantly from $193.0 million and $217.9 million in fiscal 2008 and fiscal 2007, respectively. The downturn in business was also pushing prices down as the top three firms in the sector--U-Haul, Ryder, and Penske--competed for a smaller customer base. According to a 2009 Dun & Bradstreet report, there were 1,634 establishments that rented trailers or utility trailers, which generated $551 million in revenues and employed 7,364.

While firms that rented trailers were riding out the economy, businesses that specialized in renting RVs benefitted from Americans' desire to limit vacation spending. During the busiest season--from mid-June to mid-August--some rental firms were reporting substantial increases in bookings. However, the number of European travelers, which accounts for up to 30 percent of some dealers' business, was down. Thus, although the number of domestic travelers was up, the lack of overseas business lead to a highly competitive environment and subsequent price declines. Cruise America's Chairman Randall Smalley told RV Business during the summer of 2009, "Prices have eroded a bit. Our yield per day is down about 5%. I'm not complaining. In the early '80s, with that gasoline thing, prices got dramatically hit. This is not that bad at all." Overall, it appeared that RV renting was increasing in popularity. In March 2009, online classified Web site RVT.com partnered with GetRV.com to add a RV rental search engine. Consumers who search the site are linked to available rental units in their local area.

Industry Leaders

The largest RV rental establishment is Cruise America of Mesa, Arizona, with 20 company-owned and 125 dealer facilities and satellite rental centers in the United States. The company has a fleet of more than 4,200 vehicles, including self-contained RVs, motor homes, camper homes, truck campers, and motorcycles. Cruise America operates a joint venture with Thor Industries, Inc., a leading maker of RVs, for rental to the public. Cruise America generated $100 million in revenues in 2008.

While the utility trailer rental segment was highly competitive, Ryder System, Inc., managed to hold onto its leading position with sales of more than $6.2 billion in 2008. Penske Truck Leasing maintained its number two spot with sales of $3.9 billion in 2001. Amerco, U-Haul's holding company, filed for Chapter 11 bankruptcy protection in June 2003, from which it emerged in March 2004. U-Haul was not included in the filing and generated $2 billion in sales for fiscal 2009. Unlike Ryder and Penske, which had substantial investment in commercial moving and storage, U-Haul focused on the do-it-yourself movers. As of March 2009, U-Haul had 76,000 trailers in its inventory.