KOA BUSINESS REPORT KOAH BOARD MEETING August 22 - 24, 2017
We are pleased to present our August 2017 KOAH board report in advance of our scheduled meeting on Wednesday the 23rd. This report covers department updates, company priorities and our financials through July with a forecast for year end.
PAT HITTMEIER
KOAH BOARD MEMBERS:
This year represents six years of year over year growth in same store occupancy and operational revenues. On a same store comparison our transient market is showing 5.8 percent up in occupancy, 3.95 percent up in rates and 9.9 percent up in registration revenue. Reservations remain strong up 13.8 percent for the remainder of the prime season and our Value Kard revenues continue to show strong year over year gain, up $625,000 from last year through June, some of which is due to a $3 price increase in May 2016.
TOBY O’ROURKE
With over half the year completed, we have made good progress on our goals and have successfully executed ongoing programs like marketing, support, training, accounting, communication, HR, COP operations, etc. A brief overview of what is happening by department is represented within the updates section of this report. We have also updated our company priorities as to their progress relative to achieving specific goals. Although we won’t be covering any of these topics during our meeting, we welcome any questions or comments you have on this content.
On our COP side, 20 of our 30 parks are performing better or at plan and both Moab and Pigeon Forge (new last year) are outperforming our acquisition projections through June. Philadelphia, also new last year; is missing its forecasted projections due to timing on adding new sites and cabins relative to our forecast. Demand is strong and we will quickly catch up to our forecast once the first phase construction is completed.
We continue to look for new, modern offices space. Our current location for more than 33 years has lost some of its attraction and we believe that new space will improve our work environment, build better communication and help us compete more effectively for talent. A local architect / developer recently proposed a concept for a new KOA building and we agreed to participate in a feasibility study. We hope to show you what we know so far during our meeting. KOA has come a long way since its beginnings adding more and more value along the way. The future continues to have a wealth of opportunities for improvement in the value we bring to the franchise, sales and company property growth. We are excited and dedicated to building a stronger brand and a more robust company property portfolio.
JOHN BURKE
Department expenses are all in line with our plan and we expect to end the year with better profit margins than last year.
We appreciate your time and guidance as we plan for 2018 and beyond.
Pat Hittmeier
Toby O’Rourke
KOA BUSINESS REPORT
John Burke
Terry Shade 2
TERRY SHADE
Respectfully,
TABLE OF CONTENTS
Cover images right to left: Santa Cruz/ Monterey Bay KOA Holiday new swimming pool, Lake Placid/Whiteface Mtn. KOA Holiday Glamping Tents, Pigeon Forge/Gatlinburg KOA Holiday Deluxe Cabin
Financial Performance Weekly Flashlight................................4 Registration Revenue...........................5 Comparison of Operating Income.........6 COP Operating Income.......................7 2017 Cash Flows.................................9 Forecast: Year-End 2017 Forecast Operating Income................ 10 Forecast Cash Flows........................... 11 Department Updates Information & Technology Services ......12 Franchise Services .............................13 Marketing ........................................14 Public Relations .................................15 Brand Development ......................... 16 System Development .........................17 Company Owned Properties ..............18 Company Priorities—Guest Experience Brand Positioning ............................. 20 Online Reservation Process ................ 22 System Value ................................... 24 KampSight & Card Processing ............ 24 Quality Assurance ............................ 25 Signature Items ................................ 26 Communications .............................. 27 Profit Centers COP Capital .................................... 28 COP Structure ................................. 28 Employee Reviews ............................29 Employee Training ............................30
3
KOAH BOARD MEETING // AUGUST 22 - 24, 2017
FINANCIAL PERFORMANCE: YEAR-TO-DATE 2017 KOA WEEKLY FLASHLIGHT— KAMPSIGHT DATA & SAME CAMP COMPARISONS KOA Weekly Flashlight Kampsight Data and Same Camp Comparisons Monday, July 31, 2017
MONDAY, JULY 31, 2017 RV Short-Term Nights YTD Franchise COP Total
2017 1,695,179 277,872 1,973,051
Var 6.8% 5.7% 6.6%
Cabin
Deluxe Cabin
2017 Var 166,405 -0.6% 26,262 -3.2% 192,667 -0.9%
2017 122,112 37,045 159,157
Short-Term Sub-Total
Tent
Var 5.7% 0.6% 4.5%
2017 238,664 29,410 268,074
Var -2.0% -2.8% -2.0%
2017 2,285,618 372,954 2,658,572
Var 5.7% 3.7% 5.4%
RV Long-Term
Total
2017 1,559,708 333,333 1,893,041
Var 1.1% 2.2% 1.3%
2017 3,845,326 706,287 4,551,613
Var 3.8% 3.0% 3.7%
PCN YTD Franchise COP Total
$ $ $
2017 48.53 59.65 50.10
Var 4.4% 5.1% 4.5%
2017 $ 73.39 $ 87.35 $ 75.30
Var 3.8% 6.4% 4.1%
2017 $ 125.38 $ 156.32 $ 132.58
Var 3.7% 7.3% 4.5%
2017 $ 40.40 $ 51.21 $ 41.58
Var 5.3% 4.2% 5.1%
$ $ $
2017 52.76 71.15 55.34
Var 3.9% 5.0% 4.0%
$ $ $
2017 16.28 20.24 16.97
Var 2.5% 6.8% 3.4%
$ $ $
2017 37.96 47.12 39.38
Var 4.7% 5.8% 4.9%
Reg $ YTD (thousands) Franchise COP Total
$ $ $
2017 82,265 16,576 98,841
Var 11.5% 11.1% 11.4%
2017 $ 12,213 $ 2,294 $ 14,507
Var 3.2% 3.0% 3.2%
2017 $ 15,310 $ 5,791 $ 21,101
Var 9.6% 8.0% 9.2%
$ $ $
2017 9,641 1,506 11,147
Var 3.2% 1.2% 2.9%
2017 $ 120,585 $ 26,537 $ 147,122
Var 9.8% 8.9% 9.6%
2017 $ 25,386 $ 6,745 $ 32,131
Var 3.6% 9.2% 4.7%
2017 $ 145,971 $ 33,282 $ 179,253
Var 8.6% 9.0% 8.7%
% of Total Reg $
55.1%
8.1%
Care Camps Holiday Reservations
2017
Var
11.8%
Memorial Day
6.2%
Father's Day
82.1%
4th of July 2017
Var
17.9%
Labor Day 2017
VKR Appreciation
2017
Var
2017
Var
Var
1.4%
91,752
5.2%
24,617
18.6%
2017 12,349
16.3%
Var
20.7%
# of Reservations
34,989
4.3%
54,536
4.8%
59,022
Camper Nights
71,165
4.5%
131,146
4.7%
120,655
1.8%
220,813
5.4%
76,614
18.9%
33,263
Length of Stay
2.0
0.2%
2.4 -0.1%
2.0
0.5%
2.4
0.2%
3.1
0.3%
2.7
Holidays (Canada)
Victoria Day
Canada Day
Civic Holiday
2017
2017
2017
Var
Var
Var
Peak Season
Reservation Deposit Balances (thousands)
2017
Var
2,768 -5.7%
6,877
2.0%
4,368 23.3%
189,926
23.5%
Camper Nights
7,098 -4.4%
18,463
3.9%
12,912 26.9%
507,803
22.8%
2.7
1.9%
2.7
-0.5%
2.6
1.3%
Campground Sales Value Kard YTD New Kard Sales
2017 Var 90,314 10.8%
Renewal Kard Sales Sale $ (thousands)
$
49,133 139,447
5.9% 9.0%
1,863
12.5%
KOA BUSINESS REPORT
KOA Sales
3.0
2.9%
Total Sales
2017 Var 13,711 16.6%
2017 104,025
88,706 12.5% 102,417 13.0%
137,839 10.0% 241,864 10.7%
$ 3,018
20.2%
$ 4,881
3.8%
Remaining (US & Can)
# of Reservations Length of Stay
100.0%
Var 11.5%
17.2%
4
2017 $
22,311
Var 20.6%
REGISTRATION REVENUE COMPARISONS— SAME FRANCHISEE CAMPGROUNDS $175.00 +8.7% $165.00 $155.00
8.9% Comp Annual Growth
+10.5%
$145.00
+13.6%
$135.00
+7.0%
$115.00 +5.5%
$105.00 $95.00
$167.15
+8.5%
$125.00
$100.00
$85.00 2011
2012
2013
2014
2015
2016
2017 6 year cumulative growth 67.1%
Registration Revenue
REGISTRATION REVENUE COMPARISONS— ALL FRANCHISEE CAMPGROUNDS $140 $116.3
$120
($ in Millions)
$100 $80 $66.6 $60 $44.2 $40 $23.4 $20 Royalties $5.3
Royalties $9.6
$0 2011
2012
2013
2014
2015
2016
2017
# of Campgrounds: 442
454
449
454
456
457
495
Winter (Jan - Apr) CAG 11.1%
5
Summer (May - Jul) CAG 9.7%
KOAH BOARD MEETING // AUGUST 22 - 24, 2017
REGISTRATION REVENUE COMPARISONS— COP CAMPGROUNDS $25 $20.5
($ in Millions)
$20
$15.9
$15 $10
$11.9 $8.3
$5 $0 2011
2012
2013
2014
Winter (Jan - Apr) CAG 11.6%
2015
2016
2017
Summer (May - Jul) CAG 9.5%
COMPARISON OF OPERATING INCOME YEAR-TO-DATE JULY 31, 2017 (IN THOUSANDS) YEAR TO DATE JULY 31 2017 ACTUAL 2017 PLAN 2016 ACTUAL FRANCHISEE SERVICES Revenues (Franchisee royalties) Expenses Net Profit
2017 ACTUAL BETTER (WORSE) THAN 2017 PLAN 2016 ACTUAL $
$
9,208 $ (708) 8,500
8,856 $ (806) 8,050
8,354 (877) 7,477
$
352 98 450
% 4.0% $ 12.2% 5.6%
$ 854 169 1,023
% 10.2% 19.3% 13.7%
KAMPSIGHT SUPPORT
(387)
(422)
(394)
35
8.3%
7
1.8%
KOA FIELD SERVICES
(623) 143
(653)
(672)
30
4.6%
49
7.3%
CANADA TOTAL FRANCHISEE SERVICES
7,633
SYSTEM DEVELOPMENT & SALES MARKETING LOGO SALES & LICENSING FRANCHISE DEPARTMENTS Franchise Departments Profit Margin
VALUE KARD REWARDS KARD SALES EXPENSES VKR Profit Margin
COMPANY OPERATED PROPERTIES Registration revenues Retail sales Other revenues (net) Total revenues Cost of Sales Gross profit Operating expenses COP admin Operating expenses COP NOI COP Profit Margin
TOTAL CAMPING RESULTS Profit Margin
KOA BUSINESS REPORT
34
31.2%
7.5%
1,113
17.1%
41
9.3%
28
6.6%
(3,329)
(3,414)
(3,301)
85
2.5%
(28)
-0.8% -1.7%
(19)
-3.6%
(9)
(2,816)
(2,882)
(2,779)
66
2.3%
(37)
4,418
3,779
3,314
639
16.9%
1,104
33.3%
48%
43%
40%
304 137 441
6.6% 6.3% 17.9%
756 53 809
18.1% 2.5% 38.7%
1,080
17.3%
1,913
35.4%
532
522
4,636 (2,179) 2,457
4,184 (2,095) 2,089
-1.3%
59%
53%
50%
7,316
6,236
5,403
36,421 4,222 2,054 42,697
35,470 4,242 1,954 41,666
30,997 4,103 2,016 37,116
951 (20) 100 1,031
2.7% -0.5% 5.1% 2.5%
5,424 119 38 5,581
17.5% 2.9% 1.9% 15.0%
(2,508) 40,189
(2,592) 39,074
(2,510) 34,606
84 1,115
3.2% 2.9%
2 5,583
0.1% 16.1%
(19,846) (1,188) (21,034) 19,155
(19,206) (1,228) (20,434) 18,640
(18,507) (1,133) (19,640) 14,966
(640) 40 (600) 515
-3.3% 3.3% -2.9% 2.8%
(1,339) (55) (1,394) 4,189
-7.2% -4.9% -7.1% 28.0%
(1) 217 1 217 732
0.0% 15.8% 0.1% 2.4% 7.6%
(776) (167) (105) (1,048) 3,141
-14.7% -16.9% -7.2% -13.5% 43.5%
11.4% $
5,054
40.0%
45%
(6,062) (1,154) (1,573) (8,789) 10,366 $
13.5%
(427)
45%
Depreciation Interest expense Corporate charges Subtotal COP - PRETAX PROFIT (LOSS)
17 532
(440)
4,940 (2,042) 2,898
TOTAL FRANCHISE CAMPING
109 6,520
(399) 513
TOTAL MARKETING
126 7,101
17,682 31%
40%
(6,061) (1,371) (1,574) (9,006) 9,634 $
15,870 29%
6
(5,286) (987) (1,468) (7,741) 7,225 $
12,628 25%
$
1,812
COP NET OPERATING INCOME—EAST REGION YEAR-TO-DATE JULY 31, 2017 (IN THOUSANDS) YEAR TO DATE JULY 31 2017 ACTUAL 2017 PLAN 2016 ACTUAL St. Petersburg
Gross profit
$
COP NOI Profit Margin
Naples
Gross profit
$
COP NOI Gross profit Profit Margin
Gross profit
$
COP NOI Gross profit COP NOI Gross profit Profit Margin
Gross profit
$
COP NOI Profit Margin
Boston
Gross profit
$
COP NOI Gross profit
COP NOI Gross profit Profit Margin
Gross profit
$
COP NOI Gross profit
COP NOI Profit Margin
785
$
422 49%
38%
32%
1,176
$
701
689
600
59%
53%
973
938
1,838
747
892
$
493 $
1,335 62%
925
2,060
45%
53%
341 41%
-5.8% $
(8)
-0.3%
(138)
-8.9%
11
0.8%
(109)
-4.5% $
26
1.1%
-6.2%
29
3.3%
36
4.2% $
68
8.2%
23
5.5%
60
15.6%
35
-
65
9.0%
(35)
-
19
8.2%
123
11.0%
101
16.8%
70
$
6.0% $ 1.7%
28
2.9% $
76
8.2%
20
4.1%
52
11.3%
(35)
-1.6% $ -4.6%
66
3.2%
57
4.7%
(15)
-1.6% $
34
3.8%
3.5%
54
14.0%
270
17.2% $
349
23.4%
183
22.2%
282
38.9%
$
(85)
-10.2% $
53
7.6%
(83)
-24.3%
33
14.7%
32%
$
805
54%
49%
985
$
605
$
938
$
547
61%
35
4.1% $
87
10.8%
13
2.8%
77
19.3%
78
7.9% $
125
13.3%
39
6.4%
97
17.7%
(68)
-10.6% $
571
-
(38)
-14.8%
219
-
58%
639
$
-
257 -
$
18,556
10,315
10,412
8,984
50%
51%
48%
7
$
694
53%
20,306
(163)
15
225
857
$
42.6%
49%
$
398
20,512
$
725
832
$
13.8%
124
(62)
1,489
462
571
107
7.8%
43%
$
824
$
$
904
475 1,063
$
387
1,568
$
2.8% $
59%
$
426
$
24 30
12
1,216
953
$
9.4%
50%
2,161
$
$
461
51%
$
$
1,123
56%
2,126
$
720
32%
$
9.0%
116
46%
$
231
1,001
214
-1.2%
(60)
832
285 $
$
385
750
38%
$
2,279
250 1,246
4.2% $
(16)
38%
864
$
$
872
40%
$
219
Profit Margin
Gross profit
900
$
961
61%
$
COP NOI TOTAL EAST REGION
2,414
644
Profit Margin
Timberlane (Philadelphia)
53%
35%
$
COP NOI Niagara ONT
1,409
56%
258
Profit Margin
Niagara NY
2,637
1,558
55%
$
$
54%
$
$
105
37%
2,792
1,007
Profit Margin
Gross profit
777
1,420 2,305
$
291
45%
$
47%
$
COP NOI Lake Placid
2,629
$
385
441
Profit Margin
Gross profit
860
60%
$
COP NOI Virginia Beach
$
1,273
Profit Margin
Gross profit
884
51%
$
COP NOI Mystic
52%
513
Profit Margin
Cape Hatteras
55%
49%
$
COP NOI Bar Harbor
52%
445
Profit Margin
Orlando SW
2,373 1,237
39%
$
$
1,369
901
Profit Margin
Kissimmee
2,482
47%
$
COP NOI Okeechobee
$
1,353
415
Profit Margin
Sugarloaf
2,587
2017 ACTUAL BETTER (WORSE) THAN 2017 PLAN 2016 ACTUAL
$ -
$
206 (97)
1.0% $ -0.9%
1,956
10.5%
1,331
14.8%
KOAH BOARD MEETING // AUGUST 22 - 24, 2017
COP NET OPERATING INCOME—WEST REGION YEAR-TO-DATE JULY 31, 2017 (IN THOUSANDS) YEAR TO DATE JULY 31 2017 ACTUAL 2017 PLAN 2016 ACTUAL Santa Cruz
Gross profit
$
COP NOI Profit Margin
Albuquerque
Gross profit
$
COP NOI Gross profit Profit Margin
Gross profit
$
COP NOI Gross profit
63%
63%
62%
778
$
775
1,877
$
396 $
Gross profit
749
53%
55%
51%
-
1,525
$
306
$
$
-
Profit Margin
Gross profit
$
COP NOI Gross profit
Profit Margin
Gross profit
$
COP NOI Gross profit
$
$
COP NOI Profit Margin
KOA BUSINESS REPORT
$
987
1,738
1,002
745
5.9% -11.5%
117
17.2%
410
27.9%
239
31.9%
7.7% $ 21.2%
184
12.6%
106
40.0%
-
-
-
-
$
(935)
-
(210)
-
$
825 46%
$
240 38%
1,592
40,189
$
1,037 $
59%
176
49.2%
193
219.3%
6.4% $
170
11.3%
7.9%
146
19.9%
-21.8% $ -48.9%
(39)
-4.8%
(70)
-25.1%
-2.1% $
80
4.8%
(18)
-2.2%
101
14.3%
(2)
-0.2% $ -1.2%
41
4.3%
121
56.8%
$
83
12.5% $
121
19.4%
74
27.4%
104
43.3%
97 150
6.1% $ 14.5%
1,549
-
1,073
-
1,882
$
115
5.8% $
121
10.4%
139
10.6% $
128
18.3%
201
10.7%
221
20.8%
57%
$
-
$
-
701 -
1,452
-
829
-
-
$
9,459
16,050
$
7,115
50%
909
4.8% $
567
6.0%
3,627
22.6%
2,911
40.9%
44%
$
34,606
19,155
18,640
14,966
48%
48%
43%
8
$
1,065
1,313
39,074
42.0% $ 109.7%
-
1,165
$
0.6% -11.4%
(37)
(4)
114
1,968
18,768
$
140
-
$
$
624
41%
19,677
5 (50)
22%
662
$
(215) (200)
961
270
1,452
$
213
34%
$
101 64
1,658
46%
2,083
-5.6% $ -18.9%
43%
$
338
$
$
811
344 1,689
158 147
706
1,004
$
(51)
34%
1,775
$
$
279
41%
$
51%
$
$
409
10,026
Profit Margin
Gross profit
49%
57%
COP NOI TOTAL COP PROPERTIES
22.0% $
(91)
1,503 733
829
Profit Margin
Gross profit
339
43 (43)
25%
$
815
772
$
358
52%
62%
$
COP NOI TOTAL WEST REGION
$
855
53%
1,286
Profit Margin
Gross profit
0.4% $ -16.2%
65
935
879
70%
COP NOI Pigeon Forge
$
88
1,572
1,187
Profit Margin
Nashville
3
51%
$
36%
$
33%
$
COP NOI Moab
1,458
134
334
Profit Margin
Gross profit
9.2%
145
440
376
46%
$
COP NOI Louisville
1,673
$
53%
$
807
Profit Margin
Gross profit
534
27%
$
COP NOI Townsend
911
209
Profit Margin
Cherokee
$
210
481
53%
$
COP NOI Lake Conroe/Houston
$
281
Profit Margin
Gross profit
860 45%
$
COP NOI South Padre Island
6.3%
151
18%
-
390
Profit Margin
Gross profit
169
2.9%
(64)
265
20%
$
2.2% $
22%
COP NOI Trinity Lake
1,467
843 $
$
62 50
51%
1,538
Profit Margin
Dallas/Arlington
735
988 1,642
$
375
51%
$
-
COP NOI
2,663 1,638
23%
$
$
1,739
371
Profit Margin
Stockton
2,770
43%
$
COP NOI Las Vegas at Sam's Town
$
1,789
332
Profit Margin
Tucson
2,832
2017 ACTUAL BETTER (WORSE) THAN 2017 PLAN 2016 ACTUAL
$
1,115 515
2.9% $
5,583
16.1%
2.8%
4,189
28.0%
KAMPGROUNDSOF OFAMERICA, AMERICA,INC. INC. 2017 CASH FLOWSKAMPGROUNDS CASH CASHFLOW FLOWREPORTING REPORTINGFOR FOR YEAR YEARTO TODATE DATEJULY JULY31, 31,2017 2017
YEAR-TO-DATE JULY 31, 2017 (IN THOUSANDS)
ACTUAL ACTUAL BEGINNING BEGINNINGCASH CASHBALANCE BALANCE
$$
ORIGINAL ORIGINAL PLAN PLAN
1,998 1,998 $$
1,998 1,998
VARIANCE VS ORIG PLAN $
-
6,079 6,079 20,940 20,940
5,673 5,673 19,971 19,971
406 969
CASH CASHFLOW FLOWFROM FROMCAMPING CAMPINGOPERATIONS OPERATIONS
27,019 27,019
25,644 25,644
1,375
CAPITAL CAPITALEXPENDITURES: EXPENDITURES: FRANCHISED FRANCHISEDCAMPING CAMPING COMPANY COMPANYOPERATED OPERATED
(116) (116) (8,083) (8,083)
(172) (172) (11,485) (11,485)
56 3,402
INCOME INCOMETAXES TAXES NOTES NOTESRECEIVABLE RECEIVABLE(PAYABLE) (PAYABLE) CAPITAL CAPITALLEASES LEASESFOR FORDELUXE DELUXECABINS CABINS
(466) (466) (1,952) (1,952) --
(357) (357) (2,073) (2,073) 1,049 1,049
(109) 121 (1,049)
-OPERATING CASH CASHFLOW FLOWNON NON-OPERATING
(10,617) (10,617)
(13,038) (13,038)
2,421
CASH CASHFLOW FLOWBEFORE BEFOREINTEREST, INTEREST,DISTRIBUTION, DISTRIBUTION,ETC. ETC.
16,402 16,402
12,606 12,606
3,796
INTEREST INTERESTINCOME INCOME(EXPENSE) (EXPENSE)NET NET DISTRIBUTIONS DISTRIBUTIONSPAID PAIDTO TOKOAH KOAH
(1,073) (1,073) (2,500) (2,500)
(1,371) (1,371) (2,000) (2,000)
298 (500)
NET NETCASH CASHFLOWS FLOWS
12,829 12,829
9,235 9,235
14,827 14,827 $$
11,233 11,233
FRANCHISED FRANCHISEDOPERATIONS OPERATIONS COMPANY COMPANYOPERATED OPERATEDOPERATIONS OPERATIONS
ENDING ENDINGCASH CASHBALANCE BALANCE
$$
9
3,594 $
3,594
KOAH BOARD MEETING // AUGUST 22 - 24, 2017
FORECAST: YEAR-END 2017 FORECAST OF OPERATING INCOME YEAR ENDING DECEMBER 31, 2017 (IN THOUSANDS) YEAR ENDED DECEMBER 31 2017 FORECAST 2017 PLAN 2016 ACTUAL FRANCHISEE SERVICES Revenues (Franchisee royalties) Expenses Net Profit
2017 FORECAST BETTER (WORSE) THAN 2017 PLAN 2016 ACTUAL $
$
18,078 $ (1,815) 16,263
17,528 $ (1,817) 15,711
16,439 (1,571) 14,868
$
550 2 552
% 3.1% $ 0.1% 3.5%
$ 1,639 (244) 1,395
% 10.0% -15.5% 9.4%
KAMPSIGHT SUPPORT
(720)
(768)
(732)
48
6.3%
12
1.6%
KOA FIELD SERVICES
(1,065)
(1,098)
(1,112)
33
3.0%
47
4.2%
CANADA TOTAL FRANCHISEE SERVICES SYSTEM DEVELOPMENT & SALES MARKETING LOGO SALES & LICENSING
534
533
509
1
0.2%
25
4.9%
15,012
14,378
13,533
634
4.4%
1,479
10.9%
(771)
(788)
(746)
17
2.2%
(25)
-3.4%
(4,479)
(4,522)
(4,323)
43
1.0%
(156)
-3.6%
-5.3%
(42)
-5.5%
3
0.1%
(198)
654
6.7%
1,256
13.6%
394 151 545
5.8% 4.4% 16.4%
955 5 960
15.4% 0.2% 33.0%
721
TOTAL MARKETING FRANCHISE DEPARTMENTS Franchise Departments Profit Margin
VALUE KARD REWARDS KARD SALES EXPENSES
761
(3,758)
(3,761)
(3,560)
10,483
9,829
9,227
58%
56%
56%
7,165 (3,293) 3,872 VKR Profit Margin
763
6,771 (3,444) 3,327
(40)
6,210 (3,298) 2,912
-5.6%
54%
49%
47%
TOTAL FRANCHISE CAMPING
14,355
13,156
12,139
1,199
9.1%
2,216
18.3%
COMPANY OPERATED PROPERTIES Registration revenues Retail sales Other revenues (net) Total revenues
59,283 6,735 3,397 69,415
57,932 6,753 3,276 67,961
51,397 6,580 3,296 61,273
1,351 (18) 121 1,454
2.3% -0.3% 3.7% 2.1%
7,886 155 101 8,142
15.3% 2.4% 3.1% 13.3%
(4,088) 65,327
(4,168) 63,793
(3,964) 57,309
80 1,534
1.9% 2.4%
(124) 8,018
-3.1% 14.0%
(33,908) (2,239) (36,147) 29,180
(33,043) (2,244) (35,287) 28,506
(32,373) (2,068) (34,441) 22,868
(865) 5 (860) 674
-2.6% 0.2% -2.4% 2.4%
(1,535) (171) (1,706) 6,312
-4.7% -8.3% -5.0% 27.6%
(1) 241 (90) 150 824
0.0% 10.7% -3.3% 1.0% 6.3%
(1,374) (150) (163) (1,687) 4,625
-15.2% -8.0% -6.2% -12.5% 49.6%
6,841
31.9%
Cost of Sales Gross profit Operating expenses COP admin Operating expenses COP NOI COP Profit Margin
42%
Depreciation Interest expense Corporate charges Subtotal COP - PRETAX PROFIT (LOSS) TOTAL CAMPING RESULTS Profit Margin
KOA BUSINESS REPORT
42%
(10,391) (2,019) (2,813) (15,223) 13,957 $
28,312 30%
37%
(10,390) (2,260) (2,723) (15,373) 13,133 $
26,289 28%
10
(9,017) (1,869) (2,650) (13,536) 9,332 $
21,471 26%
$
2,023
7.7% $
FORECAST—CASH FLOWS YEAR ENDING DECEMBER 31, 2017 (IN THOUSANDS) PROJECTED PROJECTED BEGINNING BEGINNINGCASH CASHBALANCE BALANCE
$$
ORIGINAL ORIGINAL PLAN PLAN
1,998 1,998 $$
VARIANCE VARIANCE VS VSORIG ORIGPLAN PLAN
1,998 1,998 $$
--
FRANCHISED FRANCHISEDOPERATIONS OPERATIONS COMPANY COMPANYOPERATED OPERATEDOPERATIONS OPERATIONS
12,851 12,851 26,655 26,655
12,586 12,586 25,583 25,583
265 265 1,072 1,072
CASH CASHFLOW FLOWFROM FROMCAMPING CAMPINGOPERATIONS OPERATIONS
39,506 39,506
38,169 38,169
1,337 1,337
CAPITAL CAPITALEXPENDITURES: EXPENDITURES: FRANCHISED FRANCHISEDCAMPING CAMPING COMPANY COMPANYOPERATED OPERATED
(116) (116) (12,343) (12,343)
(130) (130) (12,343) (12,343)
(771) (771) (3,477) (3,477) --
(617) (617) (3,598) (3,598) 1,049 1,049
(154) (154) 121 121 (1,049) (1,049)
(16,707) (16,707)
(15,639) (15,639)
(1,068) (1,068)
CASH CASHFLOW FLOWBEFORE BEFOREINTEREST, INTEREST,DISTRIBUTIONS, DISTRIBUTIONS,ETC. ETC.
22,799 22,799
22,530 22,530
269 269
INTEREST INTERESTINCOME INCOME(EXPENSE) (EXPENSE)NET NET DISTRIBUTIONS DISTRIBUTIONSPAID PAIDTO TOKOAH KOAH
(1,962) (1,962) (2,500) (2,500)
(2,260) (2,260) (2,500) (2,500)
298 298 --
NET NETCASH CASHFLOWS FLOWS
18,337 18,337
17,770 17,770
567 567
TOTAL TOTALCASH CASHAVAILABLE AVAILABLE
20,335 20,335
19,768 19,768
567 567
EXPECTED EXPECTEDENDING ENDINGCASH CASH
3,000 3,000
3,000 3,000
--
17,335 17,335 $$
16,768 16,768 $$
567 567
INCOME INCOMETAXES TAXES NOTES NOTESRECEIVABLE RECEIVABLE(PAYABLE) (PAYABLE) CAPITAL CAPITALLEASES LEASESFOR FORDELUXE DELUXECABINS CABINS -OPERATING CASH CASHFLOW FLOWNON NON-OPERATING
CASH CASHAVAILABLE AVAILABLEFOR FORDISTRIBUTIONS DISTRIBUTIONS TO TOKOAH KOAHAND ANDINVESTMENTS INVESTMENTS
$$
11
14 14 --
KOAH BOARD MEETING // AUGUST 22 - 24, 2017
DEPARTMENT UPDATES There has been a significant amount of work done against our plans in the first half of the year. Our teams are focused and highly collaborative, and we’ve added several key staff members that are helping drive our business forward. The following pages provide highlights from each department as well as an update on our major capital projects on our Company Owned Properties.
INFORMATION & TECHNOLOGY SERVICES K2 STATUS
be able to move to a franchise location. Our goal is to transition K2 to a couple more COP locations later this summer and to one or two franchise locations prior to convention. Depending on the outcomes of those migrations, we should be able to start planning for a larger roll-out to more properties over the winter months.
At the time of last year’s board meeting, we were just a couple of months into rebuilding the K2 software following our decision to stop testing in Nashville. While the need to re-engineer the software over this past year was frustrating, it was the right move as we are in a much better place now with a solid software built on a flexible platform for future development.
RESOURCES
We’ve had K2 installed and operational again at Nashville since April and they are completely migrated off of the legacy KampSight system. Our manager, Aaron Williamson, and his staff have been invaluable in testing the software and providing critical feedback to improve its performance and features. At this point, the system’s core set of functionality in handling short-term and long-term business is performing well. We have successfully gone through our major summer holiday weekends with minimal to no issues. While we are still identifying some bugs in the system, the majority of the feedback is enhancement requests for future iterations.
We’ve made several key staffing additions this year that will help advance our work to deliver K2, most notably in the addition of John Mott in the position of a Database Administrator/Business Intelligence Developer. John was most recently doing this same type of work for the American Board of Radiology where he worked with John Adams, our assistant vice president of information services. John Mott has a good deal of experience with our reporting software and will be focused initially on building a set of vital reports into K2. Jef Sutherland is now fully immersed in his new programming role within the department. We’ve also recently added a user experience contractor who is improving the screen flow and usability of K2, as well as another senior level programming resource to help accelerate development.
Our team just completed programming on capabilities to handle group business which is now being tested in Nashville. We’re transitioning our attention to adding the royalty remittance process and integrating Quickbooks, mandatory items for us to
K2 DEVELOPMENT ROADMAP—2017 Sprint 33 (Groups) Jul 10 - Jul 31
Sprint 34 (Remittance) Jul 31 - Aug 21
Sprint 35 (Remittance) Aug 21 - Sep 11
Sprint 36 (QuickBooks and On Account) Sep 11 - Oct 2
July KOA BUSINESS REPORT
August
September 12
October
FRANCHISE SERVICES LEADERSHIP Darin Uselman joined our team in March as the Vice President of Franchise Services assuming the role that Jef Sutherland previously held. Most recently Darin was a Strategic Program Manager for General Electric at their office in Billings where he managed a number of cross-functional teams and initiatives. Darin, a PGA Class A Golf Professional, managed a private country club in Florida prior to joining GE where he instilled a focus on customer service and quality – both essential elements of our franchise operations. During his short time at KOA, Darin has proven to be a highly effective leader. He has gained the respect of both his team and franchisees and has quickly begun advancing our programs. He is highly analytical and has a strong business mind. We look forward to introducing you to him at the board meeting.
Darin Uselman, vice president of franchise services
NEW OWNER PROGRAM Our business development consultants continue to be a vital part of our business, bringing new franchisees on board and helping seasoned owners with more in-depth consultation and business analysis. This year the team launched a new three-year plan for business monitoring and communications with a new owner. The plan includes on-location training with monthly follow-ups in the first year and bi-annual check-ins the following years providing training and assistance on items such as rate management, budgeting, Quickbooks, guest service and store renovations. Additionally, the BDCs will regularly review guest survey results and provide coaching to the campground on how to properly use and respond to reviews and will work with the Quality Review team to put together action plans for the owner if needed following their inspection. To help facilitate the on-going management of these new owner relationships the team has created a report with various metrics that will help identify potential issues or struggles allowing the team to be more proactive in helping our newest members of the system be successful.
You are invited to join us NOVEMBER 11-15 IN PHOENIX, ARIZONA for our annual convention where we’ll be focusing on helping franchisees seize the moment and take advantage of our momentum and favorable market conditions to continue to grow their businesses.
WORK KAMPER
MERCHANDISE
The Work Kamper program is among our most valued services for the franchise system and COP alike. We have nearly 1,900 active Work Kampers registered in our system and more than 450 campgrounds actively using these teams for seasonal staffing. The foundation of the program is a website that functions similar to a job board with campgrounds able to post jobs and view work kamper resumes. This year we are working to overhaul the front end of the site to improve navigation and integrate new features that have been requested by both owners and work kampers. We will also improve search engine optimization (SEO) to attract even more participants into the program.
Under Darin’s leadership, the merchandise program has had a renewed focus. Assistance with stores and merchandise used to be a service we provided franchisees, but that focus has been diminished over recent years as our priorities have been placed elsewhere. More assistance in this area is increasingly requested by our owners. Kama Humphrey, our vendor relationship manager, has been focused this year on not only bringing new merchandise items to our owners, but also on developing a strategic sourcing program on core items to secure reduced pricing for an individual campground by leveraging a large purchase volume for the broader system. She also worked with Paco Underhill, a well-known retail and shopping consultant and author of the international best-selling Why We Buy: The Science of Shopping, on the development of a set of training videos about merchandising and maximizing store sales.
13
KOAH BOARD MEETING // AUGUST 22 - 24, 2017
MARKETING AGENCY During the first quarter, we conducted an RFP process on our national advertising agency. We initiated the process to ensure we were marketing our brand to its full potential and we were being exposed to new concepts in marketing that amplify how we reach the camper and influence purchase. While our advertising campaign has been performing extremely well the past couple of years, we have had increasing account management issues with our current agency, LRXD, that were creating inefficiencies and a significant amount of rework and cost. We did invite LRXD to participate in the RFP as well as 12 other firms. After the review, we decided to move to Kansas City based MMGY, a marketing agency solely focused on travel and tourism. With their experience on brands such as Choice Hotels, Marriott, and Southwest they have valuable insight on what influences travel decisions, and we believe they can help advance our brand even further than it is today. Additionally, they have an array of in-house services such as video production and media planning that will bring us cost efficiencies. LRXD is still executing our marketing during our summer season while MMGY is on-boarding. MMGY’s focus has been on learning more about our brand and the camping business while spending time on 2018 planning.
ADVERTISING
WEB AND MOBILE
Our What’s Behind the Yellow Sign? advertising campaign continues to be highly successful. According to a recent marketing effectiveness survey, 63 percent of new KOA campers said advertising and news about KOA influenced their decision to stay. This year we not only increased our media budget but extended our digital advertising throughout the entire year. We segmented the year into four phases: Plan, Go, Keep Camping and Remind. The “Plan” phase which spanned from late winter to early spring focused on encouraging campers to book early for the upcoming summer. Results from that phase were very positive producing a $20.70 ROI on our investment in digital media during that time. We are in the middle of the “Go” phase now which is responding equally well. As of mid-July our digital and TV advertising campaign has resulted in $11.2 million in registration revenue.
Because of our productive advertising, KOA.com is having another impressive year. Through June we have seen a 10 percent increase in unique visitors leading to a 22 percent increase in reservations and a 26 percent increase in online revenue. Our mobile app now has more than 730,000 lifetime downloads with more than 125,000 active monthly users in our summer season. This year we are also gaining insights about our online experience by running consumer research on our web and mobile properties. The research effort launched at the beginning of the season and will run through August. It measures how users engage with the site and app and will help us prioritize our planned enhancements.
STEPHANIE QUAYLE We have been sponsoring country music recording artist, Stephanie Quayle, over the past several months. Her single released this spring aptly called Winnebago launched an RV-based tour across North America where she has been staying at many KOAs. While there she has given small concerts and hosted meet and greets for campers. She has been very proactive in promoting KOA on her social media accounts and in her media interviews. She filmed her music video for Winnebago at the Nashville KOA, and we’ve gained nice exposure as her video has been played on CMT TV and on other country networks. Stephanie is poised to become a bigger name in country music and KOA is primed to continue to rise with her as she’s expressed interest in continuing our partnership in the future. Stephanie will be performing at the final night celebration of our KOA Convention and sharing stories about her time on our campgrounds. Stephanie Quayle at the Fillmore, Utah KOA Journey KOA BUSINESS REPORT
14
COP MARKETING The COP team has completed the development of a signage portal with a PIP in Nashville that provides easy access, for all of our properties, for ordering customizable on-site signage. Our Florida properties have a similar relationship with the Orlando PIP. To date we’ve ordered a total of $88,000 in signage at these two locations. Due to its popularity in COP, we are looking to expand access to the whole KOA system.
Our discipline of applying smart marketing to our Company Owned Properties is making an impact and contributing to the overall bottom line. For the third year in a row, our COP marketers have executed a spring promotion on our Deluxe Cabins which resulted in close to $575,000 in registration revenue this year. The program runs again in the fall and we anticipate similar results.
PUBLIC RELATIONS MEDIA HITS
HISPANIC
Similar to the past couple of years we leveraged the 2017 North American Camping Report, released in March, for media outreach. This year we used the data to gain desk-side meetings with journalists in both New York City and Atlanta as well as numerous phone interviews with top-tier outlets. We’ve had nice exposure in print publications such as USA Today, Sunset, and the LA Times as well as TV and online video with Toby appearing on segments for HLN Weekend Express, Weather Channel, Condé Nast Traveller, CheddarTV, Fox Business, and The Wall Street Journal. Through June, we’ve gained more than 394 million impressions, a 22 percent increase over the same time period last year.
We have continued our work with our agency’s Hispanic division, Nuestra Voz, to help us broaden our awareness with this demographic. In April, we attended Hispanicize in Miami, the largest event for Latino influencers and media. Saskia Boogman, our content manager, and Mike Gast, vice president of public relations led a panel discussion highlighting findings from our report on Hispanic camping trends which helped further position us as a leader and resource among this group in the outdoor travel and camping space. We also co-sponsored an event at the conference with RVIA/Go RVing that featured RVs and cabin accommodations.
Our use of the North American Camping Report for public relations has gained some national attention in marketing and PR circles. In March, we along with our agency partners at A+P were awarded the Best in Analytics award at the PRWeek Awards in New York which honor the best in PR campaigns from across the country over the past year.
Later that month, we also hosted a familiarization trip (FAM) along with RVIA at the Ventura Ranch KOA Holiday for 11 Hispanic media and influencers. The event generated more than 1.1 million impressions across blogs and social media.
Tanya Rivero interviewing Toby O’Rourke, Wall Street Journal Lunch Break
Toby O’Rourke, Mike Gast, Jeannie Horner (A+P) and Marcus Gamo (A+P) (left to right), PRWeek Awards 15
KOAH BOARD MEETING // AUGUST 22 - 24, 2017
BRAND DEVELOPMENT VALUE KARD REWARDS
PARTNERS
VKR is performing ahead of plan as a result of more overall camping nights, better retention of members, a greater number of trial cards in circulation and a strong response from defectors who have returned to the program. This year we worked to simplify the messaging to the core elements of discounts, points and Value Kard Appreciation Weekend. All of our collateral has been updated with the simplified focus and has been outperforming our previous versions. We’ve also made tweaks to our renewal process such as adding an email prior to when a physical mailing is sent, modifying the defector email creative and changing the language on the renewal envelope. All of these small changes have led to not only increased renewals but also significant cost savings and efficiencies for our operations.
We are now in our second of a three-year $1 million advertising agreement with GEICO and our partnership with them continues to be productive for both parties. This summer, GEICO invested nearly one quarter of a million dollars in giveaways at KOA campgrounds during major holiday weekends – a popular activity with both our owners and campers. We are seeing declines however, in the numbers coming from our Essex relationship. The refinance segment of their business is struggling and the business does not have a strong outlook with the high volume of new units entering the public sector. We are continuing discussions with Essex to keep close to their projections so we can plan accordingly. Similarly, we are posting declines in the Allstate Roadhelp program. As a result, we are working with Allstate to revamp the program changing from a discounted pricing model on a singular RV product to multiple products that are self-built for what best suits a household.
Total card sales are up more than 10 percent from last year with new card sales at campgrounds at their highest level in recent years with an increase of 4 percent. There are 455,248 total active memberships, including both paid and free trials. We are also pleased to see a 12 percent increase in our VIP membership. Through mid-July, VIPs had accounted for more than 400,000 camper nights this year.
KOA BUSINESS REPORT
Our rental partnerships with nine of the major RV rental agencies continues to thrive and leads to several million dollars a year in registration revenue. We are in talks to expand this to a new wave of rental companies that are taking advantage of the sharing economy movement. The companies, such as Outdoorsy, allow private RV owners to rent their RV to others for use similar to Airbnb. This trend is growing in popularity with millennials in particular, a segment we are trying to reach as they now comprise the highest percentage of camping households.
16
SYSTEM DEVELOPMENT CONVERSIONS
FACILITIES DEVELOPMENT
We are on pace to reach our target of 17-20 conversions with nine new agreements already in place. Additionally, we’ve already met our goal of two new construction contracts for properties being developed in Cranbrook, British Columbia and Canton, Texas.
Through the end of June, our facilities development team has worked with 35 campgrounds; producing 875 new or redesigned RV Sites, 75 new or redesigned Tent Sites and 79 new Deluxe Cabins. A few highlights of their work this year includes:
Two of our newest property groups we’ve spoke to you about are having success with their first KOA property and are discussing bringing more of their inventory to the KOA system. Chincoteague Island KOA, owned by the Bluewater Development Group, is having a record year in its first year under the KOA flag. Through the end of June, their overall registration revenue was 20 percent ahead of this same point last year with overall registration revenue of nearly $480,000. The Bluewater Group has committed to us another property on Currituck Sound near Coinjock, North Carolina, and one on the Nanticoke River in Maryland.
• Helping our largest franchisee, San Francisco North/Petaluma KOA, convert a section of their campground into a VIP section by transitioning 33 30-amp water/electric, 30-foot back-in RV Sites to a mix of longer, wider 50-amp sites including four 70foot, 50-amp, pull-through Patio RV Sites. • Assisting the Myrtle Beach KOA Holiday design a new road and create a new section of 24 65-foot, full-hookup, pull-through Patio RV Sites. • Working with the Des Moines West KOA Holiday to increase their site count by 34 percent through expansion onto neighboring land. The new section will have 30 wide, fullhookup RV Sites and five Premium Tent Sites.
The Richmond North/Kings Dominion KOA owned by Cedar Fair Entertainment is also having a record year, primarily on their RV and tent business. In 2016, they finished the year with $445,000 in RV and tent revenue alone and through June of this year they are already approaching $300,000. Their cabin business, which brought in $525,000 last year, is slightly behind pace but we are working with them on marketing initiatives to accelerate this segment. Cedar Fair Entertainment is considering converting their Worlds of Fun Village campground next to their large amusement park in Kansas City, Missouri, as well as exploring a green field build at their Toronto property.
San Francisco N/Petaluma KOA Patio RV Sites: before, after and aerial after 17
KOAH BOARD MEETING // AUGUST 22 - 24, 2017
COMPANY OWNED PROPERTIES MOAB KOA
PHILADELPHIA SOUTH/CLARKSBORO KOA
Our year one projects are progressing well. We have completed upgrading the Deluxe Cabins and are in the process of finishing a new swimming pool and laundry building. Our work is slowed in Moab due a strain on the available construction resources due to three new hotels also being built in the market. KOA, as well as the hotels, are sharing Moab’s one licensed landscaping contractor. Our pool contractor commutes from St. George, Utah, and splits his time between KOA and the Marriott. Regardless, we are pleased with the progress and the growth of revenues we’ve seen during this very busy summer season. To date, Moab’s NOI is up 14.5 percent over plan.
Our newest property, formerly the Timberlane Campground, has been named the Philadelphia South/Clarksboro KOA and is officially flying the KOA flag now. The store was completely remodeled, pool area upgraded and bathrooms brought up to standard. The design on the existing 20-acre campground is complete and we have broken ground on 18 RV Sites and eight Deluxe Cabins. We are also installing canvas glamping tents this fall similar to what we have recently placed in Lake Placid and Bar Harbor Woodlands.
Moab Deluxe Cabin exterior, interior and new pool development KOA BUSINESS REPORT
Philadelphia conversion to KOA and updated guest service building 18
PIGEON FORGE/GATLINBURG KOA HOLIDAY Pigeon Forge is having an extremely strong season with NOI up 18.3 percent over plan. Our major planned development projects are complete and contributing to this growth. The new Deluxe Cabins installations are among our most unique and innovative. We’ve also added decks to Camping Cabins, added RV Sites, made improvements to the recreation area, and remodeled the bathhouse.
SANTA CRUZ/MONTEREY BAY KOA HOLIDAY One of the projects we’re most pleased with is the new pool at Santa Cruz. This is a significant improvement to our property and has been very well received by our camping guests.
Pigeon Forge recreation, new sites and new Deluxe Cabins
Santa Cruz new pool 19
KOAH BOARD MEETING // AUGUST 22 - 24, 2017
COMPANY PRIORITIES—GUEST EXPERIENCE Beyond the work being done in individual departments, we are also committed to achieving the milestones set against each of our 2017 corporate priorities that we shared in February. The objectives span across the categories of Guest Experience, System Value, Profit Centers and People & Culture. Most all of these projects require cross-functional collaboration and communication. This spirit of cooperation has made us a more effective and focused organization overall.
BRAND POSITIONING OBJECTIVE: Increase adoption of brand positioning in KOA system to advance towards 2020 deadline. SUCCESS MEASUREMENTS: • Have 60 new KOAs committed to a brand position by the end of the year (sign is installed, ordered or a letter of understanding (LOU) is completed for spring 2018 implementation). • Increase awareness of brand positioning for KOA campers by 6 points (to 70 percent) and non-KOA campers by 3 points (to 41 percent). We are continuing to gain traction towards our ultimate goal of having each campground in a brand position by 2020. Since the beginning of the year there have been 22 campgrounds join a position bringing our total count to 227. Additionally, there are 62 campgrounds actively in process of completing their requirements. We anticipate an additional 15 campgrounds will officially hang their sign yet this year and roughly 25 more will commit to doing so by next spring. Our Field Services teams continually assess the non-branded campgrounds during their annual quality assurance visits. As of now, they estimate 90 percent of those will be on track to brand by our 2020 deadline. The other 10 percent fall into categories such as geographic restrictions on the campground or financial limitations. Our BDC teams are actively working with both of these groups to try to find solutions that will enable them to join the program. There is a small number of campgrounds that are resistant to joining a position, but this number is decreasing with time. We do initiate discussions with these owners during their renewal time period to communicate our expectation that they join a position to remain in the system long term. We have been actively working with our new ad agency on revisions to how we sell brand positioning to the camper. Traditionally, we have been focused on explaining the functional differences between the different positions in terms of sites and amenities. While that is still important, we are working to do more storytelling around the experience itself that each position embodies. We are in the process of developing a marketing “field guide” for each position to help campgrounds best market their brand. The field guides will be complete with templates for tactics such as email and social media. These will launch at convention and Whitney Hepp, our assistant vice president of marketing, will be leading workshops to walk through the content of each guide.
KOA BUSINESS REPORT
20
BRAND POSITIONING SUMMARY
TOTAL Complete Verified + Signs Up
93
126
8
227
Actively In-Process
11
42
9
62
KEY MILESTONES Milestone
Deadline
Progress
R efresh camper-facing language on positions for marketing materials.
February
I N PROCESS. Delayed due to marketing agency switch in the spring.
evelop internal marketing campaign to guide creative and D messaging to system throughout 2017.
March
POSTPONED. Initial concepts were created, but decided to wait until new marketing agency could present language around the positions that could influence the creative direction for an internal campaign.
omplete 2014-2015 data assessments of KOAs in a brand to C determine if we see movement in metrics that should be shared with the system.
March
OMPLETE. Determined there was not significant movement C in metrics yet that could be attributed to brand positioning that could be shared with the system.
P roduce Brand Position Field Guides to help with campground level marketing.
June
IN PROCESS. Will be introduced at convention.
T hrough Wi-Fi project (in Franchise Services department plans), determine the language change for a 2018 modification to the WiAugust Fi requirements and work through brand committees to complete change. Field guest research in fall and deliver results to system.
I N PROCESS. Initial discussions held with Brand Position committees in November about a modification to the requirement. Are currently having meetings with service providers to assist with Wi-Fi that may help determine if a change is needed to the requirement.
September NOT YET STARTED.
evelop long-term plan of how we integrate new owners into D brand positioning once we are nearing or past the 2020 deadline October date.
NOT YET STARTED.
R efresh collateral distributed in spring mailer to campgrounds on brand positioning.
November NOT YET STARTED.
Optimize/improve presence of brand positioning on KOA.com.
December NOT YET STARTED.
omplete half of current assessments of owners who have stated C December IN PROCESS. they cannot complete brand positioning due to financial reasons. omplete half of current assessments of KOAs that cannot meet C brand requirements due to geographic restrictions and develop a December IN PROCESS. written plan. Secure public relations media on brand positioning.
All Year
IN PROCESS.
P ublish consumer facing content via Kompass and KOA Blog about brand positioning.
All Year
IN PROCESS.
21
KOAH BOARD MEETING // AUGUST 22 - 24, 2017
ONLINE RESERVATION PROCESS OBJECTIVE: Take requirements and processes outlined as part of the 2016 priority work and build an implementation plan based on priority and/or K2 dependency. SUCCESS MEASUREMENTS: • Implementation of non-K2 dependent top-priority functions by the end of 2017. • Completion of a development roadmap based on priority and K2 dependencies. later in the evening. Since launching mid-May, 116 campgrounds had extended their reservation time. In that time period 17,632 same day reservations were made of which 5 percent were after 4:00 PM. Allowing these to be made online alleviates stress at the front desk during prime check-in hours by reducing phone calls or walk-ins and could be incremental business we would not have gained otherwise.
Last year a cross-functional team led by Cole Reinhardt, our digital marketing director, identified a set of enhancements we’d like to make to KOA.com to improve the online reservation process. This work is supplemented with the KOA.com user research mentioned earlier. Most of the improvements we want to make to KOA.com require KampSight interaction and thus are dependent on the status and timeline of the K2 project. Since the software is not yet deployed we are not able to proceed with many of the enhancements this year, however we are developing a future roadmap of improvements that aligns with K2 release schedules.
Secondly, we now incorporate the French language in our reservation process on Canadian campgrounds. This has been a popular enhancement for our campgrounds and campers in Quebec. KOA.com presents the option to view the reservation pages in either English or French for all campgrounds in Quebec and if it detects French browser setting on the user’s PC. We also now deliver bi-lingual transactional emails to Canadian campers. We plan to incorporate Spanish on the site in a similar fashion early next year to appeal to the rising number of Hispanic campers.
We have been able to make two important improvements to the reservation process that have been very popular with both owners and campers. First, we now allow each campground to determine the cut-off time for online same day reservations. Previously, this was set to 4:00 PM for each campground and many had expressed the desire to still accept online reservations
French reservation page on KOA.com KOA BUSINESS REPORT
22
KEY MILESTONES Milestone
Deadline
Progress
evelop priority outline/roadmap of requirements/functionality D with K2 dependencies identified.
January
COMPLETE.
evelop project plan of non-K2 dependent functions with goal to D implement top priority items (based on impact and timing of other February projects) in 2017.
COMPLETE.
F ield user research on web and mobile experience through KnowJune Click to add guest research into requirement sets.
I N PROCESS. Top line results have been received. Testing to continue through August.
I mplement non-K2 dependent functions as identified in project plan.
December
I N PROCESS. French reservations, same day reservation extensions and RYS email updates have been implemented.
evelop success metrics to measure impact of updates/added D functionality (e.g. time on page, goal completions, conversion rates, online revenue, behavior flow).
December
I N PROCESS. Currently tracking results from French reservations and same day reservation extensions.
R efine go-forward development roadmap based on 2017 achieveDecember NOT YET STARTED. ments, research discoveries and K2 impacts.
23
KOAH BOARD MEETING // AUGUST 22 - 24, 2017
SYSTEM VALUE KAMPSIGHT & CARD PROCESSING OBJECTIVE: Roll-out PIN pads for card present transactions and convert from Payware Transact to Tender Retail for card not present transactions in both the K1 and K2 platforms. Initiate K2 roll-out with Alpha and Beta pilots and initial phases of release to the system. SUCCESS MEASUREMENTS: • Implement Tender Retail for processing of all card not present transactions on or before June 1. • Deploy PIN pad technology for both K1 and K2 on or before March 1. • Complete K2 Alpha, Beta and “early adopters” (50-100 campgrounds total) by end of year. As previously mentioned, K2 is currently in production at Nashville and has been since April. We had anticipated having more COP and franchise locations using the product by this point, however we decided to hold off on additional roll-outs to allow functionality for guest group management to be programmed. Before we can expand to a franchise location we need to build the royalty remittance process and integrate Quickbooks. According to our plans that should be completed in early October.
This spring we successfully transitioned all campgrounds to our new credit card platforms, Tender Retail and Axia, as was required by June 1. The Axia platform now brings us in compliance for card present transactions. We’ve had no issues noted yet after going through half of our summer season and four heavily trafficked national promotion and holiday weekends. We are now in process of getting new EMV/ chip and pin machines distributed to each campground.
KEY MILESTONES Milestone
Deadline
Progress
Roll-out PIN pads for K1.
March
COMPLETE.
Roll-out K2 Alpha (with PIN pads).
March
COMPLETE. Alpha test launched at Nashville.
Roll-out K2 Beta.
April
POSTPONED. Additional COP locations will be brought on after Groups functionality is completed in August.
Develop training materials for K2 system release.
May
IN PROCESS.
Roll-out K2 early adopter franchise locations.
May
NOT YET STARTED. Targeting October for some franchise locations to be added.
Begin conversion process for remainder of system.
October
NOT YET STARTED. This will likely be delayed until early 2018.
KOA BUSINESS REPORT
24
QUALITY ASSURANCE OBJECTIVE: Create a grading tool combined with project estimation costs and ROI estimation worksheets for owners to self-assess their current sites, accommodations, and facilities and categorize their backlog of improvements. SUCCESS MEASUREMENTS: • Grading tool developed and in use by campgrounds. • Soft incorporation of grading tool in the 2017 QR manual intended to serve as a guide to franchisees. This spring we delivered to the system a field guide for site grading which explains the methodology of categorizing or “grading” each site and then making a plan for upgrades and improvements. The guide was complete with templates for the site inventory as well as project analysis and ROI worksheets to track costs and returns on the upgrades. Our Quality Assurance teams are actively promoting the guide during their inspection visits and the process has been positively received by our campgrounds. This project is directly related to our plans to keep modernizing our system and improve guest impressions and experience by helping owners focus on their backlog of sites and facilities. We are gathering feedback from our Franchise Advisory Committee and field teams on how to further improve the tools next year. Likewise, we are discussing if this process will eventually become a required item in our QA processes.
KEY MILESTONES Milestone
Deadline
Responsible
Progress
eeting between Facilities Development and QA teams to discuss M January future QR integration and qualifying the grading standards.
Prichard
COMPLETE.
ocuments to Produce: the ‘How to use’, ‘site grading examples,’ D ‘Case study worksheets,’ and corresponding Excel/PDF files. January Send to designer for production.
Prichard/ Sutherland
COMPLETE.
T rain field staff on the tool and plan for its implementation and roll-out
February
Prichard
COMPLETE.
Build into KOA-U curriculum.
March
Prichard/Huck COMPLETE.
F AC review with suggestions for edits and changes for future releases.
August
Prichard
F ull review and modifications for 2018. Definition of future state goals for usage of the tool. Determine if grading will be a required December Prichard item for the QA process.
25
COMPLETE.
NOT YET STARTED
KOAH BOARD MEETING // AUGUST 22 - 24, 2017
SIGNATURE ITEMS OBJECTIVE: Initiate R&D projects focused on building a set of “signature items” in the areas of Patio Sites, recreation, merchandise and food service that can be promoted to the system. SUCCESS MEASUREMENT: • Identify six R&D projects and elevate at least three to the “signature phase” that includes the development and communication of concepts in a manner that encourages adoption by the system. •N ATURAL PLAYGROUNDS: A New Hampshire vendor focused on playground development with natural elements is being used to design our recreation space surrounding the pool at Nashville. The recreation area will feature things such as a maze, amphitheater, playground, and hammock cluster. Each of these involve the use of rocks and unique landscaping versus commonly used materials seen in traditional playgrounds and recreation space.
Our intention with this effort was to test on Company Owned Properties a variety of new items across recreation, merchandise and sites that had potential to become “signature” items for KOA similar to what we have achieved with the Camping Cabin or Jumping Pillow. The goal was to not only provide new ideas but also best practices and guidance to campgrounds to make them easier to execute. We are actively working on six items as part of this project. We are closely tracking the costs associated with the installation as well as the ongoing maintenance of these items. Once we have complete details from our tests we plan to share them with the system to encourage further adoption:
•P OCKET PARKS: We have engaged a local landscape architect on the design of scalable pocket parks which include commercial grade materials of popular yard games such ladder golf and table tennis combined with nice seating and landscaping. This pocket park concept will be integrated into part of the recreation space at Nashville and we are working on designs that can be used at campgrounds of any size.
• GLAMPING TENTS: We’ve implemented glamping-style canvas tents at Lake Placid and Bar Harbor Woodlands and will soon have some at Philadelphia. While some franchise locations have invested in tents, this is our first entrance into the unique accommodations space for COP. Jill Currier, the director of accommodations, is closely tracking the costs associated with the installation and ongoing housekeeping and maintenance of the tents.
•P ATIO SITES: We still believe our Patio Site concept is a true differentiator for KOA from independent parks. We are planning to publish a site guide on patio development for RV, Cabin and Tent Sites this fall. We are also actively working on securing a trademark for Patio Sites and then will build a robust marketing plan around our offering.
• E-BIKE RENTALS: We have integrated e-bike rentals into Virginia Beach and St. Petersburg and are developing a perspective on a complete rental operation that can be shared widely.
In addition to these, we are placing increasing focus on identifying new recreation ideas and sharing them with franchisees for testing. To do this we are trying to source ideas from other outdoor recreation venues as well as experiential tourism sources such as cruise ships. Likewise, our merchandise manager, Kama Humphrey is pursuing new merchandise ideas that can have broader appeal across our locations in a signature item capacity.
• ZIP LINES: We are working with a vendor to implement a zip-line course on some of our excess land in Virginia Beach. Two of our franchise locations, Ventura Ranch KOA Holiday and Watkins Glen/ Corning KOA Resort, have zip lines but this will be the first course of this scale in our system.
E-Bike Rentals KOA BUSINESS REPORT
Lake Placid Glamping Tent 26
KEY MILESTONES Milestone
Deadline
Progress
Patio Site guide published.
March
IN PROCESS.
All other projects identified (at least six; including Patio Sites).
April
OMPLETED. Includes glamping tents, e-bikes, zip lines, C pocket parks, Patio Sites and natural playgrounds.
Execution and testing of projects.
June
IN PROCESS.
evelopment of consumer marketing campaign on patio D concept for launch in 2008. Trademark KOA Patio Site, if possible, or derivation thereof.
October
IN PROCESS. Trademark currently being pursued.
ommunications to system with complete costs and details on C installation and ongoing maintenance as well as feedback on customer satisfaction.
December NOT YET STARTED.
COMMUNICATIONS OBJECTIVE: Advance KOA’s communications content and processes for Franchisee communications through the efficient use of all current and potential communication channels and technologies. SUCCESS MEASUREMENTS: eKamp Key Performance Indicators:
Facebook YellowPride Group KPIs:
• Decrease bounce rate from 38% to less than 35%.
• Increase membership by 2% to 535 members.
• Increase page views per session from 4.1 to 5.
• Increase campground participation 3 percent to 312 KOAs.
• Increase time on page from 1.4 minutes to 2.5 minutes. • Increase time per session from 5.06 minutes to 6 minutes.
Per our success measurements we are working to increase engagement with eKamp and participation in our Facebook group. As of now, we are tracking behind on a few of these metrics, namely bounce rate on eKamp. Through making some enhancements to the site; such as providing other suggested content to read, we should be able to reduce our bounce rate.
Our focus on regular and relevant system communications is proving to be successful. The dedication of Polly Mulvaney and Mike Gast to this important aspect of our business has helped hold us accountable to educating owners and managers on our programs and being responsive to their feedback and concerns. The topics that have been of the most interest to owners this year based on our analytics include KampSight/K2, credit card processing, Convention and tiny houses.
KEY MILESTONES Milestone
Deadline
Responsible
Progress
dd three new freelance content producers to help supplement A production of content.
January
Prichard
COMPLETE.
L aunch podcasting feature as new communication stream with a goal to execute at least two per month. Integrate audio features into eKamp and Facebook.
June
Gast/Mulvaney
NOT STARTED. Likely will not pursue due to other communication priorities this year.
ork with vendor to implement planned enhancements to W eKamp on quarterly basis as defined in Phase 2 plan.
December
ast/Mulvaney/ G IN PROCESS. Reinhardt
stablish additional social platforms (or integrate within Facebook E group) as means for engagement of specific topics (e.g. “Craigs December Gast/Mulvaney NOT STARTED. List” type tool for buying/selling campground equipment). 27
KOAH BOARD MEETING // AUGUST 22 - 24, 2017
PROFIT CENTERS COP CAPITAL OBJECTIVE: Introduce more efficient monitoring and management processes that will allow us to efficiently implement capital projects and measure success. SUCCESS MEASUREMENT: • Integration of new capital management process prior to the end of 2107. operates 60 campgrounds in Australia. Insights from that meeting have led to a series of ideas on our own operations that we are working to implement during this year’s budgeting cycle. Additionally, we are still evaluating if there are technology solutions that will help us coordinate our capital projects across all stakeholders.
We are actively looking at how we can improve our capital budgeting process to make it as efficient as possible between accounting and management in the field. In May, Erik Gothberg, Toby O’Rourke and John Burke met with Discovery Group in Australia to learn more about their capital processes and overall structure. Discovery owns and
KEY MILESTONES Milestone
Deadline
Progress
Integration of new management process into our 2017 workflow. March
COMPLETE.
omplete vetting of options and defining the process by which C we will manage our capital and R&M projects.
June
IN PROCESS.
Implement new capital management practices.
December NOT STARTED.
COP STRUCTURE OBJECTIVE: : Implement new organizational structure to better support development projects. SUCCESS MEASUREMENTS: • Completion of re-organization including communication to COP team and Home Office. • Timely completion of major projects on budget. include: Trinity, Santa Cruz, Las Vegas, Tucson, Moab, Cherokee, Townsend, Pigeon Forge, Philadelphia and Virginia Beach. He also manages our two engineers, Eric Kelch and Jeff Pearson. Robyn Koromhas has the balance of campgrounds with the two regional assistants, Robert Tuzi and Sam Noel, reporting to her.
Earlier in the year, the COP organization was restructured to place more executive support on development projects. Whereas the responsibilities of the regional vice presidents were previously organized by geographic region, Erik Gothberg now oversees the campgrounds undergoing major development. These
KEY MILESTONES Milestone
Deadline
Progress
evelopment of org structure changes by senior team with reD assignment of campgrounds to regional vice presidents.
February
OMPLETE. Erik Gothberg is now aligned with the campgrounds C undergoing major capital investment. Robyn Koromhas manages the balance with the two assistants supporting her.
xecution of communication plan to COP and Home Office team E February about changes once complete. KOA BUSINESS REPORT
28
COMPLETE.
PEOPLE & CULTURE EMPLOYEE REVIEWS OBJECTIVE: Introduce new employee review process at KOA Home Office to better facilitate human capital management. SUCCESS MEASUREMENT: Implementation of new forms, processes and training for employee reviews by end of the year. both employees who supervise others and give reviews as well as those who do not manage employees. Both have provided valuable feedback in how our current process could be more effective.
We are behind schedule in our efforts to implement a new employee review process, but are making progress and will have the project completed by the end of the year. Nicole Krieger, our human resources director, has been conducting meetings with
KEY MILESTONES Milestone
Deadline
Progress
evelopment of employee review process flows and manager and D April employee assignments.
I N PROCESS.
Completion of new forms to facilitate new review process.
IN PROCESS.
June
Development of orientation/training on new process and forms. August
NOT STARTED.
R oll-out of process to Home Office managers and staff and active December NOT STARTED. management of program throughout year.
29
KOAH BOARD MEETING // AUGUST 22 - 24, 2017
EMPLOYEE TRAINING OBJECTIVE: Define Home Office training program to encourage continued development of managers and staff. SUCCESS MEASUREMENT: Documented training program with identified curriculum/resources by end of the year. P&L training. We plan to have a decision on any outside resources that we may engage within the next couple of months.
We are progressing towards the development of more formal training programs for our Home Office employees. We’ve segmented our needs in three ways: leadership and management training, staff training on KOA programs, and new employee training.
For staff training on KOA programs we are considering building a KOA-U style class with curriculum similar to what we work through in those sessions. The intention is to better educate our staff on our programs so they can be a better resource for franchisees and their fellow employees. We do have an existing new employee orientation, but are relooking at the content and approach to make this a more formal introduction to our office as well as the business of camping.
For the leadership training, we are meeting with several outside consultants who have curriculum we believe may be beneficial in the ongoing development of our staff with management responsibilities. The content can range from emotional intelligence to conflict resolution to more tactical items such as
KEY MILESTONES Milestone
Deadline
Progress
I dentify current and future state training needs across Home Office. To include considerations for new manager, continual management training, new employee, functional area, and KOA/camping business training.
April
OMPLETE. Cross-functional team has identified three primary C areas of focus: management/leadership training, staff training on KOA programs, and new employee orientation.
R esearch curriculum and delivery options for training in each area August and begin development where possible/appropriate.
IN PROCESS.
llocate appropriate budget for 2018 for implementation of A training programs.
October
NOT STARTED.
I ntroduce new formalized training program by end of year for 2018 start.
December NOT STARTED.
KOA BUSINESS REPORT
30
31
KOAH BOARD MEETING // AUGUST 22 - 24, 2017
K AMPGROUNDS OF AMERICA, INC. P.O. Box 30558 | Billings, MT 59114-0558 | 406.248.7444