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TRAVEL DECEMBER 27, 2010

RVs Map a Different Road Back

By JAMES R . H AGER TY

Thor Industries
Airstream is aiming at younger, active people w ho w ant to haul kayaks or mountain bikes inside their trailers.

The recreational-vehicle industry, a gauge of Americans' ability to splurge on adult toys, has been stuck in the slow lane of the road to recovery. Now, RV
makers are trying to move things along with more fuel-efficient trailers aimed at frugal travelers tired of airports and motels.

U.S. sales of RVs—ranging from towable campers costing as little as $4,000 to bus-like behemoths with two bathrooms and king-size beds for $300,000 or
more—boomed from 2000 through 2007 as Americans tapped their swelling home equity to buy shelter on wheels. The industry built bigger and fancier
models, catering to those whose idea of getting away from it all involves taking a lot of it with them.

But RV sales began plunging in 2008 and last year were about 46% below the peak level in 2005, to around $6.2 billion, according to market researcher
Statistical Surveys Inc. Several big manufacturers have gone through bankruptcy, and at least 200 dealers in new RVs, or 8% of the total, have left the
business.

The industry is fighting back by offering lighter vehicles aimed at a broader range of buyers, while expanding advertising that touts the affordability of RV
travel. It is also hoping that people put off by security pat-downs and other air-travel nuisances will turn to RVs.

"We have survived tough times in the past," Richard Coon, president of the Recreation Vehicle Industry Association, or RVIA, said in a pep talk to members of
the trade group at its annual convention last month.

One priority is to make more converts like Tim and Jennifer T racy of Pennington, N.J., both lawyers. T hey bought their first RV—a 27-foot Airstream, with a
list price of about $70,000—last January. "We wanted to make memories for our boys," ages two and six, says Mr. Tracy. His idea of a vacation is
backpacking; his wife prefers resort hotels. The RV was "a sort of compromise," Mr. Tracy says, and has proved a hit with the family.

Manufacturers are cutting the weight of RVs by as much as 25%, partly by using plastic composite materials instead of wood, to improve fuel economy and help
counter fears of rising gasoline prices.

They also are trying to make RVs look less like white boxes. EverGreen Recreational Vehicle LLC recently introduced a sleek new trailer called the Element,
which starts at $38,000 and is light enough to be pulled by a minivan. T he RV industry gets a large share of its sales from buyers over age 50, but EverGreen's
37-year-old engineering director, Dan Rodabaugh, hopes the Element, with its simple and uncluttered interior, will appeal to younger buyers like himself.

Airstream Inc., a unit of Thor Industries Inc., recently teamed up with the retailer Eddie Bauer LLC to design and market a model aimed at younger and more
active people who want to haul kayaks or mountain bikes inside their trailers.

The industry association spent about $8.25 million in 2010 to buy TV and other ads using talking animals to tout the economy and family-friendliness of RV
trips. It plans to increase that budget to about $11 million in 2011 and run the ads in movie theaters as well as on cable TV, online and in print.

"Our best commercial for our industry is the airlines," Robert J. Olson, chief executive of RV maker Winnebago Industries Inc., told analysts recently. "If you
haven't gone on an airline lately, it's a real hassle." Meanwhile, the recent bed-bug scare helped make people warier of motels, says John Lenzo, an owner of
Colonial Airstream, a dealer in Lakewood, N.J.

The industry's biggest manufacturer, Thor, was founded in 1980 when Wade Thompson and Peter Orthwein acquired an ailing Airstream. Since then, Thor has
made a series of acquisitions that, along with organic growth, have given it about a third of the RV market in terms of sales. In 2009, T hor also shored up the
industry's largest retailer, Camping World Inc., by lending $30 million to the owners of that chain so they could put more capital into the company.

Camping World, which has 78 stores, accounts for around 15% of Thor's total RV sales. "It would have been pretty messy if they had gone under," says Richard
Riegel, senior group president of Thor. Marcus Lemonis, CEO of Camping World, says his company could have survived without the loans but wanted a "more
flexible and comfortable balance sheet."

In the first nine months of 2010, U.S. retail sales of new RVs totaled about 152,000, up 5.5% from the depressed year-earlier level, according to Statistical
Surveys. Manufacturers' shipments of RVs in 2011 are projected to rise 4%, to about 246,000 units, the RVIA trade group says. T hor's Mr. Riegel says

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shipments will grow to 300,000 annually by 2013, which would still leave them 23% below the market peak in 2006.

RVs have never appealed much to urban hipsters, and sales tend to be concentrated in smaller cities, towns and rural areas. The RVIA estimates that 8.3 million
American households, or about 7%, own RVs. At this point, it remains largely a domestic industry. It's too costly to ship the big products around the world.
Some of the manufacturers do have vague hopes of implanting themselves in China at some point in the future, but that's just talk for now. They say China lacks
the infrastructure of places to park RVs.

Makers of RVs say the 76 million baby boomers remain a very promising market, though many have lost their home equity and savings and aren't in a position
to buy now. As a result of those financial pressures, many boomers are likely to rent or share RVs rather than buy them, says John W. Martin, CEO of Boomer
Project LLC, a market-research firm.

Write to James R. Hagerty at bob.hagerty@wsj.com

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