RV Parks vs. Boutique Hotels: Which Offers Better Risk-Adjusted Returns?

RV parks generally offer better risk-adjusted returns than boutique hotels, but only for investors willing to accept more hands-on operational work and seasonal cash flow swings. RV parks trade at cap rates of 7-12%, compared to boutique hotels which often trade at 5-8% in similar markets. That spread exists because the market prices in the operational intensity of running an RV park. If you can manage that intensity or hire someone who can, you get paid more for the same relative risk.

Here's the honest breakdown of why that gap exists and whether it's worth chasing.

Why RV parks trade at higher cap rates

Boutique hotels require daily housekeeping, front desk staff around the clock, food and beverage in many cases, and constant guest turnover. Labor costs typically run 30-40% of revenue. RV parks, by contrast, often run with a skeleton crew: one or two site managers, part-time maintenance, and seasonal help during peak months. Labor costs on a well-run RV park can sit closer to 15-25% of revenue.

Lower labor dependency means more of each revenue dollar drops to NOI. That's the core reason cap rates run higher on RV parks. Investors are willing to pay less per dollar of income because the income itself is more durable and less dependent on service quality and staffing headaches.

Seasonality is the real tradeoff

RV parks in most regions hit close to 100% occupancy during summer and holiday weekends. Then winter arrives and occupancy can drop into the teens or single digits, depending on climate and amenities. Boutique hotels see seasonality too, but rarely swing that hard. A hotel in a slow month might see 40-50% occupancy. An RV park in the off-season might see 10%.

That swing changes how you underwrite. If you want a deeper look at why this happens and how it affects revenue planning, this blog covers why RV park occupancy hits 100% in summer but sits empty in winter. Understanding that pattern before you buy tells you whether the market and amenity mix can support year-round income or whether you're buying a seasonal cash flow asset.

Growth assumptions matter more than people think

The post-pandemic RV boom pushed occupancy and rates up fast between 2020 and 2022. That surge was an anomaly, not a trend. Forecast growth for the industry is flat, running 0-1% annually through the rest of the decade. If you're underwriting a deal assuming 3-5% annual revenue growth because that's what happened three years ago, you're setting yourself up for disappointment.

Boutique hotels don't have this problem in the same way. RevPAR growth in hospitality tends to track more closely with regional tourism trends and inflation, and underwriters are used to modeling conservative single-digit growth. RV park investors need to adopt the same discipline. Assume flat or near-flat top-line growth and build your return case on margin improvement and value-add work instead.

Where the real upside comes from

Since you can't count on rate growth to carry returns, NOI improvement has to come from somewhere else. The best RV park operators focus on a few levers:

• Adding private lot leases for long-term tenants, which stabilizes income and reduces vacancy risk.

• Building out amenity fees such as laundry, propane, firewood, and storage, which add margin without adding much labor.

• Improving off-season occupancy through targeted marketing to snowbirds, seasonal workers, or extended-stay guests.

• Tightening operating expenses through better vendor contracts and smarter staffing schedules.

Boutique hotels have fewer of these levers available. Room rate and occupancy are largely it, aside from ancillary food and beverage revenue, which comes with its own cost structure and risk. RV parks have more diversified income streams built into the business model, which gives operators more control over the outcome.

If winter occupancy is the piece holding back your return projections, it's worth reading winter occupancy strategies for how RV parks survive the off-season. The parks that perform best in cap rate compression over a hold period are usually the ones that solved this problem early.

Which one fits your risk tolerance

Boutique hotels make sense for investors who want smoother, more predictable income and are comfortable paying a lower cap rate for that stability. They also tend to be easier to finance conventionally and easier to exit to a broader buyer pool.

RV parks make sense for investors who want higher going-in yields, are comfortable with seasonal cash flow, and are willing to actively manage or oversee operations rather than treat the asset as passive. The risk isn't necessarily higher in the traditional sense. It's just concentrated in operational execution rather than market cycles.

Both asset classes can work. The mistake is treating them as interchangeable when they require different skill sets and different underwriting assumptions. If you're weighing RV parks against boutique hotels for your own portfolio, reach out to Invest With Zac to talk through the numbers on a specific deal.