Staying Outside: The Rise of Glamping

The outdoor accommodation sector has been a major pandemic winner, with new brands emerging and institutional investors taking note.

Thesis Driven dives deep into emerging themes and real estate operating models by featuring operators executing on each theme. This week’s letter is a guest post from Fed Novikov, co-founder at Apt.

via Piaule Catskill

In early 2020, the hospitality industry came to an abrupt halt. Planes flew empty, urban hotels were vacated, and Airbnb’s business plummeted by 80% practically overnight. Despite the chaos, one niche stood out as immune to the pandemic and was growing rapidly — local stays in nature.

Accelerated by the pandemic, the outdoor accommodations industry has become one of the fastest-growing sectors in hospitality over the past decade. According to Kampgrounds of America, 17 million households took at least one glamping trip in 2021, a staggering 155% increase from 2019.

The low barriers to entry and the potential for substantial returns have made outdoor hospitality an attractive niche for local entrepreneurs. While traditionally dominated by mom-and-pop businesses, the industry is now becoming more sophisticated with the emergence of branded operators backed by institutional capital.

Piaule Catskill cabin

Institutional investors, including Whitman Peterson, Starwood Capital, Certares, KLS Capital Partners, and others, have poured hundreds of millions of dollars into glamping projects. In 2022, Summit REIT, a public real estate investment trust, made a direct investment in a Texas-based outdoor resort. Giants in the industry, such as Marriott and Accor, have also launched their own experimental projects. According to hospitality consulting firm PKF, the glamping market is expected to continue growing by 12% annually, reaching $5 billion by 2025.

It's a good time to evaluate the current state of the industry and explore:

• Why are outdoor accommodations so attractive to both consumers and investors?

• Is the popularity of glamping just a pandemic phenomenon?

• What are the opportunities for institutional investors in the industry?

This letter will give an overview of the outdoor accommodations sector including economics, major players, institutional investors and recent financings, and the go-forward, post-pandemic outlook for the category.