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Bunk and Breakfast

A midlife fantasy that might even pay for itself: owning your own sleepaway camp.

By Ashlea Ebeling

Reprinted from FORBES Investment Guide
December 8, 2003

In 1970, when Karl Alexander was 20, he asked his dad to help him buy the all-boys sleepaway camp in western North Carolina where he had been a camper and a counselor. Dad told him to get a real job. So he worked as a loan officer, owned a Chrysler-Plymouth dealership and did marketing for a Louisiana company that turns rice hulls into energy.

Yet camp kept calling. Alexander heard his alma mater was for sale in 1996 but decided it wasn't worth the asking price. He kept looking. And in November 2000, just after he turned 50, he bought a nearby coed camp in Horse Shoe, N.C. Camp Highlander was on 170 acres of wilderness bordering the Pisgah National Forest, with clean, crisp air, a lake and frontage on the Mills River.

"I said I wasn't going to die in a corporate office in Baton Rouge," Alexander recalls. He and wife Shelley and their five daughters (then ages 13 to 23) packed up and moved to the Blue Ridge Mountains. Now he's doing what he dreamed of--riding his horse War Bonnet on overnight treks, hiking Black Balsam Mountain and playing surrogate dad to 700-plus kids each summer. "It's kind of like a fairy tale," he says.

Think of it as a rustic version of that more common fantasy--shucking the corporate grind to run a bed-and-breakfast. "Most people who want to buy a camp have a very romanticized and unrealistic notion of what it means," warns Jeffrey Solomon, executive director of the National Camp Association, a matchmaking service for camps and campers.

First, there's the sticker shock: Expect to pay $3 million to $5 million for a 200-bed camp in good shape and operating at capacity, and $1 million to $2 million for one needing renovations and operating at half-capacity. Then there's the discovery that it's not just a summer job. Instead of sailing in the Bahamas all winter, you'll be hiring staff and drumming up business at camp fairs. "Camp owners live a rewarding life, but it's not a get-rich-quick life," says Solomon.

Still, there are more dreamers than properties for sale. Camp broker Walter Brent in Alton Bay, N.H., who sold Alexander his camp, has a file of 100 would-be owners and an inventory of three operating camps and four shells--camp buildings without an existing business. Only a dozen of the 2,000 or so private sleepaway camps in the U.S. are openly listed for sale right now. That's because most camps are handed down within a family or sold through word of mouth to, say, the assistant director who has worked there for 20 years.

In the fall of 1997, when she was 28, Dayna Hardin left a job producing educational videos for Simon & Schuster to buy Lake of the Woods in Decatur, Mich. She had been a camper, counselor, program director and finally assistant director there. The camp wasn't openly for sale. But she'd asked the owners to call her if they ever wanted to sell, and one day they did.

Hardin jumped at the opportunity even though the camp wasn't, as she puts it, "at the peak of its life." As part of a package deal she also picked up the neighboring boys camp, Greenwoods, for a total of $1.5 million, financed partly by the sellers and partly through a local bank. She got to work right away looking for campers (the former owners had only one camper enrolled for the next summer). She signed up 371 kids for that first year and took in $923,000 in revenue.

Is there a way to find out about camps not officially listed for sale? Some desperate camp hunters resort to sending blind e-mails or letters to camp owners (Hardin said she started getting these the first summer she owned the camps). But it's a long shot. Moreover, the sale of a camp to outsiders has to be done discreetly, so parents don't get nervous and flee.

Occasionally, nonprofits shed camp assets to raise money. That's how Camp Highlander came on the market. Alexander bought it from the Pine Crest prep school in Boca Raton, Fla. for a price he says was between $3 million and $4 million.

Why not just start a new camp from scratch? Zoning boards usually make it prohibitively expensive, Solomon says. They'll impose tough new standards on big-ticket items like septic systems. An existing camp can be grandfathered. Also, parents prefer a camp with a history.

Still, there are opportunities in vacant and run-down facilities. Jay Stager is a serial camp-fixer-upper who now owns Camp Med-O-Lark in Washington, Me., his seventh camp. He looks for either operating camps in distress that he can buy for less than 1.5 times revenue or empty camps selling for the value of the land. He plows $300,000 or more into the buildings, gets the camp accredited by the American Camping Association (it has 572 privately owned member camps) and then sells. On his best deal, he says, he made $1 million in profit.

Assuming you shell out $3 million or more for a fully functioning camp, what kind of revenues can you expect? Alexander will be charging $2,675 for a three-week session this coming summer, less a 5% discount for those who pay in full by December. With room for 330 kids and three sessions, a full house at full price would bring in $2.6 million. In 2002 he ran at 100% capacity. Last summer he was down to 88%, in line with an industrywide drop in enrollment, blamed on the economy and the war in Iraq. Alexander and other camp owners are optimistic enough about 2004 to be raising prices, 6% in his case. "Parents will pay you any amount--you've got their most prized possession," he says. Expect to spend something like 65% of revenue on operating expenses, including 25% on labor, 15% on marketing, 8% on food and utilities and 4% on insurance.

Alexander has plowed a lot of his operating income back into improvements--adding 65 adjoining acres to the original 170 and, for example, replacing barbed wire fencing around the horse pastures with Kentucky-style board fencing. At $125 a night, parents expect such touches.

While Alexander won't say how much he earns from the camp, it does provide a living. The camp employs three of his daughters and a son-in-law. Camp directors he knows pay themselves from $50,000 to $300,000 a year, Alexander notes.

Are you really cut out for this work? It requires a mix of management, handyman and parenting skills. You've got to like kids and long days. Says Hardin: "It's like being an accountant on Apr. 15, but for the whole summer."

The responsibility for taking care of someone else's child is enormous. "Imagine the knock on the door at 2 a.m. when a child is having an asthma attack, or fathom the pressure when a child is on a climbing wall," says 42-year-old Jeffrey Konigsberg, who owns Camp Takajo and Tripp Lake, boys' and girls' camps in Maine. His toughest job was caring for a child whose parents died in a plane crash one summer.

In season you're running a medical facility with nurses and maybe even a doctor, a restaurant, and transportation, building and groundskeeping departments. "You have to be a jack-of-all-trades," says Stager.

In the winter many camp owners close up the cabins and bunk in their "winter" residences, but they're not really off duty. Lining up campers and staffers is a big job. Camp Highlander, for example, has 120 seasonal employees. While 75% are repeat employees, some types of workers are hard to keep. Alexander is looking for his fourth chef in four years. Certified instructors in areas like riflery are also tough to find. Stager has flown a Cessna 172, owned by one of his camps, on recruiting trips.

Some costs have been rising steeply. Stager's Camp Med-O-Lark insurance bill jumped from $38,000 in 2001 to $73,000 this year. Marketing costs, including referral fees paid to camp matchmaking services, have been growing too.

In addition to across-the-board rate hikes, owners are trying to generate more revenue by charging extra for activities like horseback riding and by adding more beds.

A different approach is being taken by White Plains, N.Y. CampGroup, which has bought up eight camps since 1998. It aims to save on costs by group-buying of insurance, food and high-dollar items such as sailboats, while keeping each camp's family feel, says Daniel Zenkel, CampGroup's president.

Last year, after fixing up Lake of the Woods and Greenwoods and bumping enrollment up to 610 per summer, Hardin sold them to CampGroup for stock and cash, making a tidy profit. She's still camp director, with a salary and profit participation. So why sell? With two kids of her own now, Hardin says, she wanted to be sure she could quickly hand over management of the camps, should she choose to. "I'm still doing everything I love," she says. "But I don't have the ultimate responsibility if, God forbid, something happened to a camper. It's not all on my shoulders."

Alexander, for his part, wants to keep Camp Highlander in his family: "My hope is to pass it on to my children and their children, so that my grandchildren's children will end up there."

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