When gas and rates rise together, the outdoor economy shrinks — but not evenly

When gas and interest rates rise together, the outdoor economy shrinks — but not evenly. High gas prices increase the cost of driving to outdoor destinations, reducing demand for road-based travel. High interest rates increase financing costs for RVs and hotels, making both more expensive to build, operate, and purchase.

In 2022, U.S. average gasoline prices reached $4.19 per gallon. That same year, the Federal Reserve began rapidly raising interest rates, pushing the Prime Rate from 3.25% to 8.50% by July 2023. The combination created a double squeeze on outdoor travel: daily usage became more expensive, and big-ticket purchases became harder to finance.

RV revenues fell from $28.7 billion in 2021 to $20.3 billion in 2023 as rate-sensitive buyers exited the market. The mechanism is direct: RV loans are typically 10–15 years and tied to prime rates. As borrowing costs doubled, entry-level buyers were priced out, dealer inventories grew, and the 31% of first-time buyers who entered in 2021 faced sharply higher carrying costs.

Hotel revenues dropped 54% in 2020 but recovered to $263 billion by 2024. The sector is highly capital-intensive, so it’s sensitive to interest rates on the supply side — high rates slow construction and stress leveraged operators — but less so on the consumer side once built.

Campground revenues declined only 6% in 2020 and reached $10.7 billion in 2023 because they require no consumer financing and minimal fuel use. In past shocks — 2008–09 and 2020 — campgrounds fell just 6–7% while hotels and RVs collapsed by 25–56%. They are the most recession-resilient segment in American travel.

The 2021 cohort of first-time RV buyers, who financed at near-historic low rates, now faces higher carrying costs as loans reset in a 6.46% mortgage environment and gas remains above $3.10 per gallon.