NEW YORK — This is Under Canvas’ 10th year in business, growing from its first camp in West Yellowstone in 2012 to its latest addition near Bryce Canyon National Park in Utah, which is set to open next month.
CEO Matt Gaghen calls Under Canvas an "upscale outdoor hospitality" company. While Under Canvas may still fly under the tent flaps for some in the hotel industry, it has a popular and growing core audience of travelers and draws significant capital investment.
In 2018, KSL Capital Partners made its first investment in Under Canvas, which owns and operates upscale tent sites adjacent to national parks. Earlier this year, the majority owner made an additional $25 million investment to grow the company in new locations and expand existing camps.
Gaghen, a KSL Capital alumnus, took the CEO role at Under Canvas in late 2020. In 2021, the company opened camps near Acadia National Park in Maine and near Lake Powell-Grand Staircase in Utah, and this summer the 10th Under Canvas site will open outside of Bryce Canyon, also in Utah.
Operations
“We are a hospitality company; we just happen to operate in these remote, beautiful destinations, which is both amazing and challenging but also differentiating,” Gaghen said.
Approximately 100 corporate employees are based in Under Canvas’ Bozeman, Montana, headquarters, and they support the local teams, who run the sites like traditional hotels, but with skills unique to seasonal, outdoor locations.
“We have an operating structure with regional operations that go up to a CEO,” Gaghen said. “So it’s very similar to a typical hotel operating model … but it’s a unique skill set that we have, that with scale, makes it a lot more efficient."
One big difference between Under Canvas’ model and a traditional hotel real estate structure chiefly lies in the land, Gaghen said. The company predominantly owns the 100- to 700-acre land parcels where its camps sit. Scouting locations is a huge part of the equation, and once the site is found, Gaghen said the company’s focus is on keeping its “forward focus on sustainability.”
Safari-inspired tents sit on platforms, many with in-tent bathrooms that include pull-chain showers to conserve water and flush toilets. Battery packs in tents provide enough power for fans and lanterns, and as for Wi-Fi, that’s a no.
Instead, the landscapes and locations are what draw people to these sites, Gaghen said. And once there, creature comforts are still plentiful. Central lobby structures are the backbone of each camp, and locations each have an on-site experience coordinator who plans activities ranging from yoga to campfire s’mores. All sites are located near national parks and Under Canvas offers information about various “adventures” near each site on its website.
As for food and beverage, all sites offer grab-and-go items throughout the day and most have a restaurant boasting what Gaghen called “often the best food option in that market.”
The company’s operating model is especially attractive now as leisure-minded travelers seek outdoor recreation. Gaghen said in a typical year, about 15% of the company’s demand comes from international travelers. New York and California are the company’s largest source markets, and Gaghen said locations draw both drive-to and fly-to travelers.
Returns and Growth
Under Canvas’ light footprint also helps it drive investor return, Gaghen said.
“We typically drive 20-plus percent returns within our first year,” he said. “That’s done by being very, very focused on the build costs that we have, as well as driving the revenue aspect of our business with centralized marketing and revenue management that are very similar to a hotel’s.”
KSL looks at revenue per available room, margins and return on investment as they would with any hotel investment, Gaghen said.
“We have, because of our success, been able to raise capital in the debt markets as well,” he added. “Blackstone is a significant debt provider, and we’ve also taken in money from Blackrock and their growth equity fund. So we’re getting to that level where people see us as an alternative to a typical outdoor resort.”
As for growth, Gaghen said the company is investing in quality and quantity, looking to add two to three new locations per year.
“You’ll see us continue to grow across North America and continue to invest in the product and the people that make it possible,” he said.
For more from Under Canvas CEO Matt Gaghen, watch the video above.