The UK Holiday Park Market

There are some 3,400 holiday resorts and camps in the UK, which in 2008 generated some £292.5m in tourist revenue.

The definition of a 'holiday camp' ranges from individual touring and camping sites to full scale resorts with leisure, food and beverage operations. 

Some 80% of the market is dominated by the smaller players (usually family-owned firms), leaving around 600 larger holiday resorts owned by the group operators.

 

 

There are some 3,400 holiday resorts and camps in the UK, which in 2008 generated some £292.5m in tourist revenue.

The definition of a 'holiday camp' ranges from individual touring and camping sites to full scale resorts with leisure, food and beverage operations. 

Some 80% of the market is dominated by the smaller players (usually family-owned firms), leaving around 600 larger holiday resorts owned by the group operators.

The biggest single player is Bourne Leisure, which in 2001 bought the UK holidays division of Rank Group for £700m, giving it control of Haven Holidays, Warner Holidays, and Butlins as well as their existing British Holidays business.

Haven and British Holidays have 35 holiday resorts between them.

Other major multiple resort groups include Park Resorts and the AIM listed Parkdean.

The other major player is the now publicly-listed Center Parcs, which operates four short-break holiday villages in Nottinghamshire, Wiltshire, Suffolk and Cumbria as well as sites in Europe. Its arrival in 1987 transformed the sector, creating a more upmarket and aspirational image. Center Parcs continues to achieve annual occupancy figures of around 92.4%.

Park operators such as Bourne Leisure, which operate caravan holiday resorts, have an attractive business model and sell holiday units as well as holiday lettings.

In 2008, trips to holiday resorts, camping and caravan holidays rose to a record level of 26.3 million, the equivalent of one in five UK holiday bed nights.

Alongside the shift upmarket, holiday resorts over the past few years have spent much more time and effort on niche marketing, promoting themselves to specific sections of the population, family holidays, adult-only holidays, activity breaks and so on.

Research from Mintel has suggested that such short-breaks now account for more than half of all holiday visits in the UK, and that the market for these is increasing steadily. Alongside this, the UK tourist has become increasingly demanding and quality driven.

Planning restrictions, either on new sites or the expansion of existing sites, are a major issue for the sector going forward, limiting the potential for growth in the UK market. The lack of supply of resorts and the success of the business model enables resorts to be sold at a considerable premium to their development asset value.

Much of the growth of the market, therefore, is coming from increased sophistication, niche marketing and expanding the number of weeks that are filled, rather than a growth in the number or size of resorts.

There are clear signs that venture capitalists and City investors are now taking a close interest in the sector, and in particular group operations.

Center Parcs, for instance, before it went public, was owned by private equity firm Mid Ocean Partners.

The venture capital firms of ABN AMRO, 3i, Royal Bank of Scotland Private Equity, Close Brothers, Legal & General, Mid Ocean Partners, Phoenix Partners and others have each invested in the sector in recent years.

At the end of 2004 the Dutch bank ABN AMRO acquired GB Holidays and subsequently merged operations with another company that it had already purchased called Park Resorts. The new combined group has 35 holiday resorts throughout England, Scotland and Wales.

In January 2006 Graphite Capital Ventures acquired Cinque Ports Leisure, operator of 19 caravan parks, for £130M.

In May 2006, Cinque Ports Leisure acquired two caravan parks in Dawlish and Torquay operated by South Devon Caravans for £10M.

In June 2006, L&G Ventures negotiated the purchase of the 10 caravan park operation, South Lakeland Caravans for £100M but sold it on 16 months later to Mountain Capital for £125M.

Hermes Private Equity, in December 2006, obtained a £100m stake in Siblu Holdings, the owner and operator of eight of France’s premier holiday parks.

And in March 2008 Trevor Hemmings through Ocean Parcs backed by Abbey UK Corporate Banking purchased Pontins for £190M.

Such transactions highlight the attraction of multiple resort ownership to investors.

·                     High margin sustainable sales of holiday units even on established resorts with a rate of buyer churn

·                     Above average returns capable via buying under-managed businesses and applying a group branding and improved management

·                     Economies of scale and greater operational gearing as a business expands

·                     The flexibility to shift asset use between units for sale and company owned units for holiday letting

·                     The ‘annuity’ value of owner rents and other charges growing above the RPI, resulting in a business model which can sustain high levels of gearing

 

This author consults with leading institutions through GLG