Last year resulted in disruption for all hospitality operators, not least the holiday park industry, which was forced to close just before Easter, the start of the 2020 holiday season. It remained so until 4th July when lockdown measures were eased, and parks were allowed to reopen. And what a reopening they had.

During the Global Financial Crisis, holiday parks remained resilient because of a well-balanced business model that can flex through economic cycles. For example, switching from focussing on sales of caravans and lodges in strong economic periods to offering affordable domestic holidays in a recessionary environment. Spend on domestic holidays increased by 9.5% in 2009 vs 2007 (Visit Britain), with the number of domestic trips increasing by 13% for the same period. 

The second half of 2020 provided enormous comfort to the industry that demand was there. Google trends data showed web searches for “Holiday Park” were 39% higher in July 2020 than the average for the same period across 2016-2019. Caravan and lodge sales proved incredibly resilient from June onwards, and in turn operators reported unprecedented demand as customers chose to retreat from city locations.

The rise of the holiday park graphic 1

Holiday parks were fully-booked from July to September, with holiday makers benefitting from the naturally socially distanced accommodation, open-air entertainment and Britain’s coastal and countryside settings.

Following the latest government announcement that self-catered accommodation can open to single families from 12 April, the industry is set to become one of the earliest beneficiaries of the easing of lockdown measures. Multi-family breaks are expected to follow from 17 May.

Business Model

Holiday Parks typically have four key revenue streams which all work harmoniously and can be flexed to adapt to different economic conditions. When executed well, operators are able to grow bottom-line performance through economic cycles.

The rise of the holiday park graphic 2

Trading Outlook

Holiday Parks are well-positioned to show continued resilience in 2021 and retain their positioning for the long-term:

  • Domestic holidays are expected to hit record levels in 2021 and beyond
  • Holiday parks will open single family stays from 12 April benefitting from early pent up demand
  • The early success of the vaccine rollout in the UK, combined with a lag in Europe will see growing confidence in UK holidays
  • The industry can benefit from additional complexities (length of stay, insurance, tax, savings) and restraints for foreign holiday home ownership in the post-Brexit environment
  • Leisure travel is expected to show the strongest recovery profile in demand, cashflow and value
  • Budget accommodation offers are expected to thrive in coming years through a recovery environment

Transactional Activity

Whilst the UK lockdowns have hampered trade, the winter lockdowns in November and into Q1 2021 have come at the quietest time of year for holiday parks. The performance in between the two lockdowns, along with overwhelming forward booking patterns, has resulted in a high degree of confidence for demand and revenue in 2021. Consequently, since the second half of 2020, there has been a buoyant transactional market for assets across the UK without any visible impact on pricing.

At the largest end of the sector, the recent acquisition by Blackstone of a majority interest in Bourne Leisure is testament to the durability of the sector and confidence in the outlook for trading. Bourne is the operator of three brands; Haven, the largest holiday park operator in the UK by number of pitches, Butlins and Warner Leisure Hotels.

CBRE anticipates that 2021 will see significant transactional activity supported by stability in pricing and certainty of cashflows. The market remains highly fragmented, just 5% of the 2,800 parks in the UK are owned by the largest three operators with a number of operators seeking to consolidate and grow.

Summary

Physical restrictions on travel, naturally socially distanced accommodation and facilities offered in typically stunning holiday locations have undoubtedly made holiday parks an incredibly attractive proposition for 2021 and beyond.

There is a significant amount of capital targeting the sector and we anticipate substantial transactional activity at both a corporate and asset level through 2021.

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