Europe’s holiday park market continues to see consolidation deals, as strong demand from a second staycation summer helps boost revenues.
The latest deal over the line saw leading operator Park Holidays UK take over Bridge Leisure, giving the group nine more sites and taking its portfolio to 42 sites. Park is an established market player, having traded for over 35 years, while newcomer Bridge was set up just nine years ago.
Having scaled up Park, owner Intermediate Capital Group now looks set to test investor appetite for the larger business. Sky News reported that Intermediate, which bought into Park in 2017, has hired advisors HSBC and Royal Bank of Canada to scope out a potential sale. The publication has also suggested CVC Capital Partners is in talks to acquire Away Resorts, which has nine sites in England and Wales.
Across Europe, the trend towards greater consolidation is playing out – and attracting major private equity players to the sector. Earlier this year, Blackstone acquired UK operation Bourne Leisure. In the Netherlands, Roompot, acquired by KKR in 2020, has continued to grow its portfolio through the pandemic. And Awaze, the renamed group of holiday rental and holiday park businesses bought out of Wyndham, has also been growing with the backing of US private equity owners Platinum Capital.
Investors are betting on the pandemic driving a permanent, as well as a temporary switch to more domestic leisure trips, as environmental pressures on flying help push sentiment towards drive-to destinations.
And the famously fragmented marketplace has presented an acceleration of consolidation activity. Agents say that seasoned owners of small scale operations, battered by the complexities of operating with the pressures of pandemic restrictions, have reconsidered their options and are now looking to sell. Meanwhile, last year’s restricted season, constrained by government imposed lockdowns across Europe, still demonstrated that, when allowed to trade, sites were much in demand – and that has helped keep park values high.
KKR bought Dutch operator Roompot via its long term investment pool, aiming to see the business grow substantially across Europe, in what remains a highly fragmented sector.
In September 2020, the group acquired Dutch operator Qurios. The move added four established Dutch holiday park sites, as well as a pipeline of five further projects in the Netherlands, France and Portugal.
Into 2021, the group has signed more than 30 new sites for adding before the end of 2022. This has included three new sites in France, while a partnership with glamping operator BoerenBed has added 27 farms where luxury tents are available. In March the group announced it will convert the 146 unit De Veluwse Hoevegaerde, formerly with Landal, to its brand from the beginning of 2022.
In April, it signed a collaboration with the Strand49 park in Sint Maartenszee, while its park in Schaijk has expanded, adding a further 74 homes, more than doubling the size of the site.
Within its Wyndham portfolio acquisition, Awaze combines vacation rental brands Hoseasons, James Villas, Novasol and Cottages.com, with park holiday business Landal Greenparks. It too has expanded through the last year, adding three businesses. In the UK, it bought two more cottage rental groups, while also adding Danish business Bornholmtours.
“2021 has seen unprecedented demand for managed vacation rentals right across Europe and will continue to look for further opportunities to grow our business and brands,”said Henrik Kjellberg, CEO of Awaze.
At Landal GreenParks, which operates holiday park sites across mainland Europe, 2020 revenues at EUR405m in 2020 were down 35% on 2019, as pandemic restrictions hit bookings. However, the pipeline continued to grow as the group signed 17 sites in the Netherlands, Germany, Denmark and Great Britain. In addition, holiday home unit sales were up 40% – and at the end of 2020, Landal acquired holiday home brokerage Vakantiemakelaar.
“The emphasis for the growth is partly on new and partly on existing destinations in the Netherlands, Belgium, Germany and Great Britain”, said Landal director Dirk Anbeek. “Besides peace and quiet amid nature, our guests are increasingly choosing luxury – and we are responding with a selective growth with new, high-quality parks close to beautiful nature.”
UK agent Sanderson Weatherell, which specialises in holiday parks, noted the sector’s fundamental appeals in its recent sector report. “It is clear the sector continues to be a very attractive asset class for operators and investors,” noting “the core fundamentals of sustainable returns from pitch fees, and/or pitch occupancy along with attractive margins from caravan sales being the primary drivers.”
And there are signs of fundamental shifts in the market: “The pandemic has also introduced a new demographic to caravan holidays with many operators successfully translating this into both new and pipeline sales.”
SW partner Adam Burkinshaw told Hotel Analyst: “There’s a lot of activity in the market right now – we’re very busy.” Burkinshaw recently handled the sale for private owners of the Beachcomber Holiday Park in Cleethorpes, achieving well over the initial asking price. The site, with 521 static caravan pitches, was bought by Away Resorts, becoming the group’s ninth UK site.
Another similar family-owned sale saw SW handle the sale of the Tregoad park in Cornwall, as its owners planned their retirement. The 55 acre site was acquired by Waterside Holiday Group, becoming its fourth site, with the new owners planning a subtle upgrade with the addition of new, premier holiday home pitches.
HA Perspective [by Chris Bown]: Center Parcs has got a lot to answer for. As the premier holiday park brand in the UK, it lives off spectacular occupancy levels, year-round, and has changed hands at a stellar valuation. Plenty of others want to repeat the magic – and grab a slice of the domestic holiday market.
With supply remaining constrained, lower tier sites are always going to look attractive, presenting an opportunity for repositioning – just as a hotel investor might do with a tired Mediterranean property. The difference here, is that the pandemic is forcing a new audience to look nearer to home for their posh weekends away, presenting as SW note, a new demographic for the holiday park market.
The big question is, will this switch be permanent? Not if Ryanair, easyJet and a host of European destinations have their way. But meantime, the next two to three years will see an interesting battle played out, for European leisure spend.
Additional comment [by Andrew Sangster]: The holiday park market has been an attractive proposition for investors seeking good returns. IRRs in excess of 40% are not uncommon. The challenges have revolved more around scale and liquidity. However, there are some signs that a shift may be underway.
A report commissioned by the UK Caravan & Camping Alliance called Pitching the Value, published in February 2019, gives a feel for the scale of the opportunities and challenges. It estimated that holiday park visitors spend GBP9.3bn. The Gross Value Added by the industry to the UK economy is GBP5.3bn which compares to the GBP64.7bn that the tourism sector as a whole represents.
There are 6,243 holiday parks or campsites in the UK accounting for 438,000 pitches. This is a meaningful number when compared to the 710,000 UK hotel rooms (Whitbread’s estimate), even if the majority of holiday parks close for the winter.
The liquidity issue derives in part from the long length of ownership. Two-thirds of parks have been owned for more than 10 years and a third for more than 25 years.
What may change the segment is the growing accessibility of non-hotel accommodation via websites like Airbnb and Expedia’s VRBO. This demand revolution requires a different operational approach, one that is more flexible and responsive. It puts holiday parks much closer to hotels.
Prior to the pandemic, there was a clear trend for accommodation segments to overlap. The pandemic, as with many other such trends, has greatly accelerated the move.
Another trend during the pandemic has been the push on staycations, and the much stronger rebound in domestic rather than international travel. I’m not too sure that this is something that will outlast the initial phase of the recovery. Once international travel becomes easier, the excess demand seen in northern European countries will most probably subside.
The operators that do succeed in retaining some of this demand will be those focused on delivering exceptional experiences who have targeted customers likelier to be stickier. The holiday homes that enable people to work remotely is one example: good wifi and a desk being key facilities for families wanting an extended break but with parents that cannot take too much time off work. Fun and quirkier is another key trend.
Higher capex is going to be needed to deliver on these changing consumer requirements. The report found an average annual capex of just over GBP250,000 per park. Much more is required to deliver the transformation necessary to appeal to the new potential customer base.
This need for more capital is set to make holiday parks more liquid, as professional investors seek to realise returns, and to drive consolidation, a trend already visible.