Europe’s holiday park market has seen two more major consolidation deals, as private equity investors realign their positions for post-pandemic growth.
KKR, which owns Dutch holiday park business Roompot, has agreed to acquire its rival Landal GreenParks, in a deal at an undisclosed price. The move will create a European holiday park powerhouse, with 300 parks across 11 European countries, and a total of 32,000 homes. The deal is subject to competition authority clearance.
And in the UK, another holiday park business has changed hands, with CVC Capital Partners acquiring Away Resorts for GBP250m.
The Landal sales sees the holiday park brand being split from Awaze, a brand established by Platinum Equity after it acquired Wyndham’s holiday businesses in 2018 in a USD1.3bn deal. That deal saw the US buyer take on Landal, a Dutch-based holiday park business, in a portfolio deal along with holiday rental brands Hoseasons, Novasol, James Villas and Cottages.com.
“This transaction provides Landal the right home for the future where they can continue to build an amazing experience for guests for the long term,” said Henrik Kjellberg, chief executive of Awaze.
“We will continue building out Europe’s leading vacation rental management company, investing in our technology platform and upgrading the experience for our owners and guests. We have tremendous momentum, driven by unprecedented demand for rental properties across Europe. We are managing more vacation homes and delivering more stays than ever before.”
Platinum Equity managing director Malik Vorderwuelbecke set out the direction of travel for Awaze: “There are significant opportunities to continue expanding the Awaze portfolio through targeted mergers and acquisitions in key geographies. The business has a lot of runway for continued growth.”
Already this year, Awaze has acquired three businesses. In the UK, it bought Amberley House and Portscatho Holidays, while in Denmark it acquired Bornholmtours, adding around 1,000 homes to the portfolio.
For KKR and Roompot, the deal enables a step change in growth, also taking out a rival operation. Combined, the new group has considerable strength in the Dutch market, while rolling out the model to more and more European countries. Both businesses have continued to scale up in the last year, picking off individual sites to add to their portfolios.
In the UK, the Away deal with CVC represents a great return for seller Freshstream, with the sale price reckoned to be around four times the cost of acquiring Away in 2019. Away has continued growing this year, having agreed to acquire three sites since Christmas. CVC is reported to have moved quickly, after advisors to Away started preparing the business for sale.
David Wells, a Managing Director at CVC Capital Partners, commented: “We have been hugely impressed by the success of Away Resorts’ differentiated, family-oriented holiday park proposition. The business is well positioned in a fragmented and growing market that benefits from strong consumer tailwinds. We are excited to be partnering with Carl and the Away Resorts team to support the development of the platform they have built and accelerate their ambitious expansion plans, through investing in existing parks and by significantly growing the estate over the years to come.”
HA Perspective [by Chris Bown]: When Platinum acquired the mixed bag of holiday businesses from Wyndham, it was hard to see the logic in them staying together. The Landal parks business was clearly a different beast to a handful of holiday rental brands. But fortune favours the brave, and Platinum has found a profitable exit for Landal.
Now they just need to work out the best exit for Hoseasons, James, Cottages and Novasol – and that could be holding and growing from a strong position in a fragmented European market. According to a ranking by Rentals United, Awaze sits above regional competitors Oyo with 54,000 listings, Swiss-based Interhome with 50,000, and Sykes in the UK with 20,000. Who to buy?
Holiday parks remain a fragmented market, with opportunities to pick up family-owned businesses all over the place. This latest round of private equity buyers are also buying the idea that climate guilt will keep demand for drive-to holiday destinations hight – though there are plenty of Spanish hotel operators who will be working hard to persuade their same target audience to get back on the budget airlines as soon as international travel eases.
For KKR, their platform purchase looks to have worked out already, adding substantial scale and putting Roompot in an unassailable position in the European holiday park market. Expect it to keep on buying – with a flotation not so many years off.
Additional comment [by Andrew Sangster]: The Awaze disposal positions the company as a pure play holiday rentals platform, uncomplicated by any real estate ownership. In addition, it has the added side benefit of enabling the PE owner to take out what is likely to be a sizeable slug of cash.
The timing is also propitious as Northern European holiday businesses enjoy their staycation summer in the sun (or most likely drizzle). It is probable that much of the staycation business is a distress purchase, forced due to the difficulties in international travel.
The known unknown in this market is how much staycation business will remain once borders reopen properly again. Holidaymakers in Northern Europe will be comparing this summer’s experience of paying high prices for crowded destinations with the risk and hassle of jumping on a plane again. For many, as we have seen already when air routes open, it is an easy decision to hop back on a jet.
But people are making long-term investments at the consumer level in staycations. Buying a holiday home shows a commitment to domestic holidaymaking, perhaps boosted by a combination of Brexit red-tape (for the UK) and a desire for a permanent remote working experience.
There is a long-term opportunity to create new businesses in Northern Europe. But I’m not sure it is with the bucket and spade crowd staying in static caravans on the coast. The opportunity in areas of high value real estate is surely in delivering high-end experience holidays. But right now, there is a dearth of supply.
Taking a step back and looking at the macro picture, it is notable how little high-end supply is available to domestic holidaymakers. And there are even fewer businesses that are offering luxury experiences to what is a monied market.
Data to support my contention is hard to obtain, but an academic at Bristol University called Richard Davies has some of the richest long-run price data on UK goods and services available.
Professor Davies does not have a “luxury holiday” data set so a rough proxy needs to be found. Pub meals was the most obvious one I could find. This shows that in 1990, pub meal prices varied from GBP2 to GBP4. By 2020, the variation was between GBP7 and GBP12. Over the 30 years, the dispersion (or spread) has remained constant (relative to the median value).
In contrast, the dispersion in the price of socks has grown enormously. In 1990, the price range was from GBP1 to GBP3. By 2020, the dispersion was from GBP1 to GBP10. Over the 30-year period, some people have shown a willingness to pay more and more for their socks. The gap between the highest and lowest prices has gone from three times to 10 times.
If there is a luxury market in a commodity product like socks, surely hospitality ought to be able to have similar, or more likely greater, dispersion in prices. But the reality is that the poshest hotels and holiday rentals are currently not priced that way.
Of course, it is not just about putting up prices. Something special has to be delivered. But why not luxury fly-fishing breaks or history tours of famous landmarks. Bespoke arrangements can be put together by consumers but there are too few accommodation providers who are coordinating such offers and packaging them in a way that appeals to the high-end consumer.
The big online vacation aggregators like Airbnb are focusing on this area. The experiences part of their businesses are seen as major growth opportunities. The Airbnb IPO prospectus put some numbers on the scale of this market. The Total Addressable Market for short-term stays, according to Airbnb, is USD1.8 trillion. For experiences it is only slightly smaller at USD1.4 trillion.
The very big numbers bandied about by Airbnb are hard to digest but the basic point is there: experiences are a market that is only slightly smaller than the supply of accommodation.
It is hard to think of an accommodation business that adequately reflects this reality. When coupled with lack of truly upmarket supply, there is a yawning void waiting for the right entrepreneurial businesses to fill it.