The revenue of the UK’s Top 25 holiday parks – key destinations for conferences, corporate events, away days and team building – has increased by 65% in the past five years, validating major private equity investment in a sector that has performed strongly during the pandemic, according to New Street Consulting Group.
The incomes of the Top 25 holiday park groups have increased from £1.61bn in 2014/15 to £2.67bn in 2019/20. Even before the lockdown, warmer summers and a weaker pound are factors that have contributed to the rise in popularity of staycations in the UK, increasing by 14% between 2014 and 2019.
New Street Consulting Group says this long term rise in staycations has been one of the major factors behind the investment of private equity firms in this sector.
Blackstone, the private equity giant, recently acquired Bourne Leisure, the UK’s largest holiday parks provider, whose estate includes Butlins. US based PE fund KKR purchased Roompot, one of Europe’s leading holiday parks providers, in June last year, whilst Away Resorts is now owned by UK based private equity house Bregal Freshstream.
New Street Consulting Group says holiday parks have been a surprise winner of the Covid-19 crisis, having attracted a new group of higher-spending consumers who have been unable to or opted against going on cruise holidays or travelling internationally. The low density of guests at holiday parks makes them particularly suitable for social distancing, with groups being able to stay in separate buildings from other holiday-goers.
Several private equity houses that own holiday parks are embarking on large scale capital investment programmes in order to cater for increased demand, including corporate offerings. Holiday parks are keen to expand their market share by appealing to a broader customer demographic. They are also enhancing their propositions by investing in technology and digital offerings to provide more sophisticated ways of communicating and engaging with the customer.
New Street Consulting Group says as part of this strategy PE houses and executive leaders are hiring external specialists on an interim basis to help transform the operating models of the parks. Interims across operations, brand, digital and technology are being hired to make the parks both more compelling to a broader market and more sustainable for the future.
Parks are undergoing significant programmes of premiumisation in accommodation, food service and activities to ensure that clients gained in 2020 are retained when the market for cruises and other overseas holidays reopens. Investment is also being made into apps and digital enablement that allow customers to order food and book activities/entertainment without having to leave their lodges or mix with other guests.
Richard Lindsay, Director at New Street Consulting Group, said: “Despite its fair share of challenges and impacts on income, the UK staycation sector is booming, with the holiday park industry in particular being one of the strongest performing parts of the leisure sector during the Covid-19 crisis.
“Private equity funds’ interest in the sector is only going to continue. PE houses see holiday parks as a long-term growth prospect and not just a flash in the pan during the year of coronavirus.”
“The changing demographics of those who visit holidays parks is likely to increase the speed of change in the sector. The opportunity to improve the perception of parks for the long term through major capital investment programmes is now likely to accelerate as we head towards summer 2021.”