• Holiday parks continue growth

Holiday park operator Verdant Park Leisure said that it expected to buy further assets in the UK, after reporting a strong quarter.

The comments came as the weak pound continued to drive growth in staycations, with the wave of consolidation in the hotel sector spilling over into the park market.

Verdant Leisure reported an 18% increase in Q1 sales, with CEO Graham Hodgson commenting: “2017 was a great year for Verdant Leisure, we invested heavily in our portfolio, improved accommodation, facilities and entertainment for our holiday customers and holiday home owners across all our parks and increased our portfolio. Our continued increase in sales for the first quarter is a positive indicator that 2018 will be even more successful.

“We’ve already purchased another park this year and we’re excited to see what 2018 brings.”

February saw Verdant Leisure acquire Scoutscroft Leisure Park in the Scottish Borders, the fourth park to be acquired since the company was backed by Palatine Private Equity in April 2016.

Palatine Private Equity partner Ed Fazakerley added: “Verdant Leisure’s consistent growth over the last two years has been impressive and demonstrates how the buy and build strategy is having a significant impact on the company’s sales.

“With eight parks in total, Verdant Leisure has established itself as one of the leading ‘staycation’ park operators in the UK, and we look forward to seeing it develop even further as we continue to fulfil the firm’s acquisition strategy.”

Helping to drive the growth in usage was the increase in staycations since the EU referendum.

At the beginning of the summer Travelodge reported 57% of Britons were taking their annual summer holiday in the UK, up two percentage points on the previous year. The average length of the Staycation break was a week, with, this year, an average spend of GBP823, up 37% on the year, the highest spend since Travelodge started its annual holiday index in 2011.

The survey also revealed that a quarter of Britons were taking more UK short breaks this year, with 85% taking on average three Staycation breaks throughout 2018.

The seaside remained the top destination, attracting 55% of travellers, with the UK’s rural landscape the second most popular type of summer holiday for Britons, with 33%.

This was supported by David Nicolson, VP of finance, Europe, Jumeriah Group, who told BDO’s Hotel Britain 2018 study: “Staycations are still providing growth in the UK sector as the weak pound post Brexit is putting off the British people from going abroad. The pick-up of last-minute mini breaks within the UK has seen an increase as more and more people and are happy exploring the UK and holidaying at home.”

The study came as PwC’s British Overseas Purchasing Power Index, which combined real wage and exchange rate trends in a single measure, projected a 6% recovery by August 2018 from the lows of August 2017, but said that UK holidaymakers would still find themselves 13% short of their pre-Brexit vote purchasing power and 18% down since before the financial crisis in 2007.

Consolidation was expected in the holiday park market, from the smaller operators to the market leaders. At the end of last year the bidding for the nine-strong Forest Holidays, which was being put on the market by owners the Forestry Commission and LDC, the private equity arm of Lloyds Banking Group, was thought to have attracted both Center Parcs and Parkdean Resorts, the company produced by the merger of Park Resorts and Parkdean Holidays.

The company saw Ebitda increase from under GBP1m in 2012 to in excess of GBP10m on 2017, with 571 cabins across nine sites, with a further two in development in Snowdonia and the Brecon Beacons. On completion of those two sites, over half of its locations will be within National Parks.

In the event a controlling stake was acquired by Phoenix Equity Partners, with David Burns, managing partner, commenting: “As experienced investors in the leisure sector, we have been watching the progress of Forest Holidays with great interest. This fabulous business offers a truly differentiated proposition to the UK holidaymaker, and feedback from its customers is consistently outstanding.”

HA Perspective [by Katherine Doggrell]: The holiday park business has been encroaching into hotel territory as private equity groups have sought to gain scale in what has been a very disparate market. Drawn by the potential for both rental and sales, there is much to enjoy about the sector.

One sector observer told us that the clampdown on second homes through the increase in stamp duty may have deterred some, but the sudden increase in the price of a latte in France was keeping the market buoyant. The rise of glamping and products such as Center Parcs, which are no-one’s idea of a bargain break, means that it’s not all cheap pitches and making money off marshmallow sales.

For those who would play in the space, the issue is one of space and where to get it. The Forest Holidays deal attracted a number of operators who were eager for the group’s prime sites. The extensive resorts demand extensive planning – Center Parcs’ submitted plans for its site in Ireland in 2015, won on appeal and is now expected to open in summer 2019. CEO Martin Dalby said last month that building was now “full steam ahead” as the cost of EUR1m a week. For a sector seen as offering a cheap break, the stakes are getting ever higher.

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