The appeal of staycations
We’re big fans of caravanning and camping at Ortus.
This doesn’t mean we go on team holidays (I suspect we’d kill each other if we did), but it does mean we’re happy to lend into the sector. Therefore, as you’d expect, we carry out research and last month discovered that the UK’s top caravan park and camping site companies (being the 100 largest caravan and holiday park companies in the UK) grew their turnover to £2.67bn last year – up 9% from £2.46bn five years ago.
It makes for an interesting study and there appear to be two major driving factors behind the trend – the first, the recession and the second, Brexit. The years following the credit crunch meant families looking to cut costs sought cheaper alternatives to holidaying abroad. Now in the post-Brexit economic environment, a fall in the value of the pound has made holidays abroad less appealing than simply staying in the UK.
Whereas before the British were notorious for their sun-seeking habits, travelling to cheap European holiday destinations – including the likes of Spain, Greece and Portugal – the number opting to visit cheaper alternatives in the UK instead is on the rise.
The phenomenon has translated into a very considerable opportunity for caravan companies and camping sites. As a result, the sector has seen a real rise in attention from private equity firms looking for investment opportunities. Some recent examples of deals reported in the press include:
• Parkdean Resorts, the UK’s largest caravan park operator, was sold to Canadian private equity firm Onex Corporation for £1.35bn last December
• Midlothian Capital Partners led a consortium to buy upmarket holiday park company Park Leisure in a deal worth £103m in February
• Intermediate Capital Group purchased Park Holidays, Britain’s fourth largest caravan operator, for £362m late last year from Caledonia Investments.
Smaller players in the caravan park and camping site sector have been looking for finance in order to raise funds and meet the growing demand for ‘staycations’. Non-bank funders have played a major role in meeting this.
SMEs can find it hard to source financing – which can sometimes come at too considerable a cost for those managing tighter cash flow (as smaller businesses tend to do).
It is, therefore, important to have funders like Ortus prepared to step in and help smaller caravan park companies and camping sites invest in the improvement of their services. It plays a key role in attracting customers and encouraging repeat visits – and contributes to the sector’s overall growth.
This involves – at the more basic end of the scale – enabling businesses to provide their customers with good-quality essential services. These might include shops, restaurants, bars and swimming pools. At the higher end of the scale, ‘glamping’ sites can now offer a range of innovative premium options – such as yurts, teepees and treehouses – with luxurious add-ons such as wood-fired showers, pools, games rooms and WiFi.
Investment in this way has enabled smaller caravan park companies and camping sites to benefit from the growing trend towards UK holidaymakers ‘staycating’. This is one we can suggest might be an ongoing one in the coming years as the Brexit process continues to hold question marks over the shorter-term future of the UK economy.