LEISURE HOLIDAY & HOME PARK UPDATE 2021 SAVILLS LEISURE HOLIDAY & HOME PARKS THE NATIONAL HOLIDAY AND HOME PARK SPECIALISTS Can our Specialist Leisure team assist you? 25 LEISURE AND TRADE SOLD SPECIALISTS WORKING ACROSS THE UK AND EUROPE AGENCY VALUATION LEISURE & TRADE RELATED WE HAVE ADVISED ON OVER £1.5BN WORTH LEISURE ASSETS IN THE LAST 12 MONTHS BUSINESS PLANNING & RATES DEVELOPMENT EXPERT RATING TEAM WHO ACT FOR THE MAJORITY OF GROUP HOLIDAY PARK OPERATORS IN THE UK 3 SAVILLS LEISURE HOLIDAY & HOME PARKS INTRODUCTION TO SAVILLS Welcome to Savills 2021 Holiday and Home Parks brochure. Index PAGE Whilst writing this an unprecedented shock to and Covid-19 has shaped Holiday and introduction I recall sitting the national economy, which an environment where Home Park 6-7 down at the end of 2019 and initially also had a dramatic domestic tourism can thrive. Market writing an article entitled impact on the holiday park Caravan parks have found The Private “2020 vision”. I specifically sector. an enhanced popularity and 8-10 Equity Market remember the feeling of in some cases are viewed as Golf Course optimism that I had when I Despite the first lockdown, ‘open air hotels’ where social 12-13 looked forward to what the caravan parks continued to distancing is possible and Developments year may have in store. transact and Savills were the outdoors can be enjoyed. Business Rates 15 able to complete on six In 2021 parks will need to Valuation 16 In Q1 of 2020, clients caravan park sales in April adapt to an emerging and Emerging and park owners were and May alone. Despite 19 evolving customer base Trends reporting that caravan the continued disruption, where the greatest challenge Sustainability sales were already above demand for parks of all for park owners is perhaps 20 Services that of previous years and varieties did not falter demand outstripping supply Brexit was likely to be the throughout the year. Many for caravans and lodges. 2020 Summary 21 contributing factor. This holiday parks reopened on This is likely to also be Case Studies: viewpoint tied in with Savills 4th July commencing the reflected in the market for Planning 22-23 predictions for strong trade recovery for holiday park parks themselves, where in 2020. The short lived businesses, which fortunately demand for good quality Agency 24-25 optimism gave way to the have been able to comply Selection of our properties remains firm 26-34 warning signs of disruption with social distancing and supply limited. We Properties which, in hindsight, were requirements more easily therefore look forward with Selling Your 35 evident from the start of than other sectors of the optimism to 2021, and hope Caravan Park the year, although it was hospitality industry. that 2020 will be viewed as Our Team 36 not until 29th January when a challenging year which Savills Leisure the UK had its first Covid-19 Whilst there is ongoing despite its setbacks, helped 37 Services case that the magnitude of disruption to the UK to raise the profile of the the potential impact of the economy, news of progress holiday park sector and Why Savills 38 Pandemic became a reality. with vaccines has provided broaden its appeal to UK Our Sectors 39 The next six weeks leading hope that one day soon, we holidaymakers and second up to the first national may return to some sort of home owners. lockdown of all hospitality normality. In the meantime and accommodation the melting pot created by Richard Prestwich businesses was the start of the combination of Brexit 5 SAVILLS LEISURE HOLIDAY & HOME PARKS HOLIDAY & HOME PARK MARKET Change in Average 'Per Pitch' Values Change in Average 'Per Pitch' Values Key Key £40,000£40,000 ResidentialResidential Park Average Park Average Going into 2020 many holiday park operators were pondering how Brexit would HolidayHoliday Static Park Static Average Park Average £35,000£35,000 impact their business. Many operators had already seen a boost in staycations since TouringTouring Park Average Park Average the vote to leave and were planning to accommodate more domestic holidaymakers. £30,000£30,000 Then, with little warning, the parks had a new challenge to deal with. £25,000£25,000 In March 2020, the UK went Holiday park operators generally equally strong, as in previous £20,000£20,000 into lockdown and in an instant expect strong occupancy rates in years as illustrated in the Average holiday park operations / July and August and in 2020 the ‘Per Pitch’ Values graph opposite. £15,000£15,000 businessess came to a standstill. sector experienced occupancy There is little evidence of any National and international rates of 99%, which were higher distressed sales resulting from £10,000 holidays were cancelled overnight that the long-term average of Covid-19, on the contrary the £10,000 and lockdown restrictions meant 95%. The popularity continued majority of operators believe that people were not able to visit their into September and October, the industry will flourish in the £5,000£5,000 second homes, holiday caravans typically when operators would wake of Brexit and Covid-19. or lodges. start to see declining occupancy £0 £0 The promise of Covid-19 rates, with sustained demand The UK lockdown could not have vaccines is a welcome positive 20152015 2016 2016 2017 2017 2018 2018 2019 2019 2020 2020 near-full capacity. The second come at a worse time, at the step in the right direction, lockdown in November, whilst beginning of the spring holiday although underlying caution will perhaps less disruptive, was season, with many parks due to likely cause further disruption equally unwelcome as park open on the Easter weekend. Four throughout 2021. Forecasting owners were clawing back lost months of 2020 trading were in 2021 remains a challenge, but income from earlier in the year. lost, including some key school unlike 2020, the early lockdown holidays and bank holidays, until Despite the unprecedented and roll-out of the vaccine gives £18,710 £26,832 £52,066 holiday parks were allowed to disruption, 2020 has been hope that restrictions might be reopen again in July. The general another strong year for holiday eased by the time this year’s HIGHEST PRICE ACHIEVED AVERAGE PRICE ACHIEVED HIGHEST PRICE ACHIEVED consensus across operators and home park sales which is season kicks off in the Easter FOR A TOURING PITCH FOR A LODGE PITCH FOR A RESIDENTIAL PITCH however is that many have been testament to the resilience of holiday, which could pave the way fortunate to see a strong recovery the sector. There have been for a strong recovery in trading in holiday stays over the second less transactions in 2020 when during 2021. half of the season. compared to previous years however demand has been 6 7 SAVILLS LEISURE HOLIDAY & HOME PARKS PRIVATE EQUITY STRIPPED BARE Why is the holiday market attracting private equity investors? What is the outlook for private equity investment in the holiday park market? Private equity is risk capital which is model, sector dynamics and market that the rent is set at no higher than not publicly listed. The raison d’etre conditions. For instance, buy out around 15% of sustainable profits. of private equity funds is usually to groups traditionally have a three to Private equity buyers are generate a capital gain from the sale five year holding period; in a stronger Resilient market Investors are Strong levels of opportunistic in nature and like of investments. Private equity money market, the hold period is shorter as other groups of buyers, many are will commonly actively manage a the rate of return is higher. A more compared to over-exposed to return in the currently waiting for the bottom of business before realising a higher crowded market place is creating the market, to maximise their returns. other sectors other markets sector value on exit. Private equity fund greater competition between private While some trends emerge which managers fulfil a range of roles, such equity groups, supporting higher link one recession to another, there as raising funds from investors, finding prices. Increasingly therefore, a longer are a number of key differences and managing investments and holding period is required to make a between the Global Financial Crisis generating a capital gain. gain on the invested capital. Many of Due to its operational resilience, Moreover, many groups are over- A greater number of group operators and the current pandemic. One is the opportunities are off market and relatively few distressed assets are exposed to certain operational sectors of scale, could serve to increase the In broad terms, the concept of that the banking sector is far better are relationship driven. expected in the holiday park sector. and the opportunity to diversify into possible number of targets for private private equity emerged in the 1980s, capitalised than during the Global Despite this, we expect the holiday a market with such a flexible business equity buyers. It could also give rise out of development and venture What characteristics have marked Financial Crisis (GFC), with the banks park market to remain attractive to model is an attractive one. to an even more pronounced two tier capital. Development capital is equity private equity investment in the able to take a slightly different stance private equity investors. Why? Firstly, market, with an increased number Finally, a holiday park acquisition off funding used to expand established holiday park sector, to date? Exact through various forbearance policies, it is relevant to identify operational of groups affordable only to private a multiple on sustainable profits of businesses. It is less risky than venture requirements differ from one investor for instance extending existing trends and investment patterns equity buyers, with cash reserves say 12, represents an attractive return capital, which is financing provided to to the next however for their initial debt facilities or rolling up interest in other operational sectors.