Right now this is the question we are asked the most.
The last 18 months have had a pronounced effect on direct and indirect trading conditions for the UK Parks sector, the ramifications of which will have a lasting effect on all commercial real estate sectors, especially those that are dependent on the freedom of movement and the availability of discretionary spend.
Right now the Parks market is brimming with paradoxes; the working population’s job security is at its lowest for decades, but the attitude to “live for the day” has never been more prominent. The demand for UK short-stay family holidays is unprecedented, but the supply of accommodation and requisite staffing levels is creaking at the seams. The demand for holiday home ownership is insatiable in areas, but sourcing stock is far from straightforward. The trading “bounce” following lockdown has once again proved the robustness of the sector, but how reliable is forecasting?
Investment is needed to secure future trading
Although demand for UK holidays has reached record levels since lockdown has been lifted, and the public has embraced the wonderful opportunities the country has to offer, we assume that foreign travel will return to somewhere near normal levels in the future.
As an operator, judging the sustainability of increased trading levels will be key in the coming months particularly when considering expansion, investment in hire fleet, infrastructure, facilities, marketing and staff. Although consumer demand is extreme, this year operators must plan for necessary investment now or in the very near future to ensure a positive customer experience, in order to secure repeat business once the public has more holiday options abroad in years to come. Without this investment, and with holiday prices rising across the UK, there is a danger that the consumer will not feel that they have received value for money and may be less likely to return.
Shortage of holiday homes available
Working behaviours have changed and working from home has become one of the key drivers of consumer demand to own a second or holiday home – home is no longer the sanctuary it once was and an “escape” is essential! The Brexit induced overseas retirement restrictions, reluctance for foreign travel, and a “carpe diem” attitude are all additional drivers which have created a surge in holiday home ownership whether that is a lodge, static, tourer or motorhome, which in itself has created an issue in sourcing sufficient stock to satisfy such demand, particularly for smaller operators.
So naturally we’ve seen an increased demand for development sites across the whole parks sector; for caravan and camping sites, holiday homes or lodge locations. This demand is highly sustainable in many locations throughout the UK, which is allowing valuers to report with increased confidence the land value and business plans forecasting, which in turn is securing lender and investor appetite.
On balance, the positive trading conditions have created a clear perception across the market that the demand for the UK Parks product has shifted and is highly sustainable. The industry therefore represents a highly appealing asset class for buyers and investors. Whether it be organic growth from increased demand or growth through development, the variety of trading options often available in holiday parks has created high demand. This, coupled with a softening of demand in more traditional property sectors, we’re currently in an extremely buoyant market place.
For further detail about the UK Parks sector download our 2021 Portfolio report here.
About the author
Richard Moss is head of UK Parks Agency at Colliers, who previously worked in the sector before spending the last 15 years advising on sales and property valuations. He advises a wide range of clients from individual owners to corporate holiday park businesses.
To contact Richard email, Richard.Moss@colliers.com