Holiday parks have proved resilient over recent years, attracting visitors keen to take advantage of a UK staycation as we emerged from the pandemic. During this time we saw holiday park customers opting for more lavish holiday homes; with luxury large three bedroom lodges, couples boutique lodges, and high end caravan products all being top of the shopping list.

However, the subsequent cost of living crisis has resulted in customers taking a more cautious approach. As we look ahead to 2024, we expect this will continue with the purchase of premium holiday accommodation no longer a priority, and bookings for letting caravans and lodges becoming more last minute. Holiday park operators are reporting that letting occupancy levels are back to more ‘normal’ levels in line with those seen pre-pandemic. Having recognised that the sale of premium products is now limited and reserved for the most prestigious of locations, operators have applied their ‘survival strategy’:

• Operators have ceased or reduced orders of premium accommodation products such as lodges
• Where accommodation is already sited on a holiday park and unsold for an extended period, these units are incorporated into hire fleet (letting)
• Increasing second-hand caravan or lodge sales, thus appealing to a lower price point; this approach ensures strong occupancy of privately owned caravans or lodges on holiday pitches

This action by operators creates a more diverse income stream shifting the dependency from sales and creating more affordable options for consumers, while also minimising the impact of the reduced sales of new units. For many operators, this strategy will be used until the economy improves with the hope of sustaining levels of gross income.

During the time that operators have been implementing their new strategies, the transactional market has also been in a state of change and is now dominated by independent operators acquiring individual sites or smaller groups. Overall the quantum of transactions has, at least until recently, remained relatively constant but due to the smaller lot sizes, combined with interest rate hikes, overall investment volumes are down on 2021 and 2022 levels.

There is little doubt that the appetite to acquire parks remains; however, many institutional-backed buyers of holiday parks – which dominated the marketplace from the beginning of 2021 until mid-2022 – have withdrawn temporarily from the market.

Recent figures suggest that inflation has started to wane, with the hope that this will translate to increased levels of consumer confidence. Once interest rates start to fall, the lower cost and greater availability of debt may also help fuel an increase in transactional activity.

There is, without doubt, a wall of institutional capital that remains hugely attracted to the defensive qualities of the sector with many investors expected to go into acquisition mode, as soon as wider market conditions start to ease.

Further information

Contact Richard Prestwich

Does the marina sector offer holiday park owners an attractive opportunity for diversification?