Beyond compare


While much has been made about the recent growth of staycation holidays and the market opportunities it provides, deeper analysis shows that only certain destinations are enjoying bumper growth. The value of the UK tourism market is expected to grow to £22.9bn for 2016, representing a steady 4% CAGR since 2010.  This has led to some notable deals in the holiday parks sector, such as Onex’s £1.35bn acquisition of Parkdean and Caledonia’s sale of Park Holidays to Intermediate Capital Group.

However, research by Ortus found that revenue growth of the 100 largest caravan, camping and holiday parks was flat over the last year, and that growth among these business over the last five years has averaged behind the market at 1.7%.

A reason for this may be found when taking a closer look at where growth is coming from. Data from Visit England shows that against a market CAGR of 4.2%, spending on entertainment (5.9%) and eating out (5.3%) has grown fastest of all, ahead of the core holiday spends of accommodation and travel.

Experiences have increasingly become a key differentiator between different holiday options and can offer better margin opportunity due to more opaque pricing. With a wealth of price-comparison tools available, margins on commodities such as travel and standardised accommodation have suffered as price transparency causes a rush to the bottom. In contrast, operators that can offer something unique are able to both differentiate their product and enjoy greater margins, due to the less known value of their products.

Where we see interest is in some of the smaller operators with differentiated offers that are able to offer a wider ‘experience’ to customers.  Larger operators can struggle to manage the seasonality of their cashflow, neglecting investment in renovations and additional amenities.

Our key USPs for operators and investors looking at the market are:

Emphasis on differentiation
Consumers are demanding ever more unique experiences and activities, combined with a greater willingness to experiment. A good example of a business engaging with this is Forest Holidays. Its exclusive tie up with the forestry commission presents a distinctive experience to consumers, while optional extras such as hot tubs, TV connection and additional activities increase average spend. Growth over the last 2 years has averaged 31%.

Experience-led offers
Wider consumer spending patterns have shifted towards experiences. Key to success for operators will be positioning themselves as complete trip providers, combining a core accommodation offer with wider activities and experiences. Strong examples we have noted lately include Bluestone, a national park resort in Wales that combines accommodation with activity holidays, and Hoseasons, who have launched a range of Go Active breaks, packaging holiday rentals with outdoor pursuits and daytrips.

Edmund FitzGerald