2020 – A year of challenges and great resilience from the holiday and caravan park industry
2020 has been a quite extraordinary year with the full effects and impact of the pandemic impossible to foresee at the start of the year. Whilst all businesses and individuals have been affected, the effects of Covid at the outset was particularly challenging for holiday parks with lockdown 1 coinciding with parks entering the start of their traditional season.
On all fronts, there was a sense of entering the unknown which created considerable uncertainty but despite the many challenges we have all faced and with 3 lockdowns (to date) the UK holiday park sector has once again shown its resilience and ability to adapt and thrive in the face of quickly changing and newly emerging market trends and conditions. Park owners and operators have truly stepped up to the challenge and have done a superb job of navigating the changing and challenging conditions to reopen parks, where possible and to make the most of the opportunities created for the sector.
Naturally, activity in the sector slowed at the end of March following the announcement of the first lockdown as holiday parks were ordered to close and operators’ primary focus turned to securing the short and longer term future of their own businesses, seeking out the many different forms of Government
support on offer. However, come July the industry was raring to go with the welcome reopening of parks and a much anticipated ‘Covid bounce’ leading to one of the busiest and most lucrative summer seasons for many operators, albeit that the season was foreshortened. As well as catering for the huge pent-up demand from holiday makers finally being able to take a family holiday, many operators also reported record levels of caravan sales, exceeding their original 2020 forecasts.
Demand for holidays in the UK shows no sign of abating and we anticipate the decrease in appetite and demand for foreign travel to continue well in to 2021, adding to the encouraging outlook for the UK holiday market.
Throughout 2020 Sanderson Weatherall have seen a very strong demand across the country for all types of park and it is clear the sector continues to be a very attractive asset class for operators and investors. The core fundamentals of sustainable returns from pitch fees, and/or pitch occupancy along with attractive margins from caravan sales being the primary drivers. Like many in the industry, we anticipated that transactions in the park sector may suffer a setback however our experience has been that transactions have continued un-abated throughout periods of lockdown with Sanderson Weatherall completing a number of significant high value transactions during these periods.
As has been the case in recent years a key driver of the market continues to be the scarcity of parks available for sale which strengthens the position for sellers’ going to market. The very tight market conditions are well suited to marketing parks, in the right circumstances, through a discreet and confidential marketing campaign. Sanderson Weatherall have had a great deal of success transacting sales on this basis throughout 2020 with carefully orchestrated focused competition enabling premium sale values to be achieved.
This report is prepared at a time where we are all adhering to the constraints of Lockdown 3.0, and whilst parks are closed, fortunately this is currently taking place during the quietest period for many holiday park businesses. The hope being that a return to a new normal will be possible by Easter.
Looking forward in 2021 the indicators provide a positive forecast for the sector and many operators with a letting fleet or touring pitches have a head start with a substantial pipeline of holiday bookings transferred from 2020. The pandemic has also introduced a new demographic to caravan holidays with many operators successfully translating this into both new and pipeline sales.
However, the pandemic has already and will continue to have a significant impact on the UK and wider global economy. To date support measures including the flexible furlough scheme, Covid loans, VAT cuts and Stamp Duty freeze which have been universally welcomed and have bolstered the economy, although as they come to an end there will be undoubted economic headwinds with unemployment anticipated to rise and house prices forecast to stall or reduce during 2021.
More challenging economic times may lie ahead but with the potential for ‘home-grown’ holidays to become yet more attractive and with demand for parks continuing to out-strip supply, the sector looks well-positioned to weather any storm.
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