Corporate Finance activity in holiday park sector

Category: Corporate FinanceLeisure - Posted On: Dec 2 2020

At EQ, we act as specialist holiday park advisers to the sector and are members of the British Homes and Holiday Park Association (BH&HPA). Despite the ongoing pandemic, we’ve seen a variety of activity within the sector over the last 6 months, particularly in relation to financing development or acquisitions. We’ve summarised the main themes below:

  • Despite the pandemic, profits have held up and even improved given that many people who had never previously stayed at a holiday park, have done so in the absence of an alternative. This has presented park owners with the opportunity to attract a new group of prospective clients.
  • Park values for potential sellers are holding up well with valuations based on adjusted EBITDA times a multiplier of 10 or more commonplace.
  • Whilst valuations are holding up, perversely lenders are not viewing this sector as a good bet just now. In our experience, loan to value of 50% is common if you are seeking a high street lender, with more niche lenders providing finance at 60-65% loan to value, albeit at much higher rates, sometimes more than 5% over base.
  • Transactions are taking much longer to conclude than expected as all parties are perhaps on high alert due to the current pandemic, with planning in advance proving very difficult.
  • With high street banks viewing the sector as too risky, the use of specialist finance brokers in the sector is becoming more commonplace.

Notwithstanding the above analysis, all of the holiday park owners we have spoken with since the pandemic began seem optimistic about the future for the sector and indeed are expecting excellent trading conditions in the two years ahead particularly given that it is anticipated that the travel sector, more widely, will take some time to recover from COVID-19. We cannot, of course, predict what might happen in the immediate future due to the nature of the pandemic but once “normality” resumes, and it assuredly will do, then we see a very bright future for holiday park owners.

At EQ, we have been helping our clients in the sector in a variety of ways, ranging from development of new parks, refinancing, restructuring together with purchase, succession and sale. It’s a tricky market to plot your way through just now so having a team on board with the requisite experience can be of great benefit.

Our specialist team would be more than happy to offer their support and advice. To discuss your circumstances, please get in touch via BH& or call one of our offices.