SWOTting Staycations

If the falling value of the pound since the Brexit vote in June has an effect on the tourism market, it is likely to make more people stay in the UK for their holiday as the cost of travel abroad rises, and encourage more tourists to visit as the price for them falls. So it follows that there should be more money to be made from offering high quality family holiday facilities in Britain.

This has proved a tempting opportunity for corporate asset owners, and in the last week two UK holiday park operators have been sold in a bet that a weaker pound will boost ‘staycations’.

As reported in the FT on Monday, Caledonia Investments, a listed British trust, said on Monday it would sell Park Holidays to asset manager Intermediate Capital Group (ICG) for £362m. Thus providing a means for the previous owners to cash in on their investments - Caledonia bought Park Holidays in November 2013, paying £172million for it. Since then they have invested in new parks, and in upgrading the static caravans and homes with double glazing and central heating, so that they are catering for tourists wanting more upmarket experiences and for longer periods throughout the year.

As a result, Park Holidays' earnings before interest, taxes and other charges is expected to have grown 79% to £36.5 million under Caledonia’s ownership.

This is a news story that gives a good opportunity to practice SWOT analysis.

The report includes other factors strengthening the opportunities in the UK holiday market, with concerns about terrorism playing a large part.

For the caravan parks, Tony Clish, Commercial Director of Park Holidays also adds "Our customers are over the age of 50 and we benefit from the demographics and the increasing numbers and affluence”.

Meanwhile, in the same market, private equity group Epiris agreed over the weekend to sell Parkdean Resorts to Canada’s Onex, for £1.35bn. Parkdean is Britain’s biggest holiday park operator with parks known under the brand Park Resorts, which may be familiar to students and teachers who have used Tutor2u's 'On the Case' business minibriefs.