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How to buy a caravan park

We spoke to Victoria Brannen, who helped resuscitate Pontins, on raising finance and the profile of a typical owner.

BusinessesForSale.com spoke to Victorian Brannen, co-founder of Maya Asset Management about raising finance, why location is paramount and what it takes to run a successful holiday park.

How hard is it to raise finance to buy holiday parks?

If you can show where an uplift is going to come from then that is going to be the basis of your case. Now whether you split that with a cash investor or an institutional investor with maybe a long-term view versus a bank… it's a difficult time in terms of raising new finance from banks.

"You can buy a dog of a park, but if it's in the right location then you can prosper, or you can buy a stunning park, but if it's in the wrong location you will only ever achieve so much"

It's been reported in the press that some of the bigger players in the market have been giving the banks a bit of a rocky ride, which probably hasn't helped the sector. The appetite isn't what it was three or four years ago.

A business can fail for a number of reasons: it could be a lack of investment, crumbling infrastructure or it's not being operated efficiently so the customer experience is poor.

If you can go in with institutional investment backing and identify the basis for an uplift, if you can say a particular property has latent potential in planning gains or in improving the infrastructure and the owner doesn't have the funds, then if you buy the park and put the investment early on, then in the next three, five or 10 years you will see an uplift in your investment. 

I think that is quite compelling, particularly in the current climate where equities and other investments aren't performing that well. If you can show anything above a 5% return it's got to be attractive to someone sitting on a pile of cash. 

One of our clients is very much looking for family run, owner-managed parks because they tend to be asset-rich and cash poor.

If there are planning gains then you can uplift the capital value. It's a bit of a lottery, but you've got the return you wanted and there might also be a future windfall from the land.

What are the most important factors when appraising a holiday park for sale?

For me it's always location. You can buy an absolute dog of a park, but if it's in the right location then you can prosper. Or you can buy a stunning park, but if it's in the wrong location you will only ever achieve so much.

The key thing around that is things like drive time - where is your customer base located, how long will it take for them to get there?

And that's key if you're selling holiday homes. If you're selling caravans and people are expected to come every weekend then that's tough to achieve if you're based in Cornwall, but if you're in the middle of England it's very much easier.

How many tourist attractions are nearby? There are hot spots - Dorset for example. There's a huge customer base that can come from London and the Home Counties, there's lots to do there - it's a very popular area. 

The product mix is also quite important. We don't have the best weather in the UK, so if you're focused on camping then it's highly weather dependent. 

So if you compromise on location you might have a better product mix. You might have static caravans or lodges, which doesn't kill your holiday if it rains because your accommodation stays dry.

You also need to factor in the facilities. A big site predominantly attracting families will ideally have an indoor swimming pool, or the ability to build one, so if it rains then there's something for the kids to do.

What kind of entrepreneur buys a holiday park? 

A high net-worth entrepreneur entering this sector on a one-park basis would probably be quite hands on, quite passionate, used to being close to the ground, probably enjoy people's company, enjoy making a quick decision and immediately seeing the effect. 

They very much do it for that personal touch, seeing it as an extension of themselves. I think it's quite emotive.

At the portfolio corporate level where we are, you need to embrace that because customers like to be recognised when they come back, they like that their kids are known by the entertainment team.

It's not one park which you can run round during the busy season from 5am until 3am the next morning; you are running a corporate business structure. You don't want to lose that passion, but at the same time you've got to be more visionary and be able to approach things strategically.

So it's more for people with management capabilities who enjoy people and have perhaps worked in leisure. If you were too corporate and 'non-people' then you wouldn't understand that you're in a customer experience.

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Adam Bannister

About the author

Adam Bannister writes for all titles in the Dynamis stable including BusinessesForSale.com, FranchiseSales.com and PropertySales.com as well as other industry publications.

@Be_TheBoss

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