Demand for camping, caravans and holiday parks remains strong in Europe, particularly in the key markets of the UK and France. Consumers are seeking more regular breaks, enjoy being closer to home, and value a safe, relaxing, outdoor family environment. With strong potential cashflows, the outdoor accommodation market is an attractive space for investors.
The European outdoor accommodation market is the second largest in the world after the US, with up to three million pitches at around 29,000 campsites1.
The market comprises of a wide range of businesses including independent site operators, small private groups, major holiday home companies and large tour operators.
There are a variety of accommodation types offered to the consumer including a pitch for your own tent or caravan, pre-erected tents, caravans and lodges. Specifically, the European market is largely focused on the following three business models, with some operators using different models for different areas of their sites:
- Holiday accommodation and land ownership combined: These operators own both the land and the accommodation. Accommodation is rented to consumers for holidays and short breaks.
- Operator-owned holiday accommodation, separate land ownership: These operators own the accommodation which is rented out to consumers, but rent the land. Partnerships are agreed between the land owner, who charges a rent, and the operator, which places its own accommodation on the site – typically with a contract of up to seven years.
- Land ownership with sold accommodation: These operators sell accommodation to customers who may then have the right to rent the accommodation out themselves or through the park owner. Park owners will typically also provide financing for sales and maintenance to the accommodation.
1 Fédération National de L’Hôtellerie de Plein Air
There are a number of trends in the market which are driving growth:
- Brand development – operators want to both improve the quality of the holiday experience and increase direct sales in order to enhance margins and reduce reliance on third-party booking agents
- Premiumisation – operators are improving the quality of the accommodation and experience. For example, in the UK many parks are increasing the availability of lodges compared to caravans
- Environmental – holidaymakers are seeking vacations which are naturefriendly and offer a sense of freedom for families
- Frequency – consumers are seeking more regular holidays or short breaks. Owning a holiday home or taking more regular holidays is driving demand
- Value for money – consumers want comfort and quality at reasonable prices and mobile homes and lodges can provide this. For those seeking a holiday home for more frequent holidays, a mobile home or lodge can offer significantly better value than purchasing a property
- Range of services – sites are increasingly providing a full range of leisure and social activities with demand particularly strong for high-quality swimming pools, water parks and sports facilities. With these facilities on site, and some included in the cost of the stay, holiday parks become more attractive destinations
- Regulation – while this varies between countries, regulation regarding mobile home installation remains quite flexible across Europe, driving further growth in the market
Online is an increasingly important channel for the outdoor accommodation industry across Europe, although until quite recently many independent players, especially smaller operators, were rather unsophisticated in their approach.
That is now changing fast with major camping, mobile home and lodge groups using their market strength to develop powerful internet marketing strategies in order to gain customers and limit the power of online booking engines.
Across the wider tourism industry, online booking capability is essential and is particularly high in the UK with the rest of Europe now also catching up.
The market has proved resilient through the economic downturn. While some areas such as caravan and lodge sales were admittedly affected by the recession, holiday parks in general were viewed as good value. Even during the height of the economic crisis, the European sector kept on increasing sales while overnight stays and occupancy rates also increased.
Driven by continued strong demand, we estimate that the number of rented pitches across western Europe has doubled to around 550,000 over the past five years, while the upgrading of the market towards 3*, 4* and 5* sites is expected to continue.
Given that just a fifth of people have ever spent a vacation in a mobile home, the potential for future growth is clear. Meanwhile, the market remains fragmented with many sites individually owned by independents or small groups. This creates significant opportunities for continued consolidation. Investors are drawn to the market for buy-and-build opportunities as evidenced by the number of private equity backed operators in the market which are acquiring additional sites.