The potential sale of Butlin’s is expected to provoke a bidding frenzy amongst those newly drawn to the domestic holiday market. This area has been the focus for many deals during the pandemic, beginning with Roompot and, most recently, the sale of Park Holidays for close to £1bn.
Butlin’s owner Bourne Leisure has already tested the leisure market once in the past 18 months, selling a majority stake to Blackstone, which valued the group at £3bn, an illustration of the enthusiasm of investors for the leisure.
Bourne Leisure also owns Haven and Warner Leisure Hotels, but it is Butlin’s which has the heritage owners want. The brand has fallen back from its heyday of nine sites to three, having suffered in the face of cheap overseas travel, but has been resurrected in recent years, with an extensive investment and renovation programme. It was out with the dated accommodation and in with new chalets, pool complexes, spas and F&B which reflected the public appetite for quality eating out experiences. Driving all this? The rise of Center Parcs, which showed the sector that people would pay a premium to stay in the UK.
Flying the flag
Center Parcs acts as an analogy for the market, which we have seen during the spread of Covid-19 – a market where huge demand was met with limited supply, with high rates a result. Anyone trying to book this summer quickly found all those lockdown savings depleted.
Limited competition means questionable standards. Plenty of people paying through the nose this summer didn’t have the great experiences which lead to repeat bookings or even repeat stays in the UK.
There is a dearth of brands in the sector, but we have found that a flag which resonates with the guest is the only way to drive high levels of direct distribution and fuel short-term returns and medium/long-term asset value.
The pandemic has helped investors realise that there is a market for quality brands, which can rejuvenate tourist destinations in the UK that have become tired and left behind. There are many beautiful locations that have limited, low-quality accommodation, and rundown holiday parks that need investment and offer routes to growth.
It’s true that when global travel comes back, there will be some people who leave the domestic market behind, but the trend towards staying within these shores was here before the pandemic and we believe it will stick.
Overseas travel can be difficult and expensive, with ever-growing complexities. Concerns about climate change mean that travellers are thinking local and thinking more sustainably. Experience is now the driver for guests, both in terms of where they are staying and what they do when they get there. Guests are motivated by the desire for a connection with the locations they are visiting and a property that inspires and revives. And sure, a bit of sunshine in the summer helps.
Attraction of aparthotels
Investors are starting to appreciate that delivering this doesn’t need to be expensive. Self-catering sees guests choose for themselves how they stay, and a technology-enabled offering allows a high degree of self service. There are lower team requirements than a traditional hotel, but with staff on hand for when guests need them.
Partnerships with local restaurants and other local businesses mean that F&B is outsourced and guests have that unique experience they want, but at a lower cost to operations.
We are developing purpose-built aparthotels where we blend the best of self-catering with hotels, focusing on the lifestyle sector which has flourished in recent years. The market in the UK has not kept pace with the demands of the mass-affluent travellers who are now holidaying within its shores.
This isn’t 100% new thinking. I was involved in the launch of Locke, which was the first aparthotel brand to target the lifestyle sector, taking the best of hotel brands such as ACE and Hoxton and blending them with the very dry and traditional corporate serviced apartments to create something aspirational and relevant for the modern traveller. And it worked.
But there is nothing that brings lifestyle self-catering to the beach and herein lies our opportunity. We’ve started work on a 40-unit community in Hayle, near St Ives, which will put this theory into practice as we expand the Beach Retreats brand.
Ben Harper is group managing director at Watergate Bay Hotel, Beach Retreats and Another Place
