Leisure developer Holmes Investment Properties has formed a new division, HIP Entertainment, and is looking for up to 75 sites for its new family entertainment centre concept.
Former managing director of David Lloyd Europe, Grant Wright, will be managing director of the new division, in which he has a 40% stake. The remaining 60% share is owned by HIP.
HIP, based in London, works with leisure operators on a partnership basis to find land and then finance and purchase development sites to create purpose-built commercial venues for sports, leisure and entertainment purposes. It is privately owned by chief executive Martin Helme.
The entertainment centres will host eight activities including mini golf, high ropes courses, soft play areas for children, laser quest, indoor rock climbing, 4D simulator experiences, escape rooms and an activity arcade with games provided by entertainment company Sega (see box).
“The activities will be provided by existing suppliers, all of which are British companies and distributors with whom I have either worked or partnered. They have done a lot of work to develop this concept,” says Wright.
Site specifics
HIP Entertainment is close to securing its first site in Swindon and is aiming to open around 12 sites every year for the next five to six years.
It will consider both existing buildings and development land near all major towns and cities in the UK, provided that they are within drive time of a 250,000-person catchment and have main-road frontage and capacity for a car park of around 200 spaces.
For sites with existing buildings it is looking for both freehold and long-leasehold opportunities of 50,000 to 100,000 sq ft that can be converted to D2 leisure use.
For new-build opportunities, which HIP Entertainment will build itself, it requires a site of between three and five acres within the same demographic catchment.
Wright is confident that there is sufficient supply in the market. He says: “We have been enthused to see that there is a lot of leisure space available at quite reduced prices as there are not that many takers.”
HIP Entertainment is looking to spend £6m to £7m on the acquisition of each new-build site, and estimates end costs to be around £2m less for each site with existing infrastructure.
Wright and HIP Entertainment aim to fund around 20% of each development, with the remainder to be financed through deal-specific fundraising.
“We have already raised the finance that we need [for the first phase of sites] and we have an agreement for leasing the equipment. We are in the middle of a second fundraising, which is a hybrid offer of 50% shares and 50% bonds,” Wright says.
How will it work?
HIP Entertainment will act as an owner-operator for each site, and will lease the equipment needed for the various activities from established leisure operators, such as Sega. HIP Entertainment will then oversee the management of each centre and the activities within.
“It is similar to an owner-occupier model,” says Wright. “The equipment is provided through a lease finance agreement and then we run everything ourselves.”
Each site will include an area designated for food and beverage of around 4,000 sq ft and this will include a different offering on each site.
HIP Entertainment is looking to partner with local businesses as well as established operators to provide the F&B in each location.
“F&B can be challenging in leisure centres as everyone wants to eat at the same time, so we are looking to deliver something new that would be right for us and also enable us to work with private operators,” says Wright.
In instances where HIP Entertainment has surplus space on site, there could also be opportunities for other established leisure operators to work with the company.
Wright says: “When we have more space ,we will look to partner with other leisure brands, so it could be a go karting contractor or a trampoline operator, but this would work on a site-by-site basis.”
Why now?
Drawing on his 25-year experience in the leisure industry, Wright is aware of the risks involved with the sector but is prepared for the challenge.
He says: “History is littered with the skeletons of those that have tried and failed to bring US concepts to the UK, but ours is based on a similar model in New Zealand, which we think will work.
“Leisure is a robust part of the economy and the research shows that people want more leisure that is flexible and on their terms. Finding something for all friends and family to enjoy is almost impossible, but we can give people that choice all under one roof.”
Jonathan Sutton of Lewis Sutton is HIP Entertainment’s retained agent.
HIP Entertainment’s initial eight activities
■ Dinosaur Adventure Golf: 18-hole crazy golf
■ Tree-Tops Aerial Adventure Rope Course: an hour-long high rope course, 12 metres up and around the leisure centre
■ Soft Play for children up to eight years old
■ Out of this World Space Shuttle Simulator: simulator with eight different journeys
■ Top, Top Secret Escape Adventure: Escape room activity
■ Laser Quest: an old favourite reinvented and updated
■ Clip’n’Climb: indoor climbing
■ HIP Entertainment Activity Arcade: games from the global brand Sega
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