New owners for Pontins try to defy the product life cycle

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Pontins, the UK holiday park business which was born in post-war Britain and thrived during the 1950’s and 1960’s, has just been bought for £46m by new investors.  Can they turn reverse the decline in the traditional holiday park market?

Family holiday camp firm Pontin’s has been bought for £46 million by new investment and management firm Ocean Parcs.

Ocean Parcs executive chairman Graham Parr is a former chief executive of Pontin’s, so he should know what he is letting himself in for!

The new owners plan to re-vitalise the leisure brand by “capturing the growing market for value and environmentally conscious holidays in the UK”.

This sounds like quite a challenge.

In recent years holiday centres have faced an unprecedented degree of competition for the leisure pound: from low-cost airlines, the proliferation of niche holiday products on the market and from the lure of DIY, independently booked travel.

Although many commentators predicted the long-term demise of the traditional British seaside park holiday, the sector has survived, albeit with much lower demand than in the boom years some decades ago.

The past decade has actually seen quite a lot of investment in the holiday centre industry.  Weatherproof domes, better quality entertainment, upgraded modern facilities, better accommodation, and the diversification of product have succeeded in attracting a new generation of customers, drawn increasingly to short break holidays as well as the more traditional longer stays.

Holiday parks are also good cash generators.  I remember advising a venture capitalist on an investment in the sector.  The investors and bank both appreciated the strong, relatively predictable cash flows that popular holiday parks can generate.

So maybe Graham Parr’s investment doesnt sound as risky as it might seem.

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