Article

What next for holiday parks in 2025?

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country road
While the holiday parks sector has shown resilience, operators are facing many challenges which are causing financial stress. Chris Petts and Shane Smith look at the issues and what park operators should be doing.
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The holiday park sector continues to be a vital part of the UK economy. Research published by the UK Caravan and Camping Alliance (UKCCA) in 2024 showed that it supports 226,745 full time jobs across the UK and generates £12.2bn in visitor expenditure, equating to £7.2bn Gross Value Added (GVA) to the UK economy.

The holiday parks sector can be split into two market segments: short term rentals for tourism (holiday makers); and caravan and holiday-home ownership. Many parks generate income from both holiday makers as well as the sale of caravans.

The sector has shown resilience

The sector has proved its resilience over a turbulent period – the value of the UK camping and caravanning sector has increased by 25% over the past five years. This has been driven by consumers seeking cheaper domestic holidays (‘staycations’) due to a reduction in consumer confidence and a fall in household disposable income. 

As competition in the sector intensifies and consumer preferences change, holiday park operators are strategically offering more services such as swimming pools, outdoor barbeques, and luxury amenities to attract guests.

Key challenges facing holiday parks

However, while the sector is still expected to show revenue growth of 1.3% in 2025, there are still challenges that management teams will need to navigate.

The lingering effects of the cost-of-living crisis and adverse weather conditions have negatively impacted staycation bookings towards the end of 2024 and into 2025, constraining overall performance. Profit margins have also been squeezed by rising competition for both domestic and international tourism, which has put downward pressure on prices and compelled sites to invest in facilities to create unique selling points.

Increased wage costs, including rises in national insurance contributions and increases in the National Living Wage (NLW) are squeezing margins further. In April 2025, the NLW is due to rise again to £12.21 for those aged 21 and over. High revenue volatility combined with low (below GDP) growth classifies the segment as 'hazardous’ – per ‘Ibis World industry analysis’.

Caravan and holiday-home ownership – legal action

The caravan and holiday-home ownership segment faces an additional challenge; the threat of legal action.

Approximately 1,200 holiday-home owners in the UK, members of the Holiday Park Action Group (HPAG) are to begin legal action against the holiday parks in relation to caravans they have sold. The members are seeking compensation for seemingly unfair increases in pitch/site fees and misleading claims about the value of holiday homes at the point of sale.

Claims have been made that site fee increases exceed the level of inflation in the UK. In one example, a holiday-home owner was charged £2,795 in 2022, rising to £4,100 in 2024 (an increase of over 46%). At the same holiday park, a static caravan that was purchased for £29,995 in 2022 would supposedly fetch just £5,000 on the open market in 2023/24.

BBC investigation revealed that many holiday-home owners had lost their life savings, inheritance and pensions when their homes lost significant value. The situation highlights the need for greater transparency and fairness in the caravan ownership market to protect consumers from financial harm.

Effect on investor demand for the sector

The strong performance of caravan rentals in the holiday parks sector has attracted some investor interest. However, concerns about the long-term value retention of caravans have offset this increased demand.

While there has historically been a steady demand for caravans and holiday-home ownership, the ongoing legal action and resulting negative publicity against various holiday parks is likely to deter investment in 2025.

In addition, financial strain and reduced disposable income due to the cost-of-living crisis have made it caravan and holiday home ownership more difficult for retirees and families – the most frequent holidaymakers.

Caravan manufacturers and suppliers have reported losses and slow-moving stock amid these challenging market conditions. Holiday Park operators are also finding it harder to sell static caravans or cabins.

What is the financial impact on holiday park operators?

Holiday park operators may find that several issues are contributing to financial strain:

  • Consumer spending is expected to decrease in 2025 due to a weakening economy and low consumer confidence, impacting multiple revenue streams for caravan operators.
  • The winter months have traditionally been challenging for the industry, and operators are finding that performance throughout the rest of the year is not sufficient to enable operators to comfortably withstand the low season.
  • Lower income is leading to growing difficulties covering operational costs and servicing debt
  • Caravan owners are also taking longer to pay pitch fees due to their own financial constraints, affecting the liquidity of operators.
  • While there’s an increase in the sale of cheaper caravans due to lower disposable income, high-value caravans remain unsold and tied up on the balance sheet.

What should holiday park operators be doing?

Exploring new revenue streams, such as long-term rentals and year-round attractions, can diversify and reduce risk. A focus on digital efficiencies can also reduce costs during times of financial hardship.

But many operators are facing significant financial stress, with some on the brink of insolvency. There’s  an increasing trend of operators seeking financial restructuring or external investment to stabilise their operations. Our market-leading team has sector expertise, and the experience to help holidaypark operators navigate the way forward.

For more information or advice, contact Chris Petts or Shane Smith.

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