Trading conditions in the holiday home sector have been somewhat rocky since the pandemic.
Once we came out of lockdown and parks opened up again, it became apparent that the public’s appetite for holidaying abroad or taking cruises had waned. This prompted a surge in the manufacture of static caravans and lodges. Manufacturers had bulging order books and the biggest problem facing consumers was that lead times on orders were stretching out to a year, 18 months and beyond.
Several episodes affecting the economy then conspired to revive consumer confidence in taking an overseas holiday. The cruising market picked up. Either as a partial or complete result of this, a large number of the orders placed for static caravans and lodges were cancelled by customers, leaving an over-production on the supply side of the industry.
For all the reasons connected with the global economy that we are all familiar with (via the medium of our gas bill etc…) the cost of keeping a caravan or lodge on a licenced holiday park began escalating, leading to many people deciding it is now unaffordable.
So, I’m not an economist, but I do sit in the NACO office and hear calls coming in from members who are concerned about their future at their park now that it has been “placed in Administration”. This is understandably worrying, particularly if pitch fees have been paid. Equally worrying is the scenario in which pitch fee notifications have not been issued.
The feeling of uncertainty that this news engenders is unpleasant, but it is essential to understand that Administration is a form of protective management to keep the business running through a financially difficult period. Any pitch fees paid should stay within the day-to-day working capital of the park’s operating company who will either be able to refinance their business and resume their operations, or else sell to another company to continue the park’s business.
If the business is placed in Receivership, which is instigated by the company’s creditors, the process should be similar, probably culminating in the sale of the business to another operator.
If the company is placed in Liquidation, things might be a bit more troublesome, as it does spell the end of trading for that company. However, the solution is to sell the company’s assets. This obviously includes the park, which will achieve the best outcome if it is a going concern. It is unlikely the local authority would sanction a change of use for the land, so sitting tight will probably be the sensible option to maintain the value in your caravan or lodge.
Occasionally there is a high-profile announcement that a senior managerial figure at a park operating firm has been declared bankrupt. This is personal to him or her and will probably result in the commencement of the Administration process.
