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26 June 2019 | Leisure

Half year review of the leisure market: Staycations boost UK tourism businesses and health & fitness continues to thrive

Specialist business property adviser, Christie & Co provides an overview of the leisure market in the first half of 2019, reflecting on previous predictions, emerging trends and challenges facing the sector.

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Christie & Co’s Business Outlook 2019 report anticipated that the leisure market would see some distress in poorly invested and located indoor “big box” leisure operations, while multi use sites and staycation-boosted holiday parks would perform strongly, and the health and fitness market would continue to thrive.
 

Investor interest


Highlighted in Business Outlook 2019, Christie & Co reiterates the high interest seen from investors in the ‘alternative’ property market, outside the traditional residential and commercial, specifically the business property sectors in which Christie & Co operates. In particular, long investment requirements with good covenants continue to be highly sought after, with a mix of funds, REITS, developers and investors increasingly prepared to consider an element of exposure to operational real estate. 
 

Distress and success


As anticipated, the distressed positions for certain types of leisure businesses has continued, most recently with MFA Bowl UK entering administration in March 2019. On the other hand, the successes predicted in the leisure sector have also come to fruition as the health and fitness industry goes from strength to strength; now worth a reported £5 billion. With current user penetration rates of around 15.5%, the sector still has room to grow, and operators have demonstrated organic acquisition strategies and a focus on development and refurbishment of sites in the first half of 2019. 
 

The staycation effect


Similarly, UK holiday and caravan parks have performed well going into 2019, as noted by Christie & Co, boosted by good weather over the Easter weekend, bank holidays and the continually growing trend of staycations. A recent report by Barclays Corporate Banking forecasted a 31% increase in the number of Brits holidaying in the UK on 2018, with the main reasons being affordability, convenience and concerns over Brexit impacting European travel. This is translating for hospitality businesses, over half of which reported increased domestic demand, and Christie & Co predicts that this is unlikely to slow going into next year. 
 

New concepts and opportunities


Having recently been instructed to market a portfolio of four adventure golf centres and two development sites on behalf of Adventure Experience, one of the UK’s leading mini golf operators, Christie & Co is well placed to comment on the opportunities emerging in the adventure golf sector. The market comprises both themed indoor locations and outdoor, family-orientated centres, which Christie & Co identifies the potential for with consolidation and targeting a range of consumers. With the operational synergies to be had in the utilisation of both indoor and outdoor spaces, particularly as a hedge against the weather, adventure golf offers a lucrative leisure investment.
 

Brexit


Going into 2019, Christie & Co notes that Brexit does not appear to be hindering the markets as they are still seeing overseas players targeting the UK as a relatively safe haven for investment or, it appears. good value for money on the back of exchange rate arbitrage. What Christie & Co has also seen is an increasing degree of diligence from lenders, particularly towards businesses with exposure to some of the issues perceived to be affecting the high street retail market and this is creating a time lag for a certain number of transactions.

Jon Patrick, Head of Leisure & Development at Christie & Co comments, “The UK leisure market comprises a vast arrange of ‘experiential’ activities targeting an extremely diverse demographic across a wide range of price points and for these reasons we anticipate that well operated and invested businesses will continue to perform well within the wider economy.”