Parks hear of new ways to flex their financial muscle
BEHIND-THE-SCENES changes enabling holiday parks to gain significant financial advantages for their businesses were put under the spotlight at a recent webinar.
The well-attended May event, organised by Michael Paul Consultancy, brought together three experienced advisers to present their analysis of new industry opportunities.
Together, they painted a picture of how holiday parks have rarely been in a better position to attract funding, grow their businesses, and realise additional cash from their assets.
Alex Patey, director of Spectrum Corporate Finance, explained how the staycation boom is creating a new thirst among investors for taking a stake in the parks sector.
He said that the expectation of analysts is that parks will see long-term benefits from the recent decline in foreign travel, and this is luring funders both from the UK and overseas.
The target of investors is holiday parks with the potential to expand either organically or through acquisition, and Alex says that investor involvement could greatly accelerate such plans.
The level of their funding is likely to be influenced by the value of the business, and important changes here were addressed by David Broadhead, director of Michael Paul Consultancy.
A widely respected RICS valuer, David said that the criteria by which the worth of a park is established has undergone substantial re-alignment in recent times.
The simple notion of basing a park’s value on the number of its pitches or by applying a multiple of its income was now a relic of the past, he said.
Today, a host of other factors comes into play when arriving at a figure – and they include the park’s ability to grow, its purchases, and any recent restructuring.
These, said David, could see a business’s value elevated far beyond figures based on traditional ways of estimating worth, and smaller parks in particular could stand to gain.
Also speaking at the webinar was holiday park business tax specialist Jason Batty who is well known to many park operators and is a director of Zeal, formerly known as HJR Tax.
Jason, through his long involvement with the industry, estimates that an astonishing 80 per cent of parks have unclaimed capital allowances to which they are fully entitled.
Unlocking this previously ignored tax relief could deliver a cash windfall to the business in the form of a rebate from HMRC for overpayments made in the past.
Missing out on these capital allowances previously, said Jason, was not necessarily the fault of the park’s accountants as such claims required a detailed understanding of park business structures.
Almost invariably accepted by HMRC when identified by his firm, the claims are often based on reports from a specialist surveyor commissioned at no extra cost to the park by Zeal.
Michael Paul Consultancy’s CEO Michael Paul said that feedback from the webinar had been overwhelmingly positive with many parks now planning to profit from what they had learned:
“Because parks are often very complex business models, it’s not surprising that some of their advisers may be unaware of many of the financial advantages available.
“Add to this the way in which the business landscape has changed so much recently, and the case for using a professional specialist is stronger than ever,” said Michael.