• center parcs 

    MARTIN DALBY, CHIEF executive of Center Parcs, needs no reminding of the value of investment.


    "One of the reasons we have been successful for the past 25 years is we are forever reinvesting the profits and refreshing the product," he says.


    The holiday operator has begun construction on a £250m village - the company's fifth - on the Duke of Bedford's Woburn estate, north of London, buoyed by strong trading and a 97 per cent occupancy rate at its four existing sites.


    This was no sudden decision. Mr Dalby first walked through the greenbelt forest site eight years ago. A battle against local opponents ensued before planning permission was granted in September 2007, after initial rejection.


    Since then, the company has been diverting footpaths and bridleways and building new roundabouts. It also took a year to put together finance, of which £100m will come from Blackstone, the group's private equity owner, and £150m in a construction loan from RBS, Barclays, HSBC and Lloyds Banking Group.


    Unlike some companies, Center Parcs did not have a cash pile. The trigger for the Woburn funding was refinancing of its £1bn debt, which had been due to expire next year. It has been replaced by a bond issued via a "whole business securitisation" backed by revenue from its existing villages in Cumbria, Nottinghamshire, Suffolk and Wiltshire.


    The Woburn Forest site, due to open in spring 2014, will employ 1,200 people in the construction stage and 1,500 once it opens.


    Mr Dalby has little doubt that there will be sufficient demand even if economic growth remains slow.


    Center Parcs, which attracts families, has so far seemed recession-proof: if money is tight, many trade down to the short-break holidays at which it excels.


    Mr Dalby expects the investment to add 20 per cent to Center Parcs' turnover and 25 per cent to its profits. In the year to April 2011, it had earnings before tax, depreciation and amortisation of £131m on revenues of £290.5m. This will probably be its last site in the UK, where it views its geographical coverage as complete.


    Ireland remains a strong candidate for expansion abroad, though Center Parcs ended talks with the government in Dublin two years ago after the recession hit. In the long term, Center Parcs is eyeing markets such as India and China.


    In the six years since Blackstone bought Center Parcs, it has spent more than £250m upgrading the existing villages and will spend a further £60m over the next three years.


    Mr Dalby says 60 per cent of customers come back every three years, so it is important to attract them with well-maintained facilities and new restaurants and leisure attractions. Brian Groom 'Until companies stop stashing the cash, the economy will remain on the critical list' Center Parcs, which attracts families, has so far seemed recession-proof.

    Originally published in A Blueprint for British Business, Financial Times, 31 May 2012. 

11/1/2020 1:21:22 AM