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Grant Thornton’s Solent 250 Sector Watch Tourism – potential for growth


Tourism is a key industry in the UK. In most years it is either the fifth or sixth biggest sector of our economy. Tourism covers UK people staying in the UK, UK people travelling overseas and overseas people coming to the UK. As such it captures many businesses: hotels, tour operators, theme parks, pubs and restaurants, museums, holiday parks ... the list is endless.


The UK coalition government’s objective is to further promote ’staycation’ holidays here in the UK. For longer stays (more than four days), this would mean 29% of UK travellers holidaying here instead of the current 20%. Of course, the ’rebalancing’ of domestic versus outbound travel would potentially have a negative impact on the current dominating outbound sector.


The next few years offer an unprecedented series of opportunities which our tourism industry must grasp. These include the Royal Wedding, the London 2012 Olympic and Paralympic Games, the Queen’s Diamond Jubilee (2012), the Rugby League Cup (2013).


Ones to watch


Tourism covers a variety of businesses as the following selection demonstrates


Paultons Park


This is a popular, family-owned theme park near Southampton. Paultons is regarded with great affection by many families in the south and beyond. Many of us will have noticed the current publicity regarding the latest addition to the park, Peppa Pig World. The accounts, while less exciting to some, show a company that is enjoying increasing sales and profitability, with a strong balance sheet enabling the company to continually improve the theme park.


Hoburne


Another family-owned group operating holiday and caravan parks in the Cotswolds, Somerset, Cornwall, South Devon, Dorset and Hampshire. Headquartered in Highcliffe, this group is reaping the benefits of the recent increase in ’staycation’ holidays, resulting in healthy increases in operating profits. The group has a strong balance


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There are of course risks with these events. Inflated prices and crowded places can discourage people from visiting. But overall it is hoped that these events will boost tourism not only at the times of the events themselves, but also beyond.


Tourism is a particularly effective mechanism for regenerating areas of the country. A good example in the Solent area is Gunwharf Quays which has become one of the south’s leading attractions with an interesting mix of retail and food outlets, and also situated next to the Historic Dockyard. A real success story.


Of course, the tourism sector has recently faced challenging trading conditions. Take the hotel industry as an example. In broad terms, average occupancy rates in the provinces fell from a high of 71% in 2006/2007 to a low of 64% in 2009/10. Average room rates fell from about £67 to £60. These are significant decreases and have left many hotels struggling to generate sufficient profits to pay the interest on their high borrowings.


sheet demonstrating continued investment in the group’s parks.


Serenity Holidays


Serenity is a specialist tour operator based in Fareham, offering holidays to a number of destinations from The Gambia, Senegal and Cape Verde in West Africa to the islands of Corsica and Sardinia in the Mediterranean. This company has faced many of the challenges experienced by tour operators including the weakening value of sterling, high fuel costs and reductions in consumers’ disposable income. Nevertheless, the company’s strategy is to focus on its niche destinations and also to drive operational efficiencies throughout the business.


Southdowns Motorhome Centre


This is a family-owned motorcaravan dealership based in Portsmouth. The company’s founder, Michael Ayling, recently announced his retirement from the day-to- day management of the business, passing the reins to his two sons. A robust, well-


However, in this recession we have not seen many hotels being subject to fire sales. Rather, the banks have opted to work with existing management teams to focus on improving trading as the economy recovers. The borrowings of many hotel groups have been restructured, often involving debt for equity swaps. The biggest example of this is the hotel group that owns the De Vere brand, where a debt for equity swap of £650 million was agreed. Over the next three to five years banks will no doubt be looking to exit from their enforced equity positions which will lead to the ownership of hotels changing again.


Returning to the local economy, here we are fortunate to have an abundance of tourist attractions. In Southampton, a key challenge is to find ways of encouraging the cruise liner travellers to use the facilities of the whole of Southampton and the surrounding area both before and after their cruise.


So these are interesting times for tourism and it seems likely that this will be a key growth area for the UK economy in the coming years.


managed business that has capitalised on the increasing popularity of motorcaravans.


For more information


about tourism in this region and throughout the UK, please contact:


David Hamblion 023-8038-1157


david.hamblion@uk.gt.com www.grantthornton.co.uk


THE BUSINESS MAGAZINE – SOLENT & SOUTH CENTRAL – JUNE 2011


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