Australian holiday parks see revenue nosedive by $400 million

17 September 2020 Consultancy.com.au

Holiday parks – a $20 billion per year segment in Australia – have seen revenues nosedive by a third since the start of this year. In a new report, BDO and the Caravan Industry Association of Australia walk through the impact on individual states.

Usually quaint spots to park a caravan or rent a cabin, holiday parks are what BDO’s Director of Business Services Angus Strachan describes as a “product offering that is loved by Australians, myself included.” However, the lockdown paradigm that has emerged since the Covid-19 outbreak is far from healthy for this economic segment.

Holiday parks across the country have cumulatively seen a 33% dip in revenues since January 1st, adding up to more than $400 million. The drop was notable on the Easter long weekend – usually the busiest time of year for holiday parks but falling in the thick of the crisis and the policy response for 2020. Revenues for Easter fell by more than 90% compared to last year.

According to Strachan, the bushfires at the start of the year were already bad for business, and Covid-19 only accentuated the problem. Fear of infection immediately after the outbreak brought damaged revenues for March, April and May across the entire country and across sub-segments of the holiday park segment – cabins, powered sites and unpowered camp sites.

Australian holiday parks see revenue nosedive by $400 million

As the crisis has progressed, other factors have come into the fray that have caused the economic impact to vary by state. State-specific policy responses, for instance, have led to differing speeds of eased restrictions. BDO’s latest figures give an overview of the biggest impact areas.

Queensland’s holiday park sector has been handed the worst hit. A $100 million plus dip from this time last year has seen nearly 40% of the state’s holiday park revenues wiped out. The researchers note a broad uptick in revenues across the country when school holidays came around in July – indeed infection rates were also in check to some extent by this point. Queensland missed out on this shift.

Aged caravan travellers – ‘grey nomads’ – usually make up a lot of the traffic to Queensland holiday parks, but were weary of making the trip this year due to being in the most vulnerable groups. Border closures were also particularly strict in Queensland, which brought earnings further down.

For some parks, July revenues this year fell by 50% from the same month last year. That being said, the state is enjoying a number of advanced bookings for the September school holiday period, although Strachan warns that this might be offset by the number of forward payments adding up all the way since the bushfires.

Next on the list is New South Wales (NSW), where revenues have fallen by a third since the start of this year, amounting to more than $130 million. Rock bottom came in May, when revenues had fallen more than 40% year-on-year for the first five months. On the other hand NSW enjoyed the June and July period, with growth exceeding 9% and 13% year-on-year in each month respectively.

Victoria has seen a decline of just over 30% from the same period last year, amounting to more than $65 million. Here too, May was the lowest point, with a 35% year-on-year decline. However, tough times may lie ahead for the state, given its implementation of Stage 4 Covid-19 restrictions, which continue to attach any travel and activity to necessity. Advanced bookings for September are down more than 60% compared to last year as a result.

After a rough patch in May with a third of revenues wiped out, South Australia has stabilised to a large extent. Strachan indicated that fortunes have been unevenly distributed in the state.

“The market in South Australia is very patchy – if you’re a destination tourist park located within about 3 hours’ drive of the city, you’re probably seeing booking rates increase and you possibly had a very strong July. But if you’re a park located further away, such as further inland, you may be yet to experience a significant rebound since May’s low-point.”

The sunny spots

Escaping disaster have been holiday parks in Western Australia and Tasmania, where revenue drops have been in and around 20%. Both states have also seen a boom in revenues over June and July, joining NSW in the league of rising year-on-year revenues.

So the impact has been varied, yet most states have managed to pick things up in recent months. For Strachan, the outlook remains mixed. Borders are still being controlled, and uncertainty looms of a potentially disastrous second wave. The broader economic landscape also remains gloomy, while business fundamentals within the holiday parks sector are being challenged.

“On the customer side, a big part of this comes down to the missing grey nomads and international tourists who usually visit Australia’s holiday parks year-round. On the business side, credit is becoming more difficult and time-consuming to come by and transactional activity has stalled,” he said. It remains to be seen how the sector will navigate these challenges.


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