In this guide, I’m going to show you how to analyze campsite for sale adverts.
“Why? What will I gain?”
To help you make the most profitable decision – whether buying or selling.
As a business analyst, this process helps me see what value is really on offer from a listing.
Today, I’ll show you how too can either:
- produce a listing that speaks real value, or;
- identify potentially profitable campsites from the ad alone.
- 1 Tenure – your entry point
- 2 Location of a campsite – the ultimate USP
- 3 Living on a campsite – owner’s residence
- 4 Campsite outbuildings – the outlier asset
- 5 Land for your campsite – setting the scene
- 6 Campsite units for hire – pitches, pods, lodges, chalets
- 7 Campsite amenities – the creature comforts
- 8 Outdoor activities – for adding value
- 9 Campsite season length and unit availability – your multiplier
- 10 Examining campsite income – verifying quoted figures…
- 11 Planning permission – consent for expansion
- 12 Campsite website, social media & reviews
- 13 How does the campsite generate bookings?
- 14 Now, I’d like to hear what you have to say…
Tenure – your entry point
The tenure of your campsite investment is key.
By this I mean, freehold or leasehold.
Firstly, it defines the timeframe, or duration of the investment.
In other words, how long you can expect to keep hold of the investment and also how long you can expect to enjoy the return on investment (profit).
Let’s take an example…
Say, you find a ‘campsite for sale’ advertised at a particular price.
You might intend to own the campsite for 10 years as a business.
The opportunity includes an owner’s residence.
You are offered the choice:
- leasehold, or;
There is a cost/benefit assessment to make either way.
But how do you arrive at the right decision for you?
Time to weigh up the pros. vs. cons.
With a leasehold, you pay a premium to acquire the campsite smallholding opportunity and take on an annual rent obligation.
There is also predefined, fixed term of ownership…e.g. 60 years. A leasehold also comes with some covenants of ground maintenance. The longer the leasehold duration, typically the more attractive a leasehold opportunity is.
- Gross Profit
- Ground Rent
- Years Remaining
With a freehold, there is no time limit on ownership. There’s no annual rent and full responsibility for upkeep and maintenance is with the owner.
As a simple example,
…if you are presented with an opportunity to buy either a freehold for:
Or, a leasehold business for:
Both with a similar turnover profile, say £90,000 per annum…
You might think, which is the most profitable campsite deal for me?
Firstly, you must think about feasibility.
In other words, what can you actually afford at present?
The difference between obtaining a loan for £45,000 vs a freehold mortgage for £650,000 is quite a contrast.
For most, the wage collateral necessary for obtaining the £45,000 loan would be around £18,000 p.a….
…whereas earnings of around £170,000 p.a. will be needed to qualify for a £650,000 loan.
But why would anyone ever consider freehold over leasehold then?
I see the main advantages of freehold campsite ownership are:
- longevity: the longer you hold on to a good investment, the greater your profit
- capital gains: when you come to sell the investment (divest) if its profit potential has grown, you can sell it for a greater price than what you originally bought it for
- asset customisation: the liberty to make significant changes to the property and land
- expansion: authority to increase the scope of the business’s physical parameters.
- rental income option: you could always rent the business out to a tenant and earn the rental income
To sum up in a nutshell?
Control, growth potential and flexibility.
All these come at a cost.
But if you have a plan that goes merely beyond just taking a going concern and peddling ‘as-is’ for a few years…its worth the down-payment.
the true fruit of business ownership is growth – not earnings.
Growth is at the heart of every investment.
In other words, what you have in your hand tomorrow should be of greater value than what it’s worth today.
Sure there are ups and downs along the way…
But faith in your game plan should keep you settled whilst riding the waves.
Location of a campsite – the ultimate USP
A campsite business can’t help being defined by where it is.
It’s a location-based business. People are ‘half’ visiting the area and ‘half’ visiting you.
But however good the experience, you simply cannot get around the setting.
There are some key benefits that are directly derived from a campsite’s location.
Here are some of them:
- …if you are rural, how quickly can customers get to commercial or attraction-based hotspots? A significant proportion of your guests are likely to want to experience the taste of a nearby village or town during their stay.
- natural benefits:
- …walks, hiking and cycling are key activities enjoyed by many whilst on camping trips. The natural beauty of the surrounding landscape will be the draw to interest, such visitors. Even daytrippers will want to sample your site.
- local economy:
- …every area, region, town or village is different and has its own appeal. Your local economy presents unique points of attraction that cannot be imitated. This adds complementary value to your on-site offering.
- safety risks:
- …the obvious WATCHOUT warning here, would be flood plains. Avoiding a site which is wracked with the seasonal threat of flooding. Steering clear of the inconvenience and capital damage of natural calamity is well worth the time and effort in research.
- …if your site is on the main road connection, you are going to gain an advantage. People will find you and in planning will favour your site for ease of access to amenities. Convenience for getting away is actually a good thing for your campsite business. Guests seeking extra value will thank you for making it quick and easy for them to get from A-B.
- local amenities:
- …shops, pubs, restaurants these are all value-adding destinations for guests. It’s where they might go hunting for treats. After a long walk or day out, often families, groups or couples will want to stop by a local eatery for an evening meal. Being nearby will help them choose to stay with you.
It’s worth thinking about the entire customer stay experience when planning to buy a campsite…
…both their time on the site and their movements off-site.
This will make for a more considered investment.
The more factors which go in your favour the greater returns you’ll receive.
Living on a campsite – owner’s residence
There are many perks involved with running a campsite. One, in particular, is living on-site.
Campsite ownership is a lifestyle.
In other words, by nature, it will influence the way you live.
Because of the practical and operational demand, you will spend a lot of time on-site and during unconventional times of day.
Many owners will opt to live on-site to benefit from immersion. Being up close and personal with the responsibilities every day keeps your challenges continually front of mind.
This arguably this makes you sharper for getting things done.
What about in the long run?
Remember, as an investment – you should intend to run the campsite for some years before realising the full benefit.
So, with all that time-on-site…
…what are the desirable features necessary for making the ownership experience as convenient as possible?
Here are a few common smallholder benefits of living on-site when running a campsite:
- eco cost savings (wood burner, solar panel): home-made cost efficiencies
- adding b&b potential or resi-let: rooms spare for adding possible B&B income
- garages: cover for your household vehicles
- annexe: a place to offer friends and family when they visit, or additional rental income
- kitchen/market garden: ability to grow your own food
…just to name a few.
Cost-saving, side income, self-sustainability & extra space/storage.
These add-ons all work to soften the blow of household expense or constraint when running a campsite. This gives resilience for times of personal challenge.
Campsite outbuildings – the outlier asset
Outbuildings grant utility.
They are useful touches that support the practicality of operating a campsite business.
Leave it late – and should you want to to make amendments ‘after the fact’ you could come unstuck if planning permission is not granted.
The following outbuilding structures might just add unexpected depth to your campsite business model:
Storage for grounds maintenance vehicles (like ride-on mowers), or for stocking other equipment is a handy provision for keeping all things in order.
Land for your campsite – setting the scene
The scope of your campsite grounds presents natural limitation.
…there are only so many pitches you can physically accommodate on a plot of a given size (acreage).
But then again, is business all about scale?
Not unless you can fill it.
Occupancy is the key to campsite cashflow.
Having your pitches paid for by customers, consistently, no matter how small a site – is where your business is working at optimal efficiency.
When weighing up a prospective campsite ownership opportunity, don’t just look for the biggest venture you can afford.
Consider all factors relating to delivering maximum value to customers.
You’ll have to make a judgement on the combination of features and the overall benefit.
What about the presentation of your grounds? Does it matter what your campsite looks like to customers?
I say it again, campsites are experience-based businesses. It’s about people trying things out and being invited to do something different.
What each customer looks for will differ from one to another. But customers can be theoretically grouped according to likes and dislikes.
You can call each group a segment.
Like the slice of a pie. Each piece contributing value to the whole pie, but carrying a slightly different arrangement and balance of ingredients. However, all of equal size and proportion. None greater than another.
But what relevance does this have to the landscape?
Camping being an activity-based pursuit is very dependent upon the make-up and use of land.
People go camping to enjoy the outdoors generally but in different ways. Some activities are complimentary other are not so.
For example, outdoor ATV driving and bird spotting are polar opposites in nature.
One noisy and disruptive to the environment and the other requiring peace and quiet amidst natural surroundings.
The two simply cannot occupy the same space, however, they could occupy the same site – if they both were each catered for carefully and respectfully.
It is obvious to say that they each would need their own separate environment.
This is where segmentation comes into it.
There will be a cost to prepare separate spaces that both segments. But by doing so you’ll make sure they will enjoy their stay.
Your gold standard in business every time is customer satisfaction. Alongside this is maintaining profit.
Both required for a healthy business.
Campsite units for hire – pitches, pods, lodges, chalets
No two campsites or caravan parks are the same.
Among all the campsite features, one of the most varied is the range of units for hire.
There are just so many factors affecting each site’s arrangement of units inc. size of land, planning permission, owner’s budget…etc.
Campsites, as a result, are very different, one to another.
A mix of number and nature of units that they offer.
Types of unit, include: static vans, pitches, pods, lodges, chalets etc…
Further breakdown of unit types include:
- park owned: under your ownership, can be hired, sold or for personal use.
- owner-occupied: where the owner of the park lives.
- seasonal hire: hiring a pitch to occupy for an entire season (usually March to October).
- winter storage: pitches offered to touring van owners to store their caravans over the winter period – getting them off the driveway.
- electric & sewage: pitches which allow customers to plug into a mains electric supply and sewage disposal system.
- hardstanding: a concrete/hard ground pitch for touring caravan owners.
- grass pitches: grass pitches for tent owners to sample the outdoors.
These all offer something different to different customer groups/segments.
Also, each comes with a cost vs. benefit trade-off to decide for you own business.
e.g. pitches without electrical hookup cost less to set-up, but likewise carry a lower price point per booking…you’ve got to weigh it up.
Research what the other campsites around offer and think of what customer segments might be missing out on.
Plug in the needs gap.
Campsite amenities – the creature comforts
Amenities make for a pleasant stay.
Guests are generally resourceful enough to make do with what they’ve got.
But where you are able to meet them at their particular need, they will often be thankful.
Whilst camping is an outdoor pursuit, some indoor perks won’t go amiss.
The following is a list of campsite amenities which are commonly found in the for sale listings:
- WiFi Broadband
- Car park
In one way or another, each amenity offers a little bit of home comfort.
They are there for those who need it and who are willing to pay for the privilege.
Some amenities have greater popularity than others…and are appreciated differently by each segment of customer. Some require greater capital investment.
All in all, what you consider an ‘essential’ line-up should be thought of beforehand.
This way you are able to quickly separate out a selection target campsites with the most desirable features.
Outdoor activities – for adding value
No secret – campers enjoy being active outdoors.
Array of activities on offer is often a deciding factor for customers when planning a trip.
This is why you should carefully consider the activities you want to lay on well in advance of investing.
This will help you shortlist the most advantageous investment prospects.
This list includes many common activities offered by campsites for sale:
- Farm animals
- Garden centre
- Walking routes
- Outdoor cinema
Some are more easily set-up than others.
Some require red tape approval, like building fishing ponds.
Taking, for example, a project to install a fishery…
…planning permission and approval from the environmental agency would be required as a minimum.
However, by contrast, an outdoor cinema requires only the capital to buy the equipment.
Either way, finding a campsite for sale which possesses a ready-made setup, means:
- the bundle price includes the value of all related assets,
- plus, the business comes ready to use from day one.
Running a course, shop, restaurant or a garden centre onsite are all staff intensive.
They comes with benefits, like additional income, but also complexities, such as…
– wage costs, staff satisfaction, employer obligations, training and development, paid leave etc.
Think carefully before settling on any one opportunity.
Campsite season length and unit availability – your multiplier
The length of camping season is directly proportional to occupancy…and therefore is a key factor affecting your earning potential.
…if your site opens for 12 months, you have twice the earning potential of an identical site which only opens for 6 months.
Buying a campsite with maximum occupancy potential makes financial sense. Consider all small print before showing interest.
Examining campsite income – verifying quoted figures…
Often campsite for sale adverts quote some indication of income.
They rarely give it all away.
But the question is, how important are these financials?
Must you have all of the detail to hand, in order to make the right decision?
The key points for estimating income are:
- the operational model
- i.e. no. of pitches, premium (paid) amenities, current pricing, historical activity, like occupancy
- turnover figure
Armed with these two details you can very accurately produce a ballpark estimate of the downstream financial performance.
Let’s take a look at how you would produce such an earnings estimate:
- Turnover aka. T/O (100% of income)
- Gross Profit (~60% – 70% of T/O)
- Overheads (~40% of T/O)
- Net Profit or EBITDA (earnings before interest, tax, depreciation and amortization) (~22% – 30% of T/O)
The percentages are a broad brushstroke approach. They are there to give you a feel for what should be on offer.
Emphasis on the ‘should‘…
– never assume from top-down that all the number stack up.
Assuming the business is geared correctly, you could expect to receive the percentages above.
Take the example of buying a car.
The expected performance printed in the manufacturer’s operation manual, like top speed, fuel efficiency etc. is on the assumption that the car is tuned up correctly.
If there is anything out of sync – then the car will fall short.
It doesn’t mean it can’t be corrected, but it will cost you to restore the balance, either with your own time and efforts or by hiring a professional.
The same can be said of buying a campsite. If the total annual turnover is, say, £100,000….
…the earnings you can expect from the opportunity to be somewhere in the creation of £22,000 – £30,000 before interest repayments, tax or depreciation…
…the caveat being, IF the business is run optimally.
Being able to READ the supporting commercial detail and documentation will help you decide how well maintained the business really is.
This will shape how you value each opportunity.
Planning permission – consent for expansion
Often campsites come with consent for further expansion.
A great differentiator.
A means of pipping other offers to the finish.
Everyone knows how cumbersome and expensive obtaining planning permission can be for property owners.
So if an owner goes through the hassle of thinking ahead on behalf of the incoming owners by obtaining consent to expand the operation…
…this could be the difference in getting their campsite sold – and quickly too.
Taking on investment is about growth. Growth potential gives the hope that future profit (yield) will be greater than today.
From both sides of the transaction, growth is attractive.
- Buyers can get more return on their invested funds if growth is available.
- Sellers can sell their businesses quicker and for higher prices where growth potential accompanies what’s on offer.
What about reputation?
How can you get a measure for the reputation and size of the existing customer base of a campsite business?
Much of a campsite’s popularity can be estimated from its online footprint.
The following sources are useful for getting a gauge of a prospective campsite’s market presence:
- 3rd party reviews
- Business website
- Social media accounts
The common theme here is user-generated content.
In other words, feedback from your customers which speak on your behalf. Where verified as genuine, the draw is even stronger.
The important metrics here are – volume and quality.
The combination of which gives a well-rounded view on how well appreciated the business is by its patrons.
For example, 500 5-star reviews would indicate a better reputation that 1,000 2-star reviews
It’s worth digging deep on this before getting serious about any particular prospect.
How does the campsite generate bookings?
This is the gateway to campsite revenue.
If there are tolls and charges to pay on the way in, your profits are immediately dampened at the route.
Some booking platforms take as much as 30% of the booking fee as sales commission.
Remembering the net profit mark-up for a business like this being in the region of 22-30% of annual turnover.
This means commission-based bookings channels can actually be loss-making, although the throughput of customers is consistently high. What you actually get left with can be the hangover of debt.
What’s the alternative?
Investing in your own website’s booking platform can come at considerable capital cost initially.
But the long term return on investment can be game-changing.
if you spent £5,000 on setting up a good quality website booking system along with search engine optimization to attract high levels of online enquiries…
…the cost savings on turnover in year one (if your annual income was £100,000, for example) would put an additional £30,000 back in your business.
Examine thoroughly the kind of web and bookings platform each prospective campsite for sale has before making your approaches.
Now, I’d like to hear what you have to say…
These are my top tips for reading the value of campsite for sale listings.
Useful stuff for whether you are thinking of either buying or selling a campsite business.
Have you any experience with buying campsite businesses?
Or, have you sold before and have some advice to share?
I’d like to hear from you below.