The family that previously owned Butlin’s, one of the UK’s best-known leisure retreats, has offered to buy the brand back from its private equity owners for more than £300mn, as the domestic holiday business benefits from a staycation boom.
The Harris family, which co-founded Bourne Leisure in the 1960s, has offered to buy back Butlin’s operating business, according to two people briefed on negotiations. A deal could close within a fortnight, one of them said.
The purchase, first reported by Sky News, will capitalise on continued interest in domestic holidays in the UK caused by international travel chaos and a cost of living crisis.
UK domestic holiday businesses had feared 2022 would spell an end to the summer staycation boom brought on by the pandemic, but inquiries and bookings for domestic travel have increased since early June.
Butlin’s was founded in 1936 by Billy Butlin, who opened his first resort in Skegness, Lincolnshire. Bourne Leisure bought the business in 2000. The Harris family was part of a trio that sold the Bourne Leisure chain, including Butlin’s, to US private equity group Blackstone for £3bn early last year. The family kept a minority stake in Bourne after the Blackstone deal.
Blackstone hired Rothschilds to launch an auction to sell the Butlin’s portion of the business early this year, and attracted some interest from private equity bidders including Epiris, Bain Capital and Terra Firma Capital Partners, according to a person briefed on the negotiations.
Last month, the Universities Superannuation Scheme, the UK’s biggest private pension fund, said that it was buying Butlin’s underlying real estate assets for £300mn.
If the deal with the Harris family closes, Blackstone will have taken back about £600mn of the £3bn it paid for the group and will have sold the Butlin’s business at a similar or slightly higher multiple than the 12 times earnings it paid for Bourne during the pandemic. Butlin’s typically accounted for about 15 to 20 per cent of Bourne’s earnings, a person with knowledge of the matter said.
Blackstone and Bourne Leisure declined to comment. The Harris family could not immediately be reached for comment.
International financiers and private equity groups have been increasingly eager to buy into Britain’s domestic holiday market. In June of last year, CVC Capital Partners bought Away Resorts for £250mn followed by Aria Resorts in August. Meanwhile, US real estate investment trust Sun Communities paid $1.3bn for Park Holidays in November.
However, market conditions for sales of these kinds have deteriorated this year as it has become increasingly difficult to secure large quantities of debt financing.
A six-month auction to sell another leading holiday park operator Parkdean Resorts, in which Bourne had made an early bid, was terminated two months ago. And the US owner of Boots abandoned its plan to sell the UK pharmacy and beauty retailer last month, attributing its decision to a downturn in financial markets.
Bourne Leisure slumped to its first pre-tax loss in more than a decade in 2020, according to its latest accounts, filed last year. The group, which also owns Haven caravan parks and Warner Leisure Hotels, reported that sales more than halved to £506.8mn in 2020 because of volatile trading during the coronavirus pandemic, leaving it with a pre-tax loss of £151.6mn.