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At your Leisure - 31 January 2005

Center Parcs UK PLC: Where Leisure and Tourism Meet

Image: The dome at Oasis Whinfell Forest by night. Copyright: Dave Ashwin

Center Parcs pioneered the concept of the all-year-round short break holiday in continental Europe and the UK. The company has many leisure facilities within its sites, including water activities such as sub-tropical pools and slides, spas and whirlpools, car-free roads and tracks for cycling, themed restaurants serving international cuisine and villa-style chalets offering high quality accommodation.

The company's offer of these leisure facilities within a secure environment regardless of the weather helps Center Parcs attract day trip visitors, weekenders, as well as more traditional holidaymakers. This blurring of the distinction between leisure and tourism has served to make Center Parcs the leading company in its market.

In this 'At your Leisure' we take an in-depth look at this successful company and investigate what it takes to become the market leader in its field.

Center Parcs' origins in the Netherlands

Center Parcs was born out of its original founder's love of nature and peace and quiet. In 1967, Piet Derksen bought an area of Dutch forest and had 30 villas and an outdoor pool built there. The first Center Parcs was designed by a Dutch architect as an all-season village, using natural materials in order to blend in with the natural environment. By 1975, five of these villages had been created in the Netherlands, offering a short break close to home.

During the 1980s, the concept was refined, so that each new village contained a sub-tropical swimming complex. The company began to expand slowly across Europe: initially, parks were opened in Belgium and in 1987, the firm moved into the UK, with the opening of a Center Parcs in Sherwood Forest, Nottinghamshire. The villages were getting larger and the numbers of visitors rising as the concept of forest-based short breaks became increasingly popular.

In the late 1980s, the company entered the French market and also began to expand in the UK. Its second village in England was built in Elveden Forest in Suffolk. By this time the Center Parcs brand was firmly established, with each park incorporating a large dome covering all the central facilities. The company was now able to offer weekend breaks as well as longer holidays that were non-weather dependent - a huge advantage in northern Europe's unsettled climate.

UK ownership

At this point, ownership of the business changed hands. Scottish and Newcastle Breweries took control of the firm, having acquired almost 75% of its shares. In 1989, the founder of the firm withdrew from the company and the UK brewing company took complete control of Center Parcs. The UK firm continued to operate the Center Parcs brand through the 1990s, opening a second French site in 1993 and a third village in England, at Longleat Forest, Wiltshire in 1994. In the late 1990s, existing Center Parcs sites in the Netherlands and Belgium were renovated and new theme concepts were introduced.

New millennium, new ownership

Image: Oasis Whinfell Forest opened in 2002. Copyright: Dave Ashwin

In the new millennium, Scottish and Newcastle decided to focus solely on its international drinks activities and sold Center Parcs, which by 2001 included 10 sites in Europe. A joint venture between a French holiday company (Pierre & Vacances) and a capital investment firm (DB Capital Partners) took control of Center Parcs. The continental Center Parcs and those in the UK are owned separately and major expansion in the UK followed.

Two new sites were then opened in England: in 2002, the Oasis Holiday Village near Penrith was acquired and became Oasis Whinfell Forest, Center Parcs' fourth park in the UK. Large investments were made in the parks, with the extension of the brand to include new 'executive' accommodation, new spa facilities and bigger sports areas.

Re-branding Center Parcs

In 2002, in order to cement their status as the market leaders in short-break holidays, Center Parcs Europe divided their range of parks into four sub-brands: Center Parcs Original, FreeLife from Center Parcs and SeaSpirit from Center Parcs. The 'original' brand comprised the original ten parks in the Netherlands, Belgium and France; FreeLife included three newly acquired parks in Netherlands and Germany, which had just been bought from the Gran Dorado company; SeaSpirit comprised two former Gran Dorado parks on the Dutch coast.

Going public, Center Parcs becomes a PLC

Changes in the ownership structure of the company continued through this period: DB Partners became MidOcean Partners, who then took complete control of Center Parcs UK; Pierre & Vacances owned the company's Continental European parks. But in late 2003, MidOcean Partners sold Center Parcs UK for £285 million to a consortium of investors, who then floated the company on the Alternative Investment Market (AIM); the company now traded under the name Center Parcs UK PLC.

In its first period trading as a PLC, covering twenty-one weeks from December 2003 to April 2004, the company's financial results show it made a pre-tax profit of only £0.1 million, on a turnover of more than £72 million. However, this period covered the weakest season of the year for Center Parcs and the company's own estimates indicate that over the whole year, profits would actually reach more than £24 million.

New finance for new investment

In November 2002, the firm raised finance for further investment plans through the sale and leaseback of three of its parks: at Sherwood, Longleat and Whinfell Forests. The fourth site at Elveden Forest was also sold and leased back in 2003, after it had been renovated following a fire in 2002. This method of financing reflected the UK company's belief that it should invest in its core activity: providing short and medium holiday breaks, rather than running a property portfolio.

In December 2004, Center Parcs announced that it had identified a location for a fifth UK site, at Warren Wood near Woburn, Bedfordshire. It would be seeking planning permission and had already completed the signing of a lease on the land from its owner, the Duke of Bedford. The project was expected to cost approximately £160 million, including the construction of accommodation, indoor and outdoor facilities, sub-tropical swimming complex, restaurants and a spa. It is anticipated that, given planning permission, the project would take between three and four years to complete.