The family who previously owned Butlin’s, one of the UK’s best-known leisure retreats, have offered to buy the brand from its private equity owners for more than £300million, as the holiday business domestic is benefiting from a boom in stays.
The Harris family, who co-founded Bourne Leisure in the 1960s, have offered to buy Butlin’s operating business, according to two people briefed on the negotiations. An agreement could be reached within a fortnight, said one of them.
The purchase, first reported by Sky News, will capitalize on continued interest in UK domestic holidays caused by the international travel chaos and a cost of living crisis.
Britain’s domestic holiday companies feared that 2022 would end the boom in summer breaks caused 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 were part of a trio that sold the Bourne Leisure chain, including Butlin’s, to US private equity group Blackstone for £3bn earlier this year last. The family retained a minority stake in Bourne after the Blackstone deal.
Blackstone hired Rothschilds to launch an auction to sell Butlin’s part of the business earlier 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 largest private pension fund, said it was buying Butlin’s underlying property assets for £300m.
If the Harris family deal goes through, Blackstone will have recouped around £600m of the £3bn it paid for the group and will have sold Butlin’s business at a similar or slightly higher multiple. to the 12 times the profits he paid for Bourne during the pandemic. Butlin typically made up about 15-20% of Bourne’s income, 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 are increasingly keen to invest in the UK holiday market. In June last year, CVC Capital Partners bought Away Resorts for £250m, followed by Aria Resorts in August. Meanwhile, US real estate investment firm Sun Communities paid $1.3 billion for Park Holidays in November.
However, market conditions for such sales have deteriorated this year as it has become increasingly difficult to secure large amounts of debt financing.
A six-month auction to sell another leading holiday park operator, Parkdean Resorts, in which Bourne had made an initial bid, closed two months ago. And the US owner of Boots scrapped plans to sell the British drugstore and beauty retailer last month, blaming the move on a downturn in financial markets.
Bourne Leisure tumbled 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 sales more than halved to £506.8m in 2020 due to volatile trading during the coronavirus pandemic , resulting in a pre-tax loss of £151.6m.