More Nomads, Less Space

A new Tourism Australia report is predicting boom times ahead for the Australian caravan park industry … despite the fact that the number of parks is shrinking at an alarming rate.

The report – Through the Looking Glass: The Future of Domestic Tourism in Australia – forecasts that the total number of nights spent in caravan and camping accommodation will increase from 39 million to 45 million by the end of the next decade. In other words, caravan and camping will be the major accommodation growth sector in Australia between now and 2020.

It will come as no surprise to any of you to learn that the baby boomer generation … those currently aged in their mid-40s to mid-60s … will be driving the caravan and holiday park sector over the next two decades. And, says the Tourism Australia report, the grey nomads will increasingly seek out travel of a longer duration, with lower per-day expenditure.

That’s all well and good but the problems come when you start looking at where us bargain-hunting, budget-minded travellers are going to be able to stay in the future.

If we look at New South Wales as an example, we find that the number of caravan parks in the state has dropped by 3.7 per cent in the two years to the end of September, 2007.

According to the Australian Bureau of Statistics, that decline translates to a 2.5 per cent drop in the number of caravan parking spaces, from 69,147 to 67,465,

If the developers carry on gobbling up parks – particularly the beachfront ones – at this rate, the relaxed Big Lap could become the stressful inflexible book-ahead-months-in-advance organisational nightmare from hell.

The Associate Director of CBRE Hotels, Paul Nyholt, said the report’s findings signalled significant opportunities in the Caravan and Holiday Park sector.

“In the past few years there been a spike in demand for acquisitions in this sector of the accommodation market, especially along the eastern seaboard,” Mr Nyholt said.

“Institutional investors have been seeking to buy large portfolios of this type of property and there has been no shortage of capital or willingness to pay premiums for quality assets. This has led to a significant shift away from the mum’s and dad’s owner operators who have historically characterised the sector.”

What this has meant, of course, is that there has been a dramatic improvement in the type of facilities on offer at some parks and a shift towards the use of professional management companies. Many more parks are now offering four or five star bungalow style accommodation, alongside the more traditional holiday park style facilities.

In other words, resort-style parks are on the rise and the associated fees are rising with them. Mind you, there's nothing wrong with a park that boasts lots of facilities, luxurious amenities and perhaps an organised activity thrown in now and then. However, while some grey nomads are sufficiently financially secure that they are not too upset at the prospect of paying an extra $10 or so a night for more facilities, there are many more who are going to feel the pinch big-time. If you factor in an extra $10 a night for a three-year trip you’re talking budget-busting bucks.

So, while the Tourism Australia report identifies that it is the grey nomads who will be underpinning the caravan park industry for years to come, there is no sign that some of the fundamental problems that are going to affect them are going to be sorted.

CBRE Hotels Analyst Nathan Wiltshire says the ongoing decline in caravan park numbers can simply be attributed to market forces.

“Perhaps most significant is that parks are being acquired by developers to be converted into other forms of development such as residential or up-market accommodation due to the often prime location of many park sites,” Mr Wiltshire said.

A lack of suitable land for new park developments close to Sydney and popular North and South coast holiday destinations was also hindering the market.

“Economic forces often mean other forms of development are selected ahead of holiday parks,” Mr Wiltshire said.

But it’s not all doom and gloom. The New South Wales Government Department of Lands has apparently begun addressing this issue by investigating the possibility of releasing suitable Crown Land for tender for new Caravan and Holiday Park … but don’t hold your breath!

In the interim, the fact that there are fewer and fewer caravan park spaces is great news for the owners of existing parks … and less good for grey nomads.

Mr Wiltshire says the fact that only a limited number of new developments were expected to occur in the short to medium term, meant existing owners now had the opportunity to re-energise their businesses and to maximise revenue from the growing and potentially lucrative market.

Gulp! I think I just heard my wallet scream. Sounds like we’d all better better have another very close look at the budget, and factor in the possibility of significantly higher accommodation costs.

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