After the recent change of ownership, the last ailing business is to grow through expansion and upgrading.
(Photo: Center Parcs)
Dusseldorf They lure with climbing parks, mini golf courses, tropical fun pools and wellness oases: the 29 Center Parcs throughout Europe. There are six of the company’s large-scale holiday resorts in Germany, for example in the Lüneburg Heath, the Hochsauerland or in the Allgäu. And they prefer to attract vacationers in families.
In the Netherlands, Belgium and France, too, the operators are trying bowling alleys suitable for children, pedal boat offers and horseback excursions. According to the concept, the accommodations have to be as functional as they are affordable.
The family fun, however, hardly covered the sad financial situation in the group. And that despite the fact that “Center Parcs” together with the French sister company “Pierre & Vacances” and the long-stay chain “Adagio” had a turnover of 1.8 billion euros in the past financial year (until the end of September 2022). Most recently, the holiday company was even on the brink of collapse.
New buildings on the Baltic coast and expansion of the premium segment
“We had two really difficult years,” admits Center Parcs Germany boss Frank Daemen. But now we want to look ahead. There will be more digitization, more service and extensive renovations. The expansion of the “premium segment” will be pushed forward with power, as will the expansion.
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In February, construction of 500 holiday homes and 100 apartments will begin on a former military site between Rostock and Stralsund. The park on the Baltic coast should be completed by 2027. Another location with 440 holiday homes will open in Denmark as early as 2024.
Founded in 1968 by Dutchman Piet Derksen, Center Parcs Europe accounts for around two thirds of the business in the “Groupe Pierre et Vacances Center Parcs” group. Since its acquisition in 2003, it has been a subsidiary of Pierre et Vacances SA, listed on the Paris Stock Exchange. However, there has been no talk of a calm business environment for a long time.
In the past ten years, the group has not once come out of the red. Most recently, it was the months of closures of the holiday resorts due to the corona pandemic that caused the loss in 2021 to rise to 341 million euros. At the end of the financial year, the French were over-indebted at 424 million euros.
Majority owned by investors
In order to end the imbalance, Pierre & Vacances Center Parcs asked its shareholders to pay up – with a capital increase of 200 million euros. In order not to have to write off the loans granted, the creditors agreed to a so-called debt-to-equity swap. Loans totaling 555 million euros were quickly converted into liable equity. Pierre & Vacances founder Gérard Brémond, 84, lost control of his company, which he founded in 1967.
On December 5, 2022, the Paris Commercial Court declared the French protective shield proceedings filed by the company on July 29, 2022 closed. After completing the restructuring, the stock exchange company is now majority owned by the investment funds Alcentra, Fidera and Atream. Only 29.7 percent of the voting rights are in free float.
New start after Corona: In the future, the holiday resorts should continue to appeal primarily, but not only to families.
(Photo: Center Parcs)
The new major shareholders immediately ensured that the board of directors was completely replaced. Georges Sampeur, once chief controller of the low-budget chain B&B Hotels, replaced the ousted group founder Brémond at the top of the board. Franck Gervais, who came to Pierre & Vacances Center Parcs as a renovator from the French hotel group Accor (Ibis, Mercure, Pullman) at the beginning of 2021, remained with the holding company as CEO.
The group describes itself as the “European market leader in local tourism”. According to its own information, the group accommodates around eight million holidaymakers every year. The range includes 46,000 apartments and holiday homes at 282 locations in Europe.
The situation is improving only hesitantly. In the 2021/22 financial year (until September 30), the group reported a net profit of 325 million euros. However, without the one-off income of 418 million euros from the debt restructuring, Pierre & Vacances Center Parcs would have remained in the red as in the previous year.
Sales higher than before Corona
A “closure aid” of 24 million euros paid out by the French state in March 2022 was hardly able to reduce the weak yield, which was even increased by 23 million euros in corona aid by the Berlin federal government. In operational terms, a further 81 million euros in cash flowed out of the company. Since the stock market crash in early March 2020, the shares have lost another third of their value.
After all, business has picked up again in the past few months. Compared to 2020/21, group sales increased by 68 percent. Sales were even a quarter higher than before the pandemic.
Center Parcs remained the group’s driving force. They contributed almost two-thirds to the group’s revenue of 1.8 billion euros, and almost 90 percent to the operating result (Ebitda) of 156 million euros. The German holiday resorts remained the frontrunners, which even closed with a plus of 37 percent compared to 2018/19.
Now increased marketing should accelerate the resurgence. A new concept called “Reinvention 2025” expands the previous target group of families to include “friends, couples, colleagues or sports clubs”. On Wednesday, the company also presented a revised visual brand identity including a new logo.
TV advertising should also boost business with immediate effect. Center Parcs manager Daemen announced that there will be 20-second commercials on several German television channels and in cinemas in the coming days.
More: Why investors are pouring record sums into the struggling hotel industry