Customer demands for refunds have put Parkdean Holidays under pressure, according to ratings agency Moody’s.
The comments came as the UK’s domestic leisure demand was expected to see a boost once lockdown was lifted.
Moody’s warned that Parkdean “may run out of cash this summer if the lockdown is not lifted in the next few weeks and demand is slow to recover”. Moody’s described the operator’s £900m of debt as “very high”. On 1 April it downgraded Parkdean from B3 to Caa1 with a “negative”. outlook.
Parkdean said: “We are looking forward to opening in July and making the most of the staycation phenomenon.” The company has come under additional pressure from owners trying to reclaim site fees from caravans that they have not been able to rent out due to the pandemic.
The UK has yet to follow many EU countries and support a voucher system for refunds on holidays or issues relating to the virus. Last month the Competition and Markets Authority established a COVID-19 Taskforce, after seeing increasing numbers of complaints in relation to cancellations and refunds.
The CMA said that, in most cases, it would expect a full refund to be offered if: a business has cancelled a contract without providing any of the promised goods or services; no service is provided by a business, because this is prevented by restrictions that apply during the current lockdown or a consumer cancels, or is prevented from receiving any services, because of the restrictions that apply during the current lockdown
There was hope that domestic leisure demand would see a strong bounceback once lockdown measures were lifted, according to HVS.
The company said that many hotels outside London typically generated over 50% of domestic room nights from holidaymakers. In the Southwest of England, for example, holidays accounted for 69% of domestic room nights, compared with London, where some 29% of hotel bookings came from domestic leisure bookings.
Overall 60% of hotel demand in the UK came from domestic sources, a similar proportion to France (63%) although not as high a proportion as Germany at 82%, although much of this demand was generated from trade fairs and events, which were likely to take longer to recover, and the Nordics, which averaged at 71%. Much of Southern Europe had a lower percentage of domestic tourism, with Portugal at 34% and Italy at 50%, which would, the group said, result in a slower recovery for their hotels unless they are able to attract foreign visitors when circumstances permit this.
“One impact of lockdown is that British tourists will be keen to travel, and unable to go abroad are likely to book holidays in the UK once it’s deemed safe to do so. This could prove a silver lining for UK hoteliers, holiday operators and campsites,” commented report author Stephen Collins, an associate director with HVS London.
“This will help support domestic demand in the short to medium term, smoothing the recovery curve and allowing hotels to stay in business until the pandemic is brought under control and international demand begins to return.”
The report warned that the fact UK tourists were unlikely to travel abroad this summer would also have a big impact on countries such as Spain, Portugal, France and Iceland, with heavy reliance on British holidaymakers – however, this may present an opportunity for strategically-minded and fast-acting British hoteliers to capture at least some of this traditionally outbound demand.
“We are cautiously optimistic about the UK hotel industry’s ability to recover at a reasonable pace compared with the rest of Europe, and to focus on domestic tourism until international demand returns,” concluded Stephen Collins.
Insight: The holiday park market used to be viewed by those with an appetite for the spaces on the edge of hotels with great enthusiasm, as it offered the opportunity for daily rental, but also sales with the attendant fees. Multiple revenue streams to complement each other and smooth out the tough times.
But when the tough times feature not opening at all, the hit is twice as horrifying. The hope for Parkdean, as at other UK businesses, is that pent-up leisure demand will explode into it once people are allowed to stay overnight.
When this will be remains unclear. The UK government does not have the tightest grip on lockdown at the moment and may be forced to be more vigorous if the tide turns against it and the spread of the virus grows. On the other hand, the lack of vigour has meant that destinations such as Spain have expressed a lack of enthusiasm for British guests, which is good news for domestic travel. If not for health. It’s this kind of strategy which, of course, makes it so easy for businesses to plan.