Rank Holidays has said it is not interested in acquiring rival brands Center Parcs and Pontin’s from their owner Scottish and Newcastle.
The move follows the announcement that Scottish and Newcastle is selling off the two holiday brands to concentrate on its core breweries and retail businesses following months of City rumours.
Rank Holidays managing director Jerry Fowden said although the two brands would be an ideal fit with its existing Butlins and Oasis brands, analysts’ valuation that the businesses were worth around £900m was too high, particularly when the market is mature.
“The return on capital is much lower than other businesses,” he added.
Travel industry analyst Michael East of Eastcastle Management said operators are likely to move away from asset-heavy products such as holiday parks because of the massive investment required for low returns.
“Unlike tour operators, these businesses are very heavily dependent on owning assets,” said East.
He said the domestic market peaked in 1997 and is now competing against a very aggressive overseas market.
A Scottish and Newcastle spokeswoman said parties have already expressed interest and that both businesses were viable. She said rumours that the asking price for both businesses was around £1bn were exaggerated. The company reported a £2.4m profit for Pontin’s last year, an increase over the £700,000 loss in 1998.
Center Parcs made a profit of £29m, up 7% from 1998. Center Parcs occupancy for 1999was 88% for Belgium and France and 92% in the UK.
Travel trade brand Pontin’s has 14 holiday parks around the UKwhile the direct-sell operation Center Parcs has 13 locations in Holland, UK, Belgium, France and Germany.