Caravan park supremos James McAllister Sr & Jr want you to swap Antibes for Anglesey.
Holidaymakers from the industrial North West have been descending on North Wales in their hordes ever since the first trains pulled into Rhyl in the 1850s. And, despite the advent of lowcost flights and some serious stretching of the term “faded grandeur” in relation to Clwyd’s best-known coastal town, the area still pulls in the punters. What’s more, plenty of them like it enough to buy a holiday home there.
One business that has seen significant growth in this market is the Talacre Beach Group, owned and managed by father and son James G and James D McAllister. The group now operates six holiday parks along and around the North Wales coast between Talacre and Anglesey.
With their faultless elocution and immaculate tailoring, the McAllisters don’t come across as your run-of-the mill caravan park operators. James McAllister Sr, a Queens Universityeducated research chemist whose father had been a successful Ulster egg exporter, was working at Courtaulds in 1970 when the opportunity arose to give up his job and manage a Talacre caravan park owned by members of his extended family. In 1976 he was able to buy out these proprietors when they were looking to make an exit.
This purchase was funded with a loan from Barclays Bank. A similar model has been used, James Jr explains, to acquire and upgrade the rest of the sites in the Talacre Beach Group: reinvestment of profits coupled with finance, first from Barclays Bank and then, more recently, Royal Bank of Scotland.
“Father started with the one caravan park in Talacre and throughout the 70s and 80s he created another three within the village, amalgamating the four under the Talacre Beach umbrella,” he says.
James Sr also set about improving the standard of the parks, inspired by his own childhood trips to Europe which showed him how the other half holidays.
“I certainly remember, as a child growing up in and around the periphery of Talacre Beach, how it’s changed,” his son says.
“It had little caravans and toilet blocks, with a sewage plant on the side of the park, little old prefab buildings, a fish-and-chip shop with an asbestos roof and a little store selling nothing but tins of peas and things like that in the wintertime.”
Things couldn’t be more different today – with on-site restaurants and bars, indoor swimming and sports facilities, attractively landscaped grounds and a range of children’s activities. And, of course, the caravans are significantly posher.
James Sr remains managing director and 100 per cent owner. It was, however, when his son joined the business in 1989, having returned from a period working in Northern Ireland and a two-year business studies course, that the expansion really began. In 1991 the company invested in another park, the New Pines in Rhyll, then in 1996 acquired a third, Tan Rallt in Abergele.
Although a couple of the sites now provide rental accommodation (this provides about four per cent of the company’s turnover) the vast majority of caravans and lodges on the McAllisters’ parks are privately owned.
While the company had for many years offered five-star facilities, it made a decisive move upmarket in 1998 with the purchase of Brynteg, a then run-down park near Llanberis on the western borders of Snowdonia. In its first year of ownership by the McAllisters, it won the Calor Gas award for “Most Improved Park”, and in later years went on to be named “Best Park in Wales” and “Best Park in Britain”.
Brynteg and Plas Coch (a recently-acquired site in the grounds of an Elizabethan manor on Anglesey, which is now open for business and is being developed as the company’s flagship park) have opened up a new, middle class, market for the Talacre Beach Group. That said, it also consolidated its traditional base with the acquisition in 2001 of the Sea View park near Prestatyn.
“The profile of the customer has changed over the years,” McAllister explains. “It used typically to be empty nesters that would buy a caravan, and their grandkids would come and use it. Now you’re looking at a professional person, people in their mid-to-late 30s with young children.”
The sites around the Talacre/Rhyl area still cater to blue collar families, he continues: “They tend to be from the same areas and backgrounds they always were.
“But they have got a lot younger too. And they seem to have a bit more money – they’ve done a bit better, their property’s maybe worth a bit more and a lot more of them own their own businesses.”
In the year to January 2006 the group filed turnover of £18.5 million, on which it made a pre-tax profit of £1.77 million. Employee numbers have risen from around 15 in 1989 to 216 (175 of them permanent positions) and the company now hosts more than 2,000 holiday home pitches.
Customers purchase holiday homes at prices starting around the £15,000 mark for a second-hand caravan, rising to more than £100,000 for a luxury lodge at Brynteg or Plas Coch. These sales account for 71 per cent of turnover.
Owners then pay annual site fees of up to around £4,000. This income stream actually makes up just 15 per cent of turnover and, as the fees cover access to all facilities and free participation in a wide range of activities for up to 12 people per holiday home, McAllister says the business doesn’t actually make much of a margin on them.
“We spend a lot of money on training our staff. We want to employ skilled people so our overheads can be quite high in providing that quality of service,” he says.
“If you look at our clubs, cabaret, entertainment, ‘Leisure Plus’ activities and pools – there’s no money to be made in that, but it’s providing a service. So those are huge overheads to have in a business like this. But, on the other side, the holiday home sales that we make are a profitable side of the business.”
Owners have to replace their caravan when it reaches ten years old, or their lodge when it gets to 25, so sales are a source of recurring revenue for the business.
Scanning a couple of internet chat rooms reveals that the sector as a whole isn’t without its disgruntled customers (often in East Anglia, oddly enough), particularly when it comes to resale of units. McAllister insists, though, that all Talacre Beach Group purchasers are made fully aware of the terms from the outset, and that many buy a new unit long in advance of the old one’s obsolescence date.
“Part of the thinking behind this [the replacement policy] is keeping the face of the park fresh and not ending up with very old and dilapidated units,” he explains. And, having taken a turn around the McAllisters’ flawlessly landscaped Brynteg site, EN’s correspondent can understand why they wouldn’t want it turning into a Welsh version of My Name is Earl.
McAllister continues, “We have an active sales policy and many of our customers part exchange their holiday homes for better models on average once every five years, so we rarely get to the point where a caravan is more than ten years in age.
“Similarly, customers upgrade lodges as time goes on. On average they would upgrade after 8-10 years, while their existing lodge still has a high value.
“We keep reinvesting in the product. I think a lot of people in our industry have been responsible for taking the money and enjoying this, that and the other. We’ve continued to plough the money that we have made back into our company, as well as borrowing money from the bank, to make our facilities better.”
The latest focus for this investment is Plas Coch. Overlooking the Menai Strait, its location makes it a great investment for the group, although its previous owner had let it become rather dilapidated. The McAllisters, who held the site’s official reopening bash in June, plan to have the site fully up-to-scratch within three years: “Dean Styger, our FD, would like it to be five, but it’ll be three”.
And once that is finished? “We’re acquisitive as a company,” McAllister says. “Maybe another two or three years down the line we might look at another park.
“You can get in danger of just buying caravan parks, and it becomes like stamp collecting, because they’re all the same. It’s about finding a Plas Coch or a Brynteg that’s got that wow factor, or the potential for wow factor.”
The business would now consider acquiring new parks anywhere in Wales, he says. In terms of future demand, what appears to be a peaking of the budget airline market should help – as will the trend for warmer summers, though this year’s damp squib may take some getting over.
The most serious threat, other than recession, is probably any downturn in the residential property market combining with high interest rates to reduce the amount of equity that customers can free up to spend on a holiday home.
Nonetheless, there’s still plenty of money out there, and the group’s focus on the top end of the market should help shield it from the worst of any falling off in what has for many years been a growth market. The company also arranges finance for customers who are not in a position to buy outright.
“I think what we try to do is to provide more and more reasons for people to visit our parks, as opposed to considering going abroad,” McAllister says.
“There is competition for tourist spend and, if £17bn goes abroad every year and Wales is only getting £3bn, we want to try to increase that.”