Is staycation investment a smart strategy?

Options for savvy investors to take advantage of the boom in the staycation sector

Politics and economies are constantly changing. Savvy investors watch these changes, and, where others see problems, they see opportunities. Take the hot topic of today (and the last two years, and likely the next two years): Brexit.

Whether or not you believe the forecasts of economic doom (I don’t), Brexit is creating an environment where people are more likely to ‘staycation’. It’s likely that it will be a little more difficult for Brits to holiday in Europe in the future. The fall in the pound has already made it more expensive to go abroad. Additionally, fears of being caught in terrorist attacks abroad persist. Consequently, the British leisure industry and its holiday resorts have had a bumper year in 2018. Travelodge has estimated that the British economy will benefit by staycationers spending an extra £31 billion in the UK in 2018.

In this article, we look at how you could benefit from staycation investment and grab yourself a slice of that £31 billion.

What is staycation investment?

Staycation investment seeks to take advantage of people holidaying in the UK rather than travelling abroad. The secret to profit from this is to understand what people want to do when they holiday ‘at home’, and where they might want to do it.

What do Brits do on holiday?

Brits have a reputation for drinking too much while on holiday abroad, and it is true that British people love their food and drink. They also enjoy trying new things, spending time with their families, and having the odd adrenaline rush. Then there are those who simply want to get away from it all and relax, visit places of culture, and unwind.

Where do Brits like to take a staycation?

Brits are like most other people. Some prefer the beach, while others would rather spend a few days on a mountain. There are those who enjoy the water, and others who desire the peace and quiet of Britain’s countryside. Others like the hustle and bustle of city life and experiencing new dining and cultural experiences.

What investments are available to staycation investors?

There are many investments that you could select to take advantage of the staycation phenomenon.

On the list of popular staycation investments are pubs and restaurants. You could invest directly, by becoming a pub or restaurant owner and working seven days a week and most hours each day. Not my idea of fun. Alternatively, you might decide to buy shares in companies that run and manage the large pub and restaurant chains. However, you don’t have any control over profitability; you are reliant on management making the right choices to enhance value and pay worthwhile dividends.

Theme parks are another popular attraction in the UK, as are museums and art galleries. To invest in these, you could research the parent companies of attractions such as Alton Towers, Chessington, and Madame Tussauds. Such venues are welcoming record numbers of visitors, with staycationers joined by overseas visitors who are benefitting from the low level of the pound and better spending power. Buying shares in companies that operate theme parks and other attractions could produce above-average capital gains and dividend income when compared to the general stock market.

Other leisure opportunities exist, too. For example, canals are popular destinations for holidaying Brits, and narrowboats are a popular choice of accommodation. However, winter trade tends to be extremely slow, so owners are reliant on earnings made in a shortened season. Sports centres, camp-sites, and outdoor activity venues and amenities all have the potential to be profitable – though most suffer during cold weather and rainy periods.

Staycationers need somewhere to stay!

Whatever their preferences for free time, all staycationers need somewhere to stay. The options available for investment include:

·      Running a bed and breakfast

If you fancy yourself as a bed and breakfast owner, you might decide to invest in a small hotel or home that can be converted to offer bed and breakfast facilities. Providing you can cook a good breakfast for several guests, enjoy cleaning up after strangers, are a people person who doesn’t mind early mornings and late evenings, this could be an option for your investment cash. It’s a hands-on role, but you are in control of your own destiny – even if that destiny means being available 24/7, seven days a week, 52 weeks of the year.

·      Investing in a hotel

Earlier this year, Travelodge announced its estimate that 25% of Brits are taking more staycation breaks this year. It said that eight in 10 are taking an average of three staycation breaks through 2018. Apart from buying and managing a hotel yourself, or buying shares in a hotel chain, you might decide to invest in a hotel room ­– you benefit from a known yield and a guaranteed capital return on a fixed-term investment.

·      Invest in a holiday let

Finally, you may buy a holiday let property. Similar to investing in buy-to-let, you benefit from the potential rental income and long-term capital gain. This benefit can come without having to put in the hard work of managing the property yourself – employ an investment property manager to manage it for you, or purchase on a holiday park where marketing and management are part of the investment package.

As a holiday let property owner, you’ll also have more control over your investment than you would as a shareholder, while retaining the potential passive income and capital gain without having the responsibility and hard work of being a bed and breakfast owner.

As you’ve learned, there are many opportunities to invest in and take advantage of the boom in the staycation sector in the UK. To discuss these further and consider how staycation investment could help you achieve your investment goals, contact Gladfish today on +44 207 923 6100

Live with passion

Brett Alegre-Wood

 

Next: Is Holiday Let a good investment

About the author

brettalegrewood

Brett has over 20 years experience in all facets of property, he owns various companies centred around property and is the driving force behind the education and training at Ezytrac. His companies have sold over £850 million in UK and London property and he manages over 1200 properties through his estate agency chain. Today he shares his time between UK, Australia and Singapore. He is married to Arlene and together they have 4 kids. Brett holds both the Level 3 Property Mark Qualifications for Property Sales and Property Lettings and Management.


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