Business Outlook 2025 | Leisure

All businesses face higher employment costs and taxation as a result of the Labour Government’s first Budget. Businesses will, wherever possible, look to pass these on to the consumer, especially in non-discretionary spending sectors. The leisure sector, however, tends to be driven by more discretionary spending and may fare differently as consumers may resist operators’ attempts to pass on such costs. The key therefore will be the quality of offer and service provided by leisure businesses to their customers to maintain operating margins.

Financial performance and new EBITDA levels will only start to show in six months to a year’s time when management information and accounts become available. The market will price in any movement in value whether it is up or down.

Buyer sentiment remains positive in operational real estate with the view that interest rates should come down at some point during 2025 and we have no shortage of buyers for well-presented and invested leisure businesses for sale. Private equity activity has shown a marked uptick across the board with a number of consolidation deals and, as always, carefully pitched pricing is key to attracting good levels of interest to ensure potential buyer engagement. 

However, sellers still should be mindful that overly optimistic pricing can deter motivated buyers. Having said this, 2024 was a very successful year for leisure - we added to our transactional team in response to market demand and continued to value a wide variety of leisure businesses including activity centres, sports arenas, cinemas, family entertainment centres, gaming operations, health clubs, golf courses, holiday & caravan parks and visitor attractions to name a few.

We anonymously surveyed leisure professionals across the country to gather their views on the year ahead.

Market Overview

The current marina market is of a modest size with a relatively small number of transactions taking place each year. Many of the sale events in the marina sector are driven by a lack of succession options for family-owned marinas, with businesses often sitting within the same family for generations. At present, there are high barriers to entering the sector due to the significant cost of marina development as well as finding suitable inland or coastal locations. We continue to see a focus on both consolidation and opportunistic acquisitions. Berthing and boat storage fees are increasing annually, which is a key driver for most successful marina businesses.

Market predictions for 2025

• We anticipate an increase in corporate M&A activity driven by falling interest rates
• Boat brokerage sales are expected to remain more challenging
• Marinas in excess of 200 berths and with opportunities to diversify the business offer will be in greatest demand
• Poorly invested marinas will be at greatest risk of business failure and we may anticipate further potential distress involving both secured lenders and HMRC seeking to protect their positions
• We expect to see further cross-sector acquisition activity from the holiday park market as well as smaller investment players

Case Studies

Market Overview

The caravan sales market has proved unpredictable, with some operators reporting modest recovery in H2 of 2024. Operators have adapted to the cost-of-living crisis, by offering lower value caravans/ lodges or prioritising second hand sales which encompasses a larger market but results in lower sales margins. The value of undeveloped pitches (with planning permission) has remained static relative to 2023. Niche operators offering premium accommodation and facilities continue to do well.

Market predictions for 2025

• More corporate M&A activity given subdued activity in 2024 and the natural ending of the private equity cycle
• Cost of capital/borrowing is decreasing (slowly), resulting in more re-financing activity
• More buoyant caravan and lodge sales market, given the above sentiment and the cost-of-living crisis subsiding
• The current government has signalled significant planning reform, which would prioritise development over local objections. This in turn could lead to more planning applications being approved and a faster planning application process. In this respect, as the market recovers from the cost-of-living crisis, operators should be able to take advantage of increasing demand and adapt accordingly, with less red tape and barriers to development/investment