When Is The Right Time To Invest?
Posted 20th January 2022
We live in strange times, or perhaps to quote the Chinese curse: ‘May you live in interesting times.’
Whatever way you put it, investing in a business during a period when the world seems to be in flux, superficially may seem counter intuitive. With inflation running at over 5% and predicted to rise, the pandemic waning and surging (depending in which country you live), and a strong possibility of a war in Ukraine, trying to map the future is like playing football wearing a blindfold. Add in a Government paralysed by its own shenanigans and imminent steep energy price increases, you might wonder if businesses are thinking twice about capital expenditure.
I am happy to report that the contrary seems to be the case with our experiences in the holiday accommodation sector. Our own research suggests that businesses in the UK are still investing for the future, banking on continued demand in the staycation sector. There is some sound thinking behind this strategy. If you ignore the surge during 2021 driven by overseas holiday travel lockdown, the UK staycation market was growing prior to the pandemic. We believe the glamping sector is creating a new holiday channel of its own. It is attracting those seeking outdoor experiences without the discomfort of camping but different to the traditional caravan/static holiday. This is also being driven by the availability of short stay vacations throughout the year. Anytime its a good time to take a break is the new mantra, and this flexible approach appeals to millennials, the largest sector attracted to glamping.
Differentiation driving change
There is an increasing desire for ‘wild’ rural and sometimes remote locations where you can be close to nature without the intrusion of other glampers in the immediate environs. Small sites with discreet locations in woodland, headlands and pasture, where privacy and space are important, is on the increase. To facilitate this trend more site owners are looking for off-grid solutions to aid this ‘away from the madding crowd’ factor.
Money is still cheap to borrow despite the recent small increase in interest rates, and before inflation goes further there is sense in investing now and locking down prices at current rates.