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Open-air hotel industry, analysis of a rising trend

The outdoor hotel industry is a segment that has experienced unprecedented growth in recent years. Today, France is the European market leader in this segment and ranks second, behind the United States, in the world. Discussion with Johanna Capoani, Deputy Director - Head of Hotel Portfolio, Swiss Life Asset Managers, France, Pierre Dupuy-Chaignaud, Associate Director, 123 Investment Managers and Jacques Masson, Member of ComEx, Siblu.

The open-air hotel industry in full mutation

The outdoor hotel market is undergoing a major restructuring, with a perpetual increase in demand over the last twenty years and, correlatively, a constantly evolving outdoor hotel offer focused on the premiumisation of locations. Indeed, these properties are far from the image they had just a few years ago.

In response to a decrease of 1,142 campsites in France over the last two decades, the supply of "top-of-the-range" campsites classified as four or five stars is expanding rapidly. This segment of the outdoor hotel industry represents more than 18% of the hotel market, an increase of more than 10 points between 2000 and 2019.

Jacques Masson, Member of the Siblu Board of Directors, reminds us in his introductory remarks that "43% of four and five star campsites represent 71% of the value produced by campsites".

Offering increasingly high quality equipment, services and facilities, the open-air hotel industry has experienced a significant move upmarket. Thanks to the new "mobile home" models, the open-air hotel industry offers responsible accommodation with innovative equipment and comfort similar to that of traditional hotels.

The outdoor hotel market is resilient in the face of crises such as the one caused by COVID

Since 2007, the price of overnight stays in the open-air hotel market has been growing steadily, well above that of traditional hotels and hotel residences. Thus, the various crises of the last two decades have had no major impact on the performance of the outdoor hotel industry. Indeed, this sector was almost spared by the COVID 19 health crisis thanks to its solid fundamentals and business model.

Johanna Capoani, Deputy Director and Head of the Hotel Portfolio at Swiss Life Asset Managers, France, highlights the resilience of this segment and underlines that the outdoor hotel industry performed best during the Covid pandemic.

Asset managers' appetite for the outdoor hotel industry is confirmed

Today, Johanna notes that fundraising is very high and investors are more mobilised than in the traditional hotel sector. The smooth passage through Covid has reassured investors in this segment.

This segment, resilient in the face of the various crises, is increasingly coveted by investors because of the very attractive rates of return.  The five largest outdoor hotel groups are valued at more than 600 million euros with a 12.8 EBITDA multiplier. Johanna says that Swisslife will continue to invest in the niche outdoor hospitality market and aims to double the size of their funds to €300 million of investment, partnering with large operators.

The limits of the outdoor hotel industry

Pierre Dupuy-Chaignaud, Associate Director of 123 Investment Managers, highlights the various investment limits of this niche market. On the one hand, this segment is really fragmented, with only 22% of campsites belonging to groups, making it difficult to grow a portfolio in this segment. On the other hand, the outdoor hotel industry is highly regionalised. The most popular destinations for outdoor accommodation, such as seaside destinations, are often rather premium locations but are also increasingly constrained by legal and environmental regulations of the coastline, region and country.  This limits the creation of new outdoor locations.

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