A triple whammy of VAT on caravan sales, higher fuel costs and poor summer weather in 2012 combined to stifle recovery in holiday parks, according to a report by Colliers International.
Richard Moss, director of Colliers' parks division, author of the firm's third annual Caravan Park Sector Overview, said the Government's decision to apply VAT to caravan sales from April 2013 was a "major blow" to an industry already facing punishingly high fuel costs and the repercussions of a wet and windy summer. He said: "Rising operating costs, coupled with fixed or reducing revenue, have eroded profits for many operators during the past few years."
Most park owners predicted that challenging market conditions endured over the past two years looked set to continue throughout 2013.
Moss added: "Although most operators predicted more of the same this summer, despite the recent hot spell, there is a worrying increase in the number of operators who felt the market had actually deteriorated over the past 12 months."
The overview, the definitive guide to the state of the UK holiday park sector, covered the major accommodation types in the sector including touring and camping parks, holiday home parks, self-catering operations and residential caravan parks.
Moss said: "The guide provides a unique opportunity to gauge the views of owners across the industry and helps us to advise and inform operators and potential owners on how, where and when to proceed.
"Although the report makes it clear that trading conditions have remained difficult, they are certainly not impossible and some of our clients are bucking the trend and trading exceptionally well."
He said proactive management and investment and the careful use of social media were other key factors behind the success of any park.
"Although the overall number of people taking domestic holidays may contract there is still an opportunity to earn market share from your competitors, which, by its very nature, requires a proactive approach. Proactive marketing, good use of social media, maintaining customer records and direct marketing is essential but remember that website reviews can be damaging.
The British climate remained the biggest threat to the sector with trading stifled in 2012 by an exceptionally poor summer. However, knowing your local area and what attracts customers can help counteract the negatives.
"There's not much we can do about the weather other than to underline the fact that the moment the sun came out on the last Bank Holiday the crowds came streaming back – proving that the parks and leisure industry here has a healthy future if owners react to changing market conditions," said Moss.
"For touring and camping parks it is essential to make sure basics such as toilet facilities are as good as they can be and kept clean at all times – owners could see business literally going down the drain through damaging posts online."