There are different methodologies for a Leasehold Business Caravan Park and a Freehold Going Concern Caravan Park.
Typically, with a Leasehold Caravan Park, the methodology used in the industry is a multiple of adjusted net profit. This multiple will depend on the location, condition of the facilities, prospects for growth, length, and conditions of the lease (to name a few). A multiple will usually be between 3 and 4 times adjusted net profit. I.e. If adjusted net profit if $200,000 at 4 times, $800,000 value.
A Freehold Going Concern Caravan Park is usually valued on a return-on-investment method. The adjusted net profit of the Freehold Going Concern, once again as per above, depending on the location, business performance, condition of facilities, prospects for growth, local conditions, etc will find a return of investment, usually between 10% and 16%. 10% being for an outstanding Caravan Park. If the adjusted net profit is $200,000 and return on investment is 12%, then $1,666,666.
We suggest you always check for comparative sales to understand the market in that location or similar Caravan Parks in other locations.
Drivers behind the value of a Caravan Park are typically:
If a leasehold, the length of the lease and the rental amount to accommodation turnover.
- The location of the Caravan Park (tourist area or not)
- The adjusted net profit. The higher this is, the greater the base to apply a multiple or return on investment percentage
- If a Leasehold, the length of lease, the rental amount and any conditions attached to the lease
- The condition of buildings, plant and equipment, fixtures and fittings and facilities
- Local attractions driving business
- Potential for growth (this usually includes development of the Caravan Park (more sites, upgrade powered sites to cabins, etc)
- Staff, systems and processes
- Type of Caravan Park (tourist, annual, residential or permanent)