Implications of Pension Fund Allocation to Leisure and Vacation Assets for the Industry and Valuation Analysis of Center Parcs

Since this year, UK public pension funds’ allocations in the private market have clearly favored asset classes with “stable cash flows + low cyclicality”, and Center Parcs, a leading European leisure resort group, is a typical target [1]. The pension funds’ negotiations for a 15%-20% stake in it reflect three aspects of consensus:

• Sustained Demand and Strong Pricing Power
  — As of 2025, Center Parcs’ Longford resort in Ireland can generate nearly 190 million euros in weekly operating revenue. After the pandemic, it has continued to achieve high occupancy rates and average customer spending, indicating that the resort has a “predictable + resilient” business model [3]. Such stable revenue aligns with the long-term cash flows pursued by public pension funds.
• High Industry Entry Barriers and Obvious Moat
  — Leisure resorts require large land areas, environmental approvals, and long-term operational experience, leading to slow growth on the supply side, while demand (family, parent-child, independent vacations) is rigid. This is consistent with the steady-state returns (7.5%~8% annualized) of continental holiday village assets after standardized management as described by Hospitality Net [2], further strengthening institutions’ confidence in “long-term holding” of such assets.
• Asset Re-integration and Capitalization
  — Institutional investors emphasize optimizing operations and enhancing service experiences before holding with long-term capital, i.e., replacing the traditional pursuit of “rapid appreciation” with “reinvestment of returns + sustainable rewards”; this model transforms the leisure and vacation sector from cyclical entertainment to a dual positioning of “infrastructure + lifestyle”.

It can be seen from this that the shift in pension fund allocation is not a short-term bet, but a long-term judgment based on the industry’s structural recovery and the “low-frequency high-value” tourism demand under consumption upgrading. If more institutions replicate the Center Parcs case in the future, it will promote the entire leisure and vacation asset class to continue to focus on “exclusive members/high-end families”, strengthening brand stickiness and non-price competitiveness.

To judge the reasonableness of the 4.5 billion pound valuation, we can consider the following dimensions:

• Discounted Cash Flow and Expectations of Stable Returns
  : The aforementioned industry report shows that mature resorts can achieve a 7.5%~8% return rate after stable operation [2]. If we reverse-calculate based on this, the 4.5 billion pound valuation corresponds to an annualized cash flow of approximately 340 million to 360 million pounds; the average is slightly higher than the current full-year EBITDA level of multiple Center Parcs resorts (the Longford resort alone has an annual revenue of nearly 190 million euros; if combined across multiple locations, the overall operating cash flow is likely to reach this level), so the valuation falls within a reasonable range under the premise of “steady-state returns”.
• Cyclical Risk Hedging
  : Compared with traditional hotels, the resort business relies more on family-style long stays and internal circulation consumption, so it experiences smaller retracements during economic downturns. Pension funds’ interest in this asset is essentially “return hedging + inflation linkage”, which further supports its high valuation.
• Brand and Expansion Potential
  : Center Parcs has several mature parks in the UK, Ireland, the Netherlands, etc. If it continues to launch high-end “Premium Lodge” and experience upgrade plans, there is still room for improvement in its average customer spending and added value. If long-term capital such as pension funds is introduced for re-development, it is expected to gradually reduce the cycle cost of capital expenditures and increase internal rates of return, thereby justifying the current valuation level.
• Structural Premium
  : European holiday village assets are becoming scarce; private and public institutions have intertwined to form a combination of “stable cash flows + resistance to interest rate fluctuations”, leading to a certain premium in valuations. The 4.5 billion valuation is acceptable if it corresponds to a relatively conservative free cash flow forecast and a long-term discount rate of 5%-6%; if the discount rate is further reduced (accepting interest rate declines or emphasizing inflation protection), the valuation remains attractive.

In summary, from the perspectives of cash flow returns, industry competitive landscape, capital demand structure, and pension fund risk preferences, the 4.5 billion pound valuation can be regarded as “premium but reasonable”, especially in the context of joint entry by multiple institutions and access to long-term capital + sustainable cash flows.

[1] Bloomberg - “UK Pension Funds Eye Stake in Brookfield’s Center Parcs: Sky” (https://www.bloomberg.com/news/articles/2025-12-27/uk-pension-funds-eye-stake-in-brookfield-s-center-parcs-sky)
[2] Hospitality Net - “From private investment to big capital: the professionalisation of the Dutch holiday park market” (https://www.hospitalitynet.org/news/4130062.html)
[3] The Irish Times - “Center Parcs in Longford takes in nearly €2m each week in record revenue” (https://www.irishtimes.com/business/2025/10/09/center-parcs-in-longford-takes-in-nearly-2m-each-week-in-record-revenue/)