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Getting price-gouged by private equity in the UK's happiest resort (2023)

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Re: Getting price-gouged by private equity in the UK's happiest resort (2023)

#111

Post by Retric »

b800h wrote: post #108
Retric wrote: post #87

Earlier quoted context omitted.

That’s great news! Small family farms are a significant economic drain. I’m only half serious, but protecting multigenerational business does come with serious drawbacks.

This isn't "protecting" multigenerational businesses. Inheritance tax shouldn't be a thing in the first place.

Excluding any type of income from taxation means every other type of income needs to be taxed at a higher rate, all to protect whatever is being carved out. Thus we tax income from investments, salaries, and yes inheritance.

Inheritance tax has positive externalities as inherited wealth discourages people from being productive members of society. Meanwhile taxing salaries discourages work, and taxing investments discourages savings.

Re: Getting price-gouged by private equity in the UK's happiest resort (2023)

#112

Post by fransje26 »

kwhitefoot wrote: post #13
lol768 wrote: post #5

This is really partially the government's fault. Parents are fined and (in a minority of cases) imprisoned for taking children out of school in term-time. Usually it's the ones who are honest that end up getting in trouble, and the others that can pass it off as sickness get away with it. During Covid and recent NASUWT/NAHT/NEU strikes though, it's seemingly not been seen as a problem for kids to miss out significant…

We took our children out of school for three months about twenty years ago because I had the opportunity to work for that period in the US. We asked the school to provide the targets for the period for each child and my wife ensured that the children did a few hours work every day, not a whole day by any means. When we got back to Norway all three of the children were ahead of their classes. In Norway there seems to…

> One idea that might reduce the problem that the UK has would be to adopt the Polish system of dividing the country into four school regions with staggered holidays.

Predators will be predators, and the prices will be jacked-up to cover the holiday span of the four regions..

The choice we have is to not given them money by not going there..

Re: Getting price-gouged by private equity in the UK's happiest resort (2023)

#113

Post by blitzar »

geodel wrote: post #101
blitzar wrote: post #43

Earlier quoted context omitted.

School holidays are already annoyingly staggered +/- a week for different schools.

What's so annoying about it?

Half-term for one kid is not the same as the other etc

Re: Getting price-gouged by private equity in the UK's happiest resort (2023)

#114

Post by dahart »

fransje26 wrote: post #110
dahart wrote: post #105

Earlier quoted context omitted.

There is a real (and sometimes large) but also subjective distinction between price gouging and market (supply & demand) pricing. The article discussed higher prices during peak demand school holidays, which isn’t price gouging on its own, and only suggests normal market high-demand pricing. Most importantly, the high demand pricing is regular and predictable: everyone knows when the school holidays are coming and th…

> The article discussed higher prices during peak demand school holidays, which isn’t price gouging on its own, and only suggests normal market high-demand pricing. Most importantly, the high demand pricing is regular and predictable [..] Price gouging is most often used to describe selling basic needs at very extreme prices during an emergency. This is more a defense of price-gouging by bringing in market-based pric…

Aside from emergencies, there are other scenarios where the term price gouging is justified, as described in the Wikipedia article I posted. Those include monopoly pricing, and excessive beyond fair market pricing, and more. Your example of insulin is one of monopoly pricing. Obviously monopoly pricing of insulin isn’t subject to seasonal demand and wasn’t caused by an acute geographic emergency, which is why calling it price gouging is justified in that case, and why your example isn’t very relevant to this article.

The article wasn’t even about price gouging anyway, that’s a slightly click-bait title, and it never provided evidence and instead went off discussing investment financing at length.

It’s absolutely standard practice, and considered “fair”, for hotels to charge more money during busy seasons and busy weeks, globally. You need more evidence than the existence of high-demand market pricing in order to justify calling what’s in the article ‘price gouging’. I have in no way defended price gouging. If you’re anti-free-market and don’t believe prices should change based on demand, that’s fine, but that’s a different debate entirely.

Re: Getting price-gouged by private equity in the UK's happiest resort (2023)

#115

Post by b800h »

Retric wrote: post #111
b800h wrote: post #108

Earlier quoted context omitted.

This isn't "protecting" multigenerational businesses. Inheritance tax shouldn't be a thing in the first place.

Excluding any type of income from taxation means every other type of income needs to be taxed at a higher rate, all to protect whatever is being carved out. Thus we tax income from investments, salaries, and yes inheritance. Inheritance tax has positive externalities as inherited wealth discourages people from being productive members of society. Meanwhile taxing salaries discourages work, and taxing investments disc…

That reductionist analysis treats people as individualised economic drones. What do you mean by "productive" - earning a salary? Contributing to civic society? People don't just do nothing if they have means.

Inheritance tax damages filial peity and encourages the disintegration of society.

Re: Getting price-gouged by private equity in the UK's happiest resort (2023)

#116

Post by thelynchmob1 »

pacifika wrote: post #38
NeoTar wrote: post #15

> which is why it’s spelled in the somewhat Francophile Center Parcs, and not Centre Parks. (I thought this is why we did Brexit?) Pardon me? The French for center/centre is centre - the 're' ending of British English spelling is either taken from the French, or sometimes a direct reference to French spelling (i.e. 'prestige' spelling - like how some American publications will use British English spelling because the…

Stopped reading after the euro bashing as well

Author of the article here -- it's a joke...

Re: Getting price-gouged by private equity in the UK's happiest resort (2023)

#117

Post by thelynchmob1 »

roenxi wrote: post #9

Based on the tone of the article, I think "price-gouged" is how this gentleman would describe any holiday based spending. He doesn't seem to like spending money on his holidays one bit. Every time he actually go into detail the practices seem normal and the prices fair. It took me a while to realise that this article does not seem to involve any price-gouging of any sort but is actually about pricing a private equity…

Author of the article here. That's not what I mean at all. As I said in the article, I love Center Parcs. And I've been on a cruise and spent a ton of money there, and it was totally worth it. The point in here was just that it's interesting to look at the market dynamics of a captive hoilday business like this and how that flows through the P&L and balance sheet.

E.g. Center Parcs makes insane gross margins e.g. food and drink because prices for those ARE insanely expensive relative to other places you could go out and eat. BUT that doesn't actually lead to crazy levels of profitability because it's a capital intensive business that requires lots of capex and/or debt financing to sustain.

The whole point is to take a deeper dive than most surface-level commentaries of "bloody hell Center Parcs is expensive" and see what's actually going on under the hood of the business.

And calling it 'price-gouging' is a bit of a nod to that, and it's a bit of a joke about how expensive a crap steak is there, and it's a way to get people's attention. Like other people have said, Center Parcs is mostly just a function of supply and demand. They have a great product, and people like me are willing to pay for it.

Re: Getting price-gouged by private equity in the UK's happiest resort (2023)

#118

Post by thelynchmob1 »

blitzar wrote: post #2

This is really a story about EBITDA. "People who use EBITDA are either trying to con you or they're conning themselves."

Author of the article here -- kind of, but the idea here was just to write a piece about a capital-intensive business compared to the couple of capital-light businesses I'd covered in the prior articles I wrote, and how that difference in capital requirements plays through the P&L, balance sheet and cash flow statement. One effect of capital intensity is that EBITDA becomes a less useful measure, sure. Another effect is that the cashflow statement becomes incredibly important to running the business, as does understanding the difference between maintenance capex and growth capex.

Re: Getting price-gouged by private equity in the UK's happiest resort (2023)

#119

Post by thelynchmob1 »

bedhead wrote: post #47

The author wrongly implies that if Center Parcs was just owned by a public company or an individual, that those controlling entities would simply not care about making a profit and wouldn’t charge the prices they do. Author also ignores inconvenient facts such as how the private equity firms actually spent a lot of money upgrading parks in order to make them the desirable locations they are today. I suppose author wo…

Hello! Author of the article here. Thanks for the comments, and appreciate the discusssion. I'll start off by pointing out that I'm not left wing, and I have an economics degree so my old lecturers would be disappointed if I was still described as 'economically ignorant.' And I completely agree that PE isn't perfect and I completely agree that PE isn't a bogeyman of any sort. Like any kind of business, I'm sure there are good PE firms and not-so-good PE firms, and firms at every point along that spectrum.

I don't intend to at all imply that Center Parcs would be better off as a public company, or in the hands of a private individual. I'm pointing out that the surface level commentary of "bloody hell Center Parcs is expensive" is misleading, and the reality is much more nuanced than that, hence the need for a deep dive into the financials. Points I make in the article:

1) Center Parcs makes great gross margins on accommodation and food & drink, and EBITDA looks great, but that's a misleading way to look at the business precisely because it's capital-intensive, and the owners -- whether PE, public, or a private individual -- have to continue to reinvest maintenance or growth capex to keep it that way. And that requires either cash or debt, there's no way around that.

2) I contrasted it with a couple of capital-light businesses to show the difference in P&L and balance sheet dynamics, precisely because people often misunderstand capital intensity and the impacts on the business model.

3) I gave a restated measure of profitability (EBDAT), and show the normalised free cash flow which show that Center Parcs is a fairly normal performing business with decent but unspectactular returns. It's definitely not the case that the PE owners are simply pricing things high and raking in the cash.

4) I showed that the expected valuation of £4.5-5bn might be difficult to achieve at a time of rising interest rates, because both capital intense businesses and large PE deals require lots of debt. I make no value judgment on the use of debt -- debt is a tool to use in any business, and just like a surgeon's scalpel, it can be used for good or for harm.

Again, this is much more nuanced than 'PE bad, high prices bad' which is the surface-level analysis that I'm poking fun at in the title and in the piece.

Re: Getting price-gouged by private equity in the UK's happiest resort (2023)

#120

Post by Retric »

b800h wrote: post #115
Retric wrote: post #111

Earlier quoted context omitted.

Excluding any type of income from taxation means every other type of income needs to be taxed at a higher rate, all to protect whatever is being carved out. Thus we tax income from investments, salaries, and yes inheritance. Inheritance tax has positive externalities as inherited wealth discourages people from being productive members of society. Meanwhile taxing salaries discourages work, and taxing investments disc…

That reductionist analysis treats people as individualised economic drones. What do you mean by "productive" - earning a salary? Contributing to civic society? People don't just do nothing if they have means. Inheritance tax damages filial peity and encourages the disintegration of society.

A hobo is less damaging than an unproductive trust fund kid. Many people contribute nothing which directly disintegrates society no encouragement required.

If a moderately larger inheritance seems to impact filial piety then it didn’t exist in the first place.

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