[zpeti]

So building an amazing product (as the author says), and then charging however much you can for it is “price gouging”

(Thanks Kamala. The only reason I imagine this article popping up now is the price gouging wording)

As far as I knew from econ 101 this is generally just supply and demand and efficient pricing.

If the price is too high, don’t buy it!!

[rwmj]

It's the same reason I would never go on a cruise ship. You're locked into a floating hotel for a few weeks and they can charge whatever they want while you're aboard. But plenty of people seem to like them, and there is loads of competition (other holidays available), so it's not a problem that cruise ships are like this.

[Loughla]

1. What, exactly, does Kamala Harris have to do with the UK?

[jampekka]

What did the PE company build here?

[rwmj]

It says in the article the current PE company invested millions to update the sites.

[grues-dinner]

That they did, but they're servicing massive amounts of debt to be in the position to do so (i.e. to own the company).

It's obviously a thing you may do, and it's what PE does do. Just as the article said, it's fundamentally the same idea as renting out a mortgaged house.

But it also means that what's actually going on is that the business is really just the catalyst for the actual transaction of interest: moving money from the consumers to whoever lent the money to the PE firm in the first place. The PE firm business is to get paid to be the middlemen.

More is spent paying for the debt then is spent on the capital expenditures. New things and maintenance of existing things combined are well under the approximate £100m debt bill. The thing is, Center Parcs has existed for decades, so the debt is sort of artificial: if it had never been bought on finance by PE, there could be, say, £100m per year more to spend (capex, opex, whatever) without changing prices to the consumer at all.

It's a bit like being in that rented house, but the house was sold by an outright owner who could afford a install a new boiler to someone on a 80% LTV mortgage and now the landlord needs to put the prices up to cover the interest because their rates went up. Yes, the new owner couldn't have afforded the house without loading up on debt, so it's nice for them that someone will front the cash to get then into the landlord business. If no one can afford to build outright, it's also good that there are ways to pay for the capex at all, or no one could build any houses in the first place(1). But it's cold comfort to the tenant in question who is now personally paying for all the "value added" for less ability to get a new boiler then they had before.

(1) I'm unsure how much debt enabled the original Sherwood Forest site to be built at all, but £32m in 1987 isn't chump change. Then again the base rate was over 8%, so debt was pretty expensive. It was double that at around 15% in 1989 when they opened the second site. So, considering they didn't sink, either they had good profitability straight away or a small debt load.

[jampekka]

Is that building?