Savills : We’re all waiting for a UK summer holiday

With the mass rollout of vaccinations underway, the end of the pandemic is on the horizon. As a result, it's more likely that the UK will enjoy a relatively uninterrupted summer once the lockdown measures have been eased.

Last year the regional UK hotels market experienced a boom following the easing of restrictions, with people keen to get out of their homes and enjoy what the UK has to offer.

The result was some of the best operational performance for a number of hotels in UK coastal and country staycation locations, with occupancy levels in excess of 90 per cent through August and September 2020.

During these months many UK hotel operators also experienced considerable year-on-year earnings before interest, taxes, depreciation, and amortization (EBITDA) growth as government support (VAT, Business Rates and furlough) reduced operating costs considerably.

The same level of support is unlikely to remain during summer 2021 despite mounting pressure from the industry, however operating costs have been re-based and owners should expect a good season ahead.

From an economic point of view, this year we can reasonably expect domestic spend to increase as many households have increased savings over the last year, coupled with a low inflationary environment. We expect overnight tourism spend to almost double this year compared with last year.

What's more, with restrictions around international travel still expected to remain uncertain for 2021 there is a huge base to kick-start domestic tourism. In 2019, over 73 million international outbound departures were made from the UK, as well as 122.8 million domestic overnight journeys.

Coach and tour operators have already seen an unexpected growth in bookings since the vaccination roll out began in January, particularly from the 50+ age group. National Express reported bookings made by the 65+ age group are up 185 per cent in the first two weeks of January compared with last year.

Additionally, VisitBritain's latest forecasts suggest overnight domestic tourism spend could increase by 81.8 per cent year-on-year in 2021, reaching £14.1 billion, albeit still down approximately 27 per cent compared to 2019 levels. This assumes a step change to recovery in the spring in line with the easing of restrictions followed by a gradual recovery through the remainder of the year.

A great deal therefore depends on the speed and efficacy of the vaccination rollout. What's promising for the UK is that this journey is firmly underway, hopefully leading to the easing of restrictions within the first half of this year and to us all having a proper summer holiday.

Further information

Contact Giles Furze

Hotel market insights: Travel & Tourism Outlook