How do you see the current market for UK holiday lets?
National and international lockdowns from the COVID-19 pandemic saw holiday plans cancelled overnight, forcing many holidaymakers to remain in their homes for the majority of the year. This has increased the appeal of holidays for many consumers, looking to make up for lost time and reconnect with family and friends abroad.
According to Mintel, 17% of UK travellers planned to take a holiday of a lifetime once the coronavirus pandemic is over (up from 10% pre-pandemic), 37% of domestic holidaymakers plan to take more staycations when the outbreak is over, 21% of those who typically took short-haul holidays before the pandemic plan to take more holidays in Europe and 30% of UK travellers plan to take a holiday with friends once the coronavirus outbreak is over, whilst 18% plan to take a multigenerational holiday.
Because of the restrictions throughout 2020 and 2021 people are now wanting to take the holiday they have always dreamt of, such as a round-the-world trip. However, due to the ongoing uncertainty about the lifting of international travel restrictions and the recent fears surrounding the OMICRON strain of the virus, staycations have started to feel like a much safer option for those that are keen to get away for a short break with VisitBritain forecasting a 10% rise in visits in 2021 to reach 11.3 million, although this represents just 28% of the 2019 level.
However, it was reported that of the 290 independently owned Best Western hotels in the UK, three-quarters have seen an increase in Christmas cancellations and 89% have expressed concern about the festive trading period. About 70% have seen a decline in bookings since the Omicron variant emerged. – (The Guardian)
What do you see as the medium term outlook?
It is likely that although there are many UK people that are keen to travel overseas as soon as it is considered safe, there are many people that have gotten used to the idea of having short UK breaks and it is felt that this is likely to continue. Furthermore, as worldwide travel re starts once again, our inbound tourism market is likely to pick up with more overseas visitors picking up on the more recent occupancy from the British guests that are keen to holiday further afield.
The speed at which the UK holiday market recovers will be heavily dependent upon when and to what extent overseas travel restrictions are fully relaxed. The continuation of enforced testing and quarantine measures remains a significant barrier for many, as well as the potential emergence of new vaccine-resistant strains of COVID-19 such as OMICRON which makes governments more hesitant to allow non-essential travel to or from the affected regions.
When restrictions are relaxed, reconnecting with family and friends will be a key travel and holiday motivation. The vaccine rollouts throughout 2021 have made travellers feel more comfortable about returning to popular or busy holiday destinations, providing optimism for hard-hit segments such as cruises, group tours, and city breaks.
Holidaymakers in healthy financial situations will be looking to treat themselves by choosing more luxurious options than they usually do. However, nature-based, leisure and coastal breaks also have high growth potential, with many consumers opting for quieter areas to visit with operators such as Bike & Boot emerging successfully from the long period of lockdown.
What recent trends in the market could be of interest to holiday let companies?
Ultimately, the holiday let model can be a very attractive proposition to operators and investors, given the high profitability that these types of business can generate. The limited requirement for staff and other costs associated with running full service hotels and guest houses are a credible alternative to buyers looking to invest. As demand for this method of holidaying with friends and family becomes more popular, technology and booking platforms will become vital in winning market share to secure high occupancy and rate.
Why would a holiday let company be well advised to speak to an independent advisers?
There is no doubt that buyers and investors should really do their homework and obtain professional and impartial advice when looking at acquiring any kind of holiday, hotel or B&B business. There are many potential pitfalls and all too often we have seen businesses fail where owners have let their hearts rule their heads. The team at Graham + Sibbald are well placed to provide considerable help and advice from valuation and agency brokerage through to planning, rating and even sustainability advice.