The UK hotel sector has been one of the most exposed real estate sectors to the COVID-19 pandemic. When both UK domestic and international travel came to a standstill in March as borders closed, and lockdowns restrictions were enforced across the country, there was an indiscriminate drop in RevPAR across all types and class of hotels as occupancy hit its lowest point on record. Between the end of March and June, UK hotel occupancy hovered around 20%. Those hotels that remained open mostly housed NHS staff, other key workers, or the homeless.
UK hotels were one of the last parts of the economy out of lockdown, on 4th July 2020, and one of the last hotel markets globally able to reopen their doors and since then occupancy figures have started to show some green shoots of recovery. By the week ending 2nd August, average occupancy of open hotels in the UK was at 42% (source STR).
Prior to UK hotels reopening their doors, it had been widely noted that domestic leisure travel would lead the recovery. The restrictions and quarantine measures in place, and the additional psychological impact of the pandemic, are all factors influencing consumer behaviour. Unable or unwilling to travel abroad, more UK residents than normal are taking ‘staycations’. Consequently, some of the more traditional UK leisure destinations, including Blackpool and Plymouth, who have a higher reliance on domestic tourism, are now showing signs of returning to higher levels of trading, reporting average occupancy at over 60%, and new bookings outweighing cancellations over the summer months.
by Rebecca Shafran
The recovery is proving to be much more of a challenge in locations with a higher dependency on overseas leisure tourism and business travellers, especially whilst corporate demand remains muted. London falls into this category and this factor is holding back trading performance of its hotels. It is clear that when corporate demand does pick up, it will be directed at the major capital and gateway cities, including London, Manchester and Birmingham. For now, many corporates are looking at how they conduct business in the most cost-effective way and this is likely to mean fewer business trips, at least in the short-term.
The impact of the pandemic will continue to be felt on the demand for tourism and corporate travel. The shock on business and household behaviour and levels of uncertainty, will have a longer lasting effect on sentiment, holding back demand in the short to medium term. Additionally changes to the airline industry and its capacity, continuously changing border and quarantine measures, and businesses continuing to run in the most cost-effective way, will all contribute to weakened demand.
Whilst the recovery for UK hotels is expected to be more elongated than the economic recovery, the development of a successful vaccine would have a profound impact on consumer and market confidence, with demand levels potentially improving by 2022, or earlier. Nonetheless, with UK hotels now reopen the sector is starting to see gradual improvements in occupancy, and the demand recovery is expected to pick up pace in 2021.
by Sukhdeep Dhillon
The COVID-19 pandemic has altered every aspect of our world. One sector that has been particularly badly hit has been the travel industry. Most travel booking companies are reporting that bookings are down by over 95%, this is no surprise as most airports and airlines are operating approximately 60% below their capacity.
The biggest question on most everyone’s mind is, when is it safe to travel, while travel companies and airlines eagerly wonder when will travel recover.
The short answer is nobody knows for sure. At the moment factors such as social distancing on planes is stretching economic viability for airlines. Whether this a perk whereby the average traveller now has more space, or will airlines increase prices to compensate, only time will tell. Nonetheless travel will not be the same again for the foreseeable future.
How are hotels responding? Before this pandemic, few people would give a second thought on touching door handles, television remotes and various other touch points. Post COVID-19, this is a major consideration. Hotels have upped the ante on deep cleaning, with most travel websites now emphasising how regularly rooms and other facilities are cleaned. Hilton have recently partnered up with Dettol for a new ‘CleanStay’ hygiene scheme, as Hilton looks to provide an ‘industry-standard of cleanliness and disinfection’ in order to assure their customers and staff.
For the hotel sector to restart successfully, it will be essential for consumers to have confidence that a hotel is clean and safe. This could pave the wave for a new certification of cleanliness. Some countries have already introduced this with the Singapore Tourism Board launching a “new clean” auditing initiative that measures hotel on a seven criteria for cleanliness.
Hotels 2.0 Sanitised arrivals, contactless arrival and departure with staggered check-ins, technology-driven cleaning tools, temperature checks and bringing back single-use toiletries will become the new norm.
The new normal will also mark structural shifts centred around flexibility and cleanliness. Hotels will need to ensure they manage customer expectations as they evolve. A resting assurance for the travel industry will be the continual shift in consumption where consumers will opt to buy experiences rather than things. The demand will be there, although it will take time to materialise.
The hotels sector has showed resilience in the past, particularly after the 2008 Global Financial Crisis. It took a few years for the hotel industry to recover revenue and even longer to recuperate profitability, but it did recover. However, in order enable the recovery sooner it’s vital that hotels embrace technological solutions. A lot of tech such as voice recognition has been around for a while it just hasn’t been integrated into hotels yet. This is a breaking moment for the hospitality industry. Trust will also play a major part, hotels need to work to earn that trust again. Cleanliness and hygiene will now be the major selling points.