TRUE: The operational performance of hotels was impacted beyond recognition in 2020 when hotels were forced to close their doors and international travel came to a standstill. Whilst most parts of the economy were able to open up in the summer months, international travel remained muted as people were unwilling or unable to travel overseas. UK hotels in popular tourism locations did benefit from a surge in domestic demand in July and August, however the emergence of the new strain and subsequent lockdowns meant that this was fairly short-lived.
After more than a year of limited trading, UK hotels are expected to reopen in May 2021 however the sector’s recovery is expected to be slower and more drawn out than other parts of the economy. Leisure focussed pent-up demand, particularly driven by higher-income households and retirees, who, during the pandemic, have had sufficient income to increase their savings, will lead the recovery in hotel occupancy. However, despite a number of larger scheduled events that are boosting business on books in specific locations, such as the UN Climate Change Conference in November 2021 in Glasgow, corporate demand for international travel, on the whole, remains muted.
The recovery of occupancy and RevPAR, particularly in the larger UK cities including London, is highly dependent on the return of business travel and it’s challenging to predict whether it will ever return to pre-pandemic levels. Whilst tied closely to the economy, the recovery is likely to be more elongated as reduced airline capacity increases air travel costs and businesses continue to run in the most cost effective way.
FALSE: Lockdown measures continue to prevent students from living their full university experience, and with courses moved online, term start dates delayed, and international travel at a standstill, it was predicted that demand from international students for UK higher education would fall.
However this was not the case. Undergraduate acceptances for places at UK universities increased 5.4% for the academic year 2020/21, with a rise of 10.6% from overseas students. Additionally the latest statistics from UCAS for the 2021/22 academic year report a record number of applicants for places at UK universities. The 8.5% increase on the previous cycle was driven by an 11.6% and 17.1% increase from UK domiciled and non-EU international applicants, respectively.
Despite the pandemic, the desirability of the UK as a place to study has not been diminished. In some respects it has improved. The determination and hard work of the NHS, the successful development of a vaccine, and the speed of the vaccination programme, has enhanced the attraction of the UK to prospective medical students which was reflected in the applications made meeting the autumn deadline. In addition, recent announcements of changes to the UK visa system continue to provide clarity to prospective overseas students regarding opportunities after graduation, and further enhances the appeal of the UK higher education system.
FALSE: With most real estate sectors negatively impacted by the pandemic, it was assumed that the Build-to-Rent sector would be no exception. As the reality of the first lockdown become apparent, there were concerns regarding how infection control could be managed with people living in close proximity to their neighbours with shared corridors, communal spaces and amenities. In addition landlords were worried about rising unemployment and the impact that would have on occupancy and timely rent collection. Moreover, it was unclear what restriction measures (and Brexit) meant for the construction sector.
However, the outcome was significantly more positive than the initial outlook. Many of the benefits of high-density, communal living, particularly in Build-to-Rent accommodation, were really highlighted by the pandemic. Residents were able to stay in touch and support their neighbours which helped reduced lockdown loneliness, and technology such as video communication apps allowed residents to stay connected with their landlord, and offered online social events for residents to stay connected with each other.
Moreover, the furlough scheme cushioned unemployment and therefore reports of rent arrears and early terminations of leases were low. A newly opened scheme in Manchester reported a steady stream of reservations. And whilst construction on sites did pause in Q2 2020 (a 5% fall in the number of schemes under construction compared to Q2 2019), construction picked back up and by the end of Q4 2020 the number of units under construction had increased 5.4% compared with a year earlier (source BPF).