Q&A Part 2: Recovery will be lengthy unless clear strategy is established, says AHC economist John Ashcroft

John Ashcroft

John Ashcroft is Founder, CEO and Author of The Saturday Economist. In a Q&A ahead of his keynote in The AHC Reimagined, he shares his thoughts on economic recovery, governmental policy and the travel and real estate markets in the UK.

In this second extract, John discusses the performance of the travel market and of the real estate market in the UK. The full interview is available here.

How is the travel market performing, and where is it headed?

Leisure and tourism is one of the worst hit sectors during the crisis. Most airlines do not expect a full recovery in international travel for several years yet. The latest data on UK travel suggest passenger numbers both in and out of the country fell by 50% in March. During the shutdown the numbers will have fallen by 90%.

Despite some recovery in the hotel and restaurant sectors, we expect the overall level of activity to be down by 30% in the final quarter of the year. A full recovery in the hotel sector specifically may not be possible before the end of 2021.

So how is the travel market performing? The sector has been badly hit. The recovery will be lengthy and protracted unless a clear strategy for recovery is established with additional support from HM Treasury.

How about the real estate market?

We segment the real estate market into retail, commercial and industrial.

The retail market has been damaged by the move online, accelerated during the period of shutdown. Retail footprints are shrinking. 40% of non food sales are now online. The high street and retail parks are already feeling the pinch as the online push continues. The move from Mall to Mausoleum is the threat to the big players in retail as the Intu experience suggests.

The commercial market appears to be under threat as the work from home or flexible working revolution is set continue. Will the tumbleweed blow across Canary Wharf? Jes Staley, Group Chief Exec of Barclays has suggested the big office block, like the Bank’s  7,000 seater in London, could become a thing of the past. The number of days in office will be reduced. But don’t write off the commercial sector just yet. The underlying demand for space is set to continue as growth returns to the economy. 

Developments in the industrial market are dominated by trends in the logistics sector. Warehousing and distribution is probably the fastest growing area in the commercial property market. The latest RICS survey suggested the  industrial (logistics) sector recorded the highest ever number of commercial property transactions in the first half of 2020. The trend is expected to continue.

John Ashcroft will give a keynote presentation on 'Cycle, Interrupted: The Economic Outlook​​​’ at The AHC Reimagined on Thursday 8th October. To hear more from John and other expert speakers about the opportunities in the UK hotel market, register here.