The UK’s struggling domestic travel and hospitality industry could net a £22 billion windfall as part of increased spending in 2021, according to new research from Colliers.
As part of its latest report UK Staycations 2021: A Year of Opportunities the real estate services company crunched the numbers on historic spending on foreign holidays. With Covid-19 still limiting foreign travel, Colliers outlined a case where 40% of 2019’s total outbound travel spend was reallocated to the UK.
“A staycation surge is expected in 2021 across the UK due to ongoing international travel restrictions and successful domestic vaccine rollouts. This presents a promising opportunity for UK hoteliers to attract people who would previously have chosen to travel abroad for holidays and weekend breaks,” the report said.
One of the reasons companies like Colliers are predicting increased leisure spending is the growth in household savings, which some have said equates to around £140 billion.
Rishi Sunak, the chancellor of the exchequer, said earlier this month at the Wall Street Journal’s CEO council summit, that the UK’s economy was in a very good place.
“As we look forward to reopening over coming weeks and months, there are signs to be cautiously optimistic and we can see that in the data. I’m hopeful that will be sustained through the rest of the year,” he said.
“We are seeing consumer confidence back to pre-pandemic levels. We know that there is an enormous amount of excess savings. We have tried to put things in place to unlock some of that cash. The signs are promising.”
Colliers expects all this extra spending to benefit the upper tiers of the hotel sector.
“We predict an increase in spending within hotels in the form of room upgrades and more expensive meals. Some guests will also be looking for additional recreational experiences during their travels and are therefore likely to spend more on extra services such as spa treatments, afternoon teas and other activities,” the report said.
How does the above translate into the hotel investment market? Those properties in higher traffic tourism hotspots are expected to generate significant interest and with companies having raised vast amounts of money to target distressed assets it seems sensible to assume they will deploy some of this in those markets.
“At Colliers, we have had an increasing flow of opportunistic buyers contacting us, many from overseas, with strongest interest being expressed in hotels in staycation locations. It is very clear that there are still numerous well-heeled cash buyers out there, as well as prospective purchasers with support from their banks,” the report said.