Hopes, Hurdles & Expectations for 2021 – The UK Hotel Market
The government roadmap outlining the easing of lockdown restrictions brings optimism for the UK Hotel sector to resume trading from 17th May, but a sense of disappointment that the sector will be one of the last to re-open.
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The government roadmap outlining the easing of lockdown restrictions and the suggested earliest possible dates for re-opening the domestic economy in stages, brings hope for the UK Hotel sector to resume trading from 17th May. Albeit, restrictions for trading sees the return of the Rule of 6 or a maximum of two households allowed to mix indoors and wedding receptions for up to 30 people. These restrictions are set to remain in place until all legal limits on social contact are lifted, no earlier than the 21st June.
The latest announcement, however, brings disappointment that restrictions will not be eased in time for Easter. Moreover, a level of ongoing uncertainty remains, with an assessment on the impact of each former stage of the economy re-opening, set against four specific tests, as the specified pathfinder.
Nevertheless, with the latest scientific data providing strong evidence that vaccines do cut Covid-19 transmissions and infections and trend data suggesting that daily cases will fall to 1,000 by mid-April, there is optimism to suggest reopening of UK hotels and the wider hospitality sector will take place according to the proposed schedule.
The biggest conundrum, however, is deciding how to ease restrictions without squandering the success of the Vaccine Taskforce, and specifically whether the increasing risk of mutations will be too great to allow for the return of international travel, without the need for quarantine or self-isolation.
In our latest Knight Frank research, we set out our view on the Hopes, Hurdles and Expectations for the UK Hotel sector for 2021 and beyond. Key to unlocking the gateway to its recovery and imperative for the long-term stability and viability of the sector, is the continued success of the UK vaccination programme and infection rates reduced to a controllable level.
Despite the significant adverse impact of the pandemic on the UK hotel sector, plenty of positives have arisen, showcasing creativity, determination and resilience. Those owners and operators who are prepared to adapt, be courageous and flexible going forward and actively engage with all stakeholders, are most likely to endure and grow stronger from the ongoing challenges ahead.
The public profile of the UK Hospitality sector has never been stronger, which comes at a time when the UK’s departure from the European Union could potentially trigger a dearth in workers from the continent, upon which the sector survives. With significant numbers of overseas workers returning home during the various lockdowns, many may decide that the financial incentive to return to the UK is no longer viable, whilst others are no longer eligible to apply for the EU Settlement Scheme. Combined with sponsorships required for all new foreign workers and the planned increase in the National Living Wage from April 2021, these are huge challenges ahead for the hospitality sector.
However, the recent launch of the Hoteliers’ Charter, which firmly places the “S” of ESG on the agenda, makes a commitment to providing a workplace environment built on the foundations of respect, fairness, equality, diversity and opportunity; and places wellness and career development of its employees at the heart of its operations. As the sector rebuilds and recover strongly from the pandemic, attracting, upskilling and retaining staff will be of critical importance.
With almost a whole year of minimal international travel, the cancellation of all conferences and event related business and remote working leading to a city exodus and reduced office footprints, attention has turned to the reinvention of under-utilised space in hotels, both internal and external, to focus on initiatives which stimulate future demand.
Image: Arundel Video Conference Suite, South Lodge Hotel, Exclusive Collection
Hotels seizing on the co-working trend, by bringing people together through the provision of flexible, safe, sustainable and smart spaces is one such focus point. Meanwhile, reinventing and maximising the use of outdoor space, during a period of ongoing social distancing restrictions and beyond, will support future income generation. A range of temporary or semi-permanent creative solutions, in the forms of domes, pods, cabins and igloos are increasingly being used to extend the all-weather dining options.
Meanwhile, demand for outdoor staycations is also bringing increased competition in the form of landowners providing high-end glamping, with fully kitted out, environmentally friendly pods, cabins, wood huts, tents and igloos all being used to get closer to nature. Opportunity exists for hotels with significant land to develop these alternative lodgings, which appeal to a wide ranging clientele.
Looking ahead, the focus will turn to hotel car parks for revenue generation, capitalising on the growth of electric vehicles and the mounting infrastructure requirements to service this demand. With carmakers, such as Ford, announcing that its passenger vehicle line up in Europe will be all electric by 2030, hotels are in a strong position to benefit from the additional revenue stream that charging a vehicle can bring.
Whilst Covid-19 will become known as a seismic event in British and global history, the pandemic has the ability to have a far deeper impact embedded into our daily lives and make a positive, lasting impact on society. The pandemic has increased the pressure on the government to overhaul the out dated and unfair business rates system and level the gap between the high street and online retailers; whilst also putting pressure on government to ignite life and rejuvenate our high streets and city centres.
The implementation of a workable nationwide strategic regeneration plan of our high streets and city centres requires huge investment, but through repurposing and reinvigorating vacant or obsolete retail, office or indeed hotel space - making them affordable, accessible, welcoming, attractive and connected places to work and live – this will result in more people moving into these central areas. In turn, this will generate significantly more income and stimulate demand for those sectors which have endured the greatest pain during the pandemic, namely hospitality, leisure, retail, culture and the arts.
For further insight into Knight Frank’s view on the Hopes, Hurdles and Expectations for the UK Hotel Sector, please CLICK HERE