First Lockdown Anniversary Underlines the Resilience of the UK Hotels Sector

Posted by Colliers on 26th March 2021 -

A year on from the first national lockdown on 23 March 2020, the anniversary marks a poignant time for everyone connected to the hotels sector as we reflect upon the absolute uncertainty suffered by owners and operators and their staff.

 

However, as we move on from the unprecedented difficulties of the pandemic there are pluses to be drawn from the proactive way in which the sector has responded to the challenges of the past year.

In particular, it has become apparent that the UK hotels sector is a robust and resilient business, and as we look ahead to the next 12 months and beyond it is clear that the outlook is positive particularly for leisure and destination hotels, and certainly far better than many of us would have dared to predict this time last year.

Judging by the experience of the Colliers UK Hotels Agency team, which is the largest provincial hotels agency team in the country, guests are set to return in force to hotels and transactional activity will increase correspondingly.

It is not a case of if, but rather when, we will return towards pre-COVID levels, both in terms of guest occupancy and hotel sales.

Staycation surge

Hoteliers should brace themselves for a staycation surge, not only for this summer but for the year ahead and beyond. There is a huge opportunity for UK hoteliers to attract people who would previously have chosen to travel abroad for holidays and weekend breaks, but are now looking closer to home because of the restrictions, complications and expense involved in foreign travel.

We will be seeing the rise of the UK mini-break during the second half of this year and the first half of next year, as people who have been cooped up in home offices decide to have a change of scene by taking occasional two to three night breaks, subject to any government restrictions.

However, while coast and country staycation hotels will be moving on quickly from the challenges of last year, it is likely to be a longer path back to normality for those hotels in towns and cities, or mainly serving airport travellers, conferences, and events.

Substantial uplift

Transactional activity is definitely building, and we have already seen a substantial uplift in enquiries and viewings this year, the volume of formal viewings is up 44 per cent for the first two weeks of March, compared with the same period of the previous month.

During 2020 many vendors sat on their hands believing they wouldn’t get their required price which resulted in a lack of quality stock coming to the market, and meanwhile many buyers were also sitting waiting for the storm clouds to arrive.

Now things are starting to shift. Although in high value staycation areas there are still some vendors holding out for a higher price, we have been seeing more sellers being realistic and being prepared to consider offers. For some this is because of dwindling cash reserves, while others are motivated by personal circumstances.

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.

Robust and resilient

In addition to those seeking to buy hotels to run them for that purpose, we have observed an increase in alternative use enquiries for lower profit hotels that could receive planning consent for change of use. Our experience of alternative use sales at Colliers last year included residential, educational, self-catering, nursing and care homes, retirement development, and rehabilitation centres.

Hotels have proven themselves as being robust and resilient, and able to quickly return to trading normality. Hoteliers have adapted to COVID secure protocols and many have implemented new business plans to put themselves in the best position of optimising trade post the current lockdown.

We have seen in the past the likes of SARS, terrorist attacks and foot and mouth disease impacting on hotel trade, however once levels of uncertainty have subsided trade soon returned, as it will again this year.