By Scott McKerracher, head of commercial at The Cumberland
With lockdown restrictions across the country easing from 19 July, now is a time of change and adaption for the UK tourism sector, which is a significant contributor to the economy ‐ estimated to be worth £260 billion per annum by 2025, according to Visit Britain ‐ and one which has been impacted the most.
As a specialist lender to hospitality businesses, we have observed huge challenges faced by the sector since the start of the pandemic and so our focus remains on ensuring our commercial customers continue to receive the support and guidance they have come to rely on this past year.
Hotels and guesthouses, along with other UK tourism businesses, may have noticed a ‘staycation’ boom already, however there is bound to be a longer‐term effect on these businesses as they notice a depletion in international visitors.
In addition, it may be more likely for hotels in more traditionally tourism‐led locations, such as on the coast, within national parks or in rural locations to recover well.
Traditional holiday areas like the Scottish Highlands, the Lake District and Devon & Cornwall are all predicted to have a buoyant recovery.
However, as customers’ preferences undoubtedly change, I foresee stimulated competition between hospitality businesses.
It may also be the case that hospitality businesses need to significantly invest in staff recruitment and training in order to thrive in what is sure to be a more competitively driven market space.
I’ve been inspired by how businesses have shown such resilience and adaptability, however, many have been left with supply‐chain people issues, and these are causing very real challenges for businesses right now.
It is vital that we understand how the sector is adapting post‐pandemic, and that’s why we’ve commissioned specialist research to find out how holiday accommodation owners have adapted to keep their enterprises resilient and future proof.
Similarly, how have consumer preferences changed? It will be fascinating to find out what UK holiday‐ makers are now prioritising when it comes to booking UK holiday accommodation.
A changing landscape…
As businesses recover from the pandemic, we mustn’t forget that the landscape has changed significantly. For example, the build up of consumer cash is impacting the market, because many people have more spare money than they usually would, and they are likely to be spending this on staycations rather than foreign holidays.
In this respect, perhaps overseas travel will become the exception rather than the rule in the future? It’s also worth noting that most businesses have had government financial assistance, whether through furlough, grants and debt repayment holidays as well as CBILS and BBLS.
There has also been deferment of HMRC contributions which, along with suppliers, will all need repayment and equity input for owners and others in some form or another.
I’m concerned about the mountain of debt, which is certainly on the horizon.
Creating an opportunity
This combination of factors creates an opportunity for strong businesses which have minimal borrowing and strong cash positions to take on additional funding to capitalise on an evolving and innovating market.
There are bound to be challenges in reopening, as businesses re‐establish supply chains and renegotiate contracts, however, there will be restructure and refinance opportunities available, which will be harnessed by many within the sector as a way to advance their businesses.
I predict there will be significant growth in the staycation market and I also think we will witness a strong recovery amongst suburban, rural and seaside boutique hotels.