Despite the temporary delay in the road map with step four and final easing of restrictions now set to be taken on the 19th July, the UK hotel sector continues to bounce back with sustained recovery momentum.
As a follow up to our last report in May we summarise current market demand using SiteMinder’s World Hotel Index tool and some more specific location data to update on:
As a more meaningful target for recovery all current booking trends are compared to 2019 actuals given this is where we aspire to get back to, as we are all too aware 2020 from April was severely damaged by tough lockdown restrictions.
UK compared to the Rest of the World
Booking Momentum – table below compares daily booking made as a % of 2019, looking at the UK against the Global consolidated figure and the daily pace in Germany.
Observations: with some expected peaks driven by half term in May, growth continues with upwards momentum, with the UK now consistently exceeding 70% daily bookings pace. The UK also sits well ahead of the rest of Europe as illustrated by the German recovery sat at just over 50%.
The headline figure of daily rooms pace is positive when we compare to a Global trend with the UK consistently just ahead, and 20% ahead when we look at a similar sized population in Germany, which like the UK benefits from a strong domestic hotel market. There are however risks beneath this macro data:
Whilst we cannot expect these controls to just disappear and volumes to roll back to pre-pandemic levels, there are encouraging noises being reported this week. Firstly on the potential for a double jab allowing travellers arriving in the UK to bypass quarantine and at least 60,000 fans confirmed for the business end matches of Euro 2020 at Wembley. This forms part of the Events Research Program, both initiatives will give much needed confidence to the economy and if successful along with similar planning over the summer allow us to build on progress so far towards the autumn.
Town vs. Country & Seaside
In the table below we see staycation driving better than 2019 volumes into a region like Bournemouth, whereas the cities like London (which mirrors Birmingham, Bristol, Manchester, and the rest) all circling 50%. Edinburgh shows better volumes by reaching 70% from a traditionally strong leisure offering, however missing the top up from international & business travel.
Booking Momentum by City –table below compares daily booking momentum as a % of year prior, taking three popular but very different UK destinations – Edinburgh, London & Bournemouth (plus Berlin).
Observations: a continuation of the trend seen since the roadmap announcement in Feb ‘21 with Bournemouth now consistently achieving better than 2019 daily bookings pace; however, we are now seeing leisure & some corporate activity start to generate volumes in the urban areas.
Whilst the table above is probably as expected there is slow but sure momentum building away from the holiday hotspots, coupled with the longer-term initiatives mentioned and an end to restrictions in sight. So, confidence has started to return ahead of 19th July, and if restrictions lifting brings even half the growth spike to business locations that we saw in leisure locations since April, then that will make a significant difference.
Spotlight on Blackpool, different market sources
To highlight the emerging positivity and to help demonstrate that growth is being generated from markets other than just a one-dimensional and short-lived staycation boom, we have looked at a very traditional seaside destination in Blackpool. It’s an easy assumption that volumes in a traditional English seaside town would be achieved solely by holidays and short breaks, however we have also looked at rooms production over the past 24 months via the Global Distribution Systems (GDS).
Away from the consumer booking direct and through the OTA’s, GDS channels are predominantly driven by business users through agents, admittedly with some leisure, allowing the following observations from the table below:
- Rooms sold/ volumes have been steadily increasing since the new year.
- 1000 room nights by the end of May, approaching 50% of pre-pandemic production.
- Average Daily Rate (ADR – in US$) has remained consistent around the $100 level.
This May production equates to £80,000 of rooms revenue into the town via these channels, which will continue to grow towards pre-pandemic levels. This can be sustained now with the vaccine rollout, unlike in autumn 2020 when we lurched back into a 2nd wave of infections and the tiers and then ultimately winter lockdown, so detailing credible forecasts will become easier.
Additionally, in the time since the start of April has allowed further analysis of this more granular data to give us some broader & encouraging market trends:
General Market Trends
- Demand remains predominantly leisure led particularly weekends.
- ADR is mainly holding up as operators resist excessive discounting, & up in many leisure destinations through good rate management and not from price gouging.
- Midweek occupancy now improving with coastal & rural areas performing better than city locations, up to 20% higher occupancy.
- Corporate activity linked to project work and filming.
- Staycations in extended stay facilities will continue to be strong – serviced apartments have so far outperformed hotels/B&B’s by up to 30% although this gap is now reducing.
- Cancellations remain high as guests hedge their bets and booking more than one property with the ability to cancel last minute.
- More consumer confidence in chain hotels, who have well communicated/branded cleaning protocols etc.
- Group events – demand returning with private/family events first as restrictions ease.
Hotels can therefore take confidence in these meaningful gains away from leisure markets, and distribution through GDS channels attracts lower costs than the OTA’s. We would be happy to review all connectivity to see if with our partners we can achieve improved access to fair market share. It could bring more room nights, less cost of sale and through Assured Hotels we have negotiated preferential monthly feed and waived many set up costs.
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