Coming out of lockdown – what is the outlook for the hotel sector in the UK?

It is not a natural condition for humans to hibernate. Yet this, in effect, is what we were asked to do in order to restrict the spread of the Covid-19 disease.

Rather, we are inquisitive and social animals. Eventually, this means good demand-side news will flow again for the hotels sector. As the restrictions are loosened we will want to travel and to meet again, although our patterns of behaviour may be different.

Over two months’ since the start of the UK’s lockdown and as the shock following the onset of the crisis has subsided, we are all trying to make sense of the short and longer term implications for our families, businesses, our wider economy and society.

To contribute to this reassessment, BVA BDRC is undertaking a weekly UK tracker of consumer sentiment, with a focus on the travel, leisure and hospitality sectors.

The encouraging news from this tracking is that there seems to be more certainty now. More people are planning to book holidays, hotels, flights and days out with a specific time in mind. Even if the prospects for the start of the upturn are typically a few months ahead, some consumers will want to stay in hotels as soon as they are allowed to do so.

More generally, asked when they think things will be back to something like normal there is an appreciation that we are in this for a long time to come, although expectations of when ‘normality’ will return are at least now becoming stabilised: 3 in 10 expect this to be the case by September, increasing to 1 in 2 who say by the end of 2020. By implication though, nearly half the population now do not think ‘normality’ will return until next year or later.

Unquestionably impacted by the international arrival quarantine rules, it seems inevitable that domestic travel will recover ahead of international travel. We can also say business demand will lag behind personal demand as hard hit businesses will be reticent about building up their travel costs again, decisions in part that will be influenced by our heightened appreciation of the potential of video-conference platforms such as Zoom and MS Teams.

Accordingly, for the UK hospitality industry, domestic leisure demand will be the first market segment to recover and hotel companies should be planning their marketing activities accordingly. That’s not to say the business and meetings markets should be written-off.  In the early stages of their recovery, supply will significantly exceed demand, meaning competition will be fierce and any shortcomings in processes or delivery will be just as costly as when normality returns – perhaps even more so.

As there is now more discussion in the media around the exit from lockdown, it is apparent that many consumers are reticent about committing themselves to behaviour as normal, until some weeks have passed after the end of the period of confinement or, for some, until a vaccine becomes available.

Hotel operators may be able to distinguish themselves from the homestay market with a scrupulous approach to hygiene as this will become a critical consumer decision factor. The new world order also will demand changes, so that the operation of hotels becomes much less ‘touch and share’.

In a recent webinar arranged and recorded by The Hotel Management Company, we discussed the importance that consumers will place on an array of different possible initiatives related to hygiene, social distancing and booking terms. Certainly, there is an expectation that hotels will need to take multiple actions before guests will consider staying after they re-open.

A challenge for hoteliers will be convincing guests that their property ticks the boxes on all these matters without this specific message drowning out the long term communication about the market positioning of their particular hotel or brand. To this end, we advocate the adoption of a cleanliness certificate to serve as a brand mark shorthand to provide the necessary customer reassurance, so more of the marketing effort can go into promoting what makes a given hotel a unique proposition.

Please register below to view the recording of Cris' presentation to the Hotel Management Company.