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Insight & Opinion

Is now the time to invest in the UK holiday home market?

Author: Gemma

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Britain has felt the effects of the coronavirus outbreak in just about every conceivable way, from how businesses and entire industries operate, all the way down to how individuals do their jobs and go about their daily lives.

While all sectors of the economy have experienced the impact of the Covid crisis, one of the most severely affected is tourism. When lockdown restrictions were imposed, income for hotels, holiday parks, airlines, travel agents, tour operators and other tourism businesses dried up almost overnight.

However, we’re now seeing the first glimmer of hope for the industry, with the government outlining an “ambitious plan” to allow tourism to restart in time for the peak summer holiday season.

It’s possible that, from early July, people will be allowed to take breaks within the UK. This could provide a major boost for the ‘staycation’ market, which will be welcome news for those who have holiday homes to rent and investors considering opportunities within this asset class.

The ‘great British break’

Culture secretary Oliver Dowden struck an optimistic tone on domestic tourism in the daily Downing Street press conference on Wednesday (May 20th). He said that, provided there is no second peak in coronavirus cases as the lockdown rules are steadily eased in the coming weeks, the country could see the return of the “great British break” from July 4th.

Holiday homes, campsites and hotels will be allowed to start welcoming guests again if determining factors like the overall number of cases and the reproduction rate of the virus permit it.

Mr Dowden said: “I would love to get the tourism sector up as quickly as we possibly can. We’ve set this very ambitious plan to try and get it up and running by the beginning of July.”

He added: “Believe me, when we get to the point when we can have British tourism back, perhaps apart from the prime minister you won’t get a bigger champion of the great British break than me.”

Foreign travel barriers

While there is hope on the horizon for domestic tourism, there are no indications yet that overseas travel will be able to restart anytime soon.

With large portions of the public surely desperate to escape the strictures of lockdown and enjoy a well-earned break, it’s the staycation market that looks set to benefit from the release of pent-up demand.

One of the most significant barriers to trips abroad is the 14-day quarantine that is due to be introduced for anyone arriving in the UK from overseas. This will make foreign holidays unfeasible for most people, since the amount of time they would have to spend in isolation upon their return would, in most cases, be just as long as the trip itself.

Cost could also be a prohibiting factor for many. The need for social distancing on planes will mean reduced capacity for airlines, which is likely to result in higher fares for passengers.

Insurance expenses could also jump as the resumption of people travelling between countries raises fears of fresh outbreaks of coronavirus and increases the risk of holidaymakers needing hospital treatment overseas.

Furthermore, the current weak value of the pound means Brits will see their spending power reduced in popular tourist destinations across Europe and elsewhere.

Staycation appeal

The unique conditions in 2020 certainly point to an imminent spike in demand for UK holiday homes and other domestic travel products, but it’s also worth noting that staycations had been steadily rising in popularity long before anyone had heard of Covid-19.

Visiting the diverse range of scenic and historic destinations on offer across the British Isles is no longer viewed as a second-rate alternative to travelling abroad.

As John Rushby, head of parks, sports and marinas at real estate group Colliers International, told the Financial Times: “Now, people with white-collar professional jobs will take a foreign holiday but will also take a UK holiday in a caravan with a flat screen television. It’s a much better offer.”

Garri Rayner, founder of Go Glamping, said he noticed growth in demand for staycations in the wake of the 2008 financial crisis, and predicted the same trend will emerge as the country steadily recovers from the Covid pandemic.

“The sense I get, using our website as a barometer, is once there is any semblance of normality the last place people are going to want to be is home,” he told the Telegraph. “People will be gagging to get out and the easiest place to do that is in the UK.”

These predictions are backed up by recent research by CabinBookers, which showed that 90% of UK holidaymakers are planning a domestic break once the current restrictions have been lifted. Eight out of ten respondents said their appreciation for British beauty spots had increased during lockdown.

Another interesting finding showed that 86% of people planning a staycation are eschewing traditionally popular city breaks in favour of escaping to the countryside. This could be because urban residents, having been largely confined to their homes for months on end, are keen to visit rural locations to enjoy nature and fresh air.

Social distancing could also be a consideration for many, suggesting that stand-alone accommodation like holiday lodges – as opposed to hotels – could prove highly popular, particularly in quiet, isolated destinations.

Owners of these sorts of properties, or those planning to invest in them soon, can look forward to seeing the benefits of the expected staycation boom.

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