Heatwave spurs leisure markets as UK enters recession
 
Heatwave spurs leisure markets as UK enters recession
17 AUGUST 2020 7:32 AM

The sun might be shining, with temperatures soaring and leisure markets seeing (for this era) stunning occupancies, but hotel metrics are far from bright as the United Kingdom officially enters recession and its major cities still lag in performance.

LONDON—COVID-19 still rages, and the United Kingdom, sweltering in a week-long heatwave of temperatures nearing or passing 100 degrees Fahrenheit, officially entered a recession, with second-quarter gross domestic product having dropped 20.4%, yet another unprecedented sign of 2020’s crisis, said STR director Thomas Emanuel.

(STR is the parent company of Hotel News Now.)

On his overview of U.K. hotel performance for the week of 3-9 August, Emanuel said the recession in the U.K. is a “considerably larger contraction than most other leading industrial economies.”

If there is some upside for the week, it is that the balmy weather has driven demand to the U.K.’s leisure destinations, where some form of social distancing still is requested.

Some destinations in the U.K. have been subjected to or emerged from partial, localized lockdowns, Emanuel said, including Aberdeen, Bradford, Leicester Preston and, notably, Manchester.

Nationally, occupancy continues to rise slowly. But for the week ending 9 August, it has been more sluggish, likely due to some British and European markets showing rises in COVID-19 cases.

Average daily rate, more encouragingly, also is softening, with year-on-year declines reducing to -29%. Revenue per available room has followed, with average year-on-year declines of between 56% and 66%.

There continues to be a huge gulf in occupancy between leisure and city markets, with Plymouth—the leader for some weeks now—showing occupancy of 92%, while London trails far behind at 27%.

Plymouth is among the destinations that have been spurred by the heatwave—in a country becoming accustomed to higher temperatures but where air conditioning is not present in the vast majority of homes.

As far as STR’s Forward Star Business on the Books data is concerned, the pattern that instantly emerges, Emanuel said, is that weekends will continue to be where the weekly surges are seen but that booking for those weekends are occurring with a very short lead time.

“To show that data by day, again, the short term does not look too bad, but once you get into September we are still seeing cancellations coming through. These are mainly weekday cancellations,” he said.

“London has, unsurprisingly, seen negative pickup on the weekend of 3-4 October when the (first postponed, now cancelled) London Marathon was due to take place,” he added.

For more of Emanuel’s insights into U.K. performance data, and the new methodology of “economic occupancy,” watch the video below:

Editor’s note: The video included in this article was filmed Thomas Emanuel, director at STR, on 12 August and edited and produced by CoStar Group. HNN is a division of STR, a CoStar Group company.

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