It is stating the obvious that the hospitality sector was one of the hardest hit by the Covid-19 pandemic. The majority of businesses that provide holiday accommodation were forced to close in the first lockdown that started in March 2020, and, even after some restrictions were lifted, visitor confidence was slow to recover.
ONS figures show that consumer spending on hospitality started to increase once travel was permitted, but remained at less than 70% of pre-pandemic levels in May 2021.
This blog considers which UK cities have driven the hotel sector’s recovery since the pandemic and considers factors which will shape future growth.
Domestic holidays and city breaks lead the recovery
The table below shows the top and bottom five locations in the UK in terms of hotel occupancy and revenue per available room in 2021 compared to pre-Covid (2019) figures.
Source: Colliers UK - The Recovery of the UK Hotel Market
1. 2021 occupancy measured as a % of 2019.
2. RevPAR measured as a % of 2019. Revenue per available room is a performance measure used in the hospitality industry. RevPAR is calculated by multiplying a hotel’s average daily room rate by its occupancy rate.
In terms of occupancy, the locations that fared best in 2021 were those that are either popular domestic holiday or city break destinations in their own right (Bournemouth, Norwich), as well as those that are strategically located near to tourism hotspots (e.g. Gloucester – which is close to the Forest of Dean and the Cotswolds). The top five locations for occupancy recovery in 2021 were all in the south of England, again indicating that domestic summer holidays drove the bounce back in 2021.
The locations that recovered less well in 2021 were the major cities of England and Scotland, including London, Glasgow and Manchester. The hotel markets in these cities all rely heavily on business travel, international tourism, and major cultural and sporting events, most of which were not in full flow in 2021.
2022 has been a more positive year for the hospitality sector, with UK average hotel occupancy reaching 80% in June 2022, compared to 57% in June 2021. This has been driven by a rebound in both leisure and business travel, including international tourism.
The resumption of major events this year such as a full-scale Edinburgh Fringe taking place this summer will have provided a boon to hoteliers (see my colleague Arabella’s blog on visitor accommodation challenges in Edinburgh). When it was recently announced that Liverpool will host the 2023 Eurovision Song Contest, asking prices for accommodation reached an eye-watering £8,000 a night – demonstrating that major events remain an important driver for hotel demand in the UK’s major cities.
Locations such as Newcastle, Blackpool and Bristol remain popular destinations for domestic travel, bolstered by demand for hen and stag parties. It is likely they will remain strong locations for the hotel sector.
Looking ahead, ongoing inflationary pressures and the cost of living crisis will no doubt be a concern for the hospitality sector. The silver lining for UK hoteliers may be that as belts are tightened, people may choose to take domestic holidays or UK city breaks rather than travelling abroad. Another silver lining for the UK hospitality sector is that the weak pound is acting as a spur for international travel to the UK, with US travellers regarding UK travel as being ‘on sale’.
Overall, although 2023 is likely to see challenges to all sectors of the economy, there will be opportunities for growth in the hotel market across the UK. Lichfields has built an enviable track record assisting in the delivery of hotel projects – ranging from stylish city locations to boutique rural retreats. For more information on Lichfields’ work in hotels please click here. If you would like to discuss opportunities for the market or a particular project, please get in touch and we will be happy to help.
Header image: The Athenaeum
Assessing the case for removing light industrial to residential permitted development rights
The temporary permitted development right (PDR) for change of use from Use Class B1(c) light industrial to C3 residential came into force on 1 October 2017. This means that light industrial premises which have a floor area of less than 500 sqm can now be converted to residential use under the prior approval process, rather than requiring an application for planning permission. The temporary PDR is in force until 1 October 2020 (though any changes of use permitted during this period are permanent). The process is subject to various limitations and conditions, which are covered in an earlier blog by my colleague Owain Nedin.
The new PDR represents another of the Government’s wide-ranging measures aimed at boosting housing supply across the country. However, the PDR raises some potential issues for the future economic vitality of local areas that local planning authorities may need to consider. These include:
permanent loss of business space, particularly of smaller industrial and workshop premises which can play an important role in the local economy;
limiting the ability of local areas to plan effectively for business needs, employment and growth; and
creating potential uncertainty for businesses and reduced scope for land use planning and place making for the local planning authority.
Local planning authorities have the ability to remove PDRs by introducing what is known as an ‘Article 4 Direction’. This allows authorities to require change of use applications, meaning they can refer to the development plan and weigh material considerations into the balance in the process of making a decision. An Article 4 Direction requires a clear justification and a defined boundary for the proposed exemption area. Local authorities must therefore compile the necessary evidence to meet these requirements.
There are two main types of Article 4 Direction: immediate and non-immediate. An immediate Direction removes a PDR with immediate effect, but must be confirmed by the local planning authority following local consultation within six months, or else the Direction will lapse. A non-immediate Direction comes into force after a period of 12 months and the PDR is removed upon confirmation of the Direction by the local planning authority following local consultation.
Lichfields has developed a staged analytical framework to support local authorities in making a robust case for implementing a non-immediate Article 4 Direction. The framework draws on a range of economic data sources, local commercial property market signals and the existing planning policy position. It enables local authorities to scope, evidence and prepare the case for an Article 4 Direction, by identifying and quantifying light industrial stock that qualifies for the PDR and the wider significance of this space within a local area in terms of business activity and economic value. In turn, this can allow an appropriate exemption area to be defined and taken forward through the due process as the basis for making a Direction.
Lichfields recently prepared such an analysis (also including offices which are subject to similar PDRs) for the town of Newhaven on behalf of Lewes District Council. Newhaven was one of 18 locations that were awarded Enterprise Zone status in 2015. As part of the analysis, Lichfields quantified the number of eligible light industrial premises in the town and the proportion that fall within the Enterprise Zone area.
Light industrial floorspace clustering example output.
The analysis shows that Newhaven is an important location for light industrial activities in Lewes District, containing around a quarter of the local authority’s total stock of light industrial space. Furthermore, the vast majority of light industrial premises that are eligible for the PDR are within the Enterprise Zone, which has been designed to help stimulate the growth of the local economy.
The quantitative analysis was coupled with site assessments to identify the function of different employment clusters in the town. The analysis concluded that the Enterprise Zone supports considerable light industrial activity, which is likely to develop further given that priority sectors for the Enterprise Zone include environmental technologies and healthcare and biologics.
Lewes District Council’s Planning Applications Committee reviewed Lichfields’ analysis and found that it provided “clear evidence to support the implementation of Article 4 directions in Newhaven to protect office and light industrial use”. The Committee resolved to approve the Directions in October 2017 and these are likely to come into force later this year. They will serve to protect employment floorspace in Newhaven, thereby supporting the expansion of innovative, high value growth sectors in the Enterprise Zone.
The new PDR has potential implications for industrial locations across the UK. The recently published Draft London Plan encourages London Boroughs to introduce Article 4 Directions where appropriate to ensure they can retain sufficient industrial and logistics capacity. As identified in Lichfields’ London Plan Insight, the vast majority of Boroughs are expected to retain or increase their existing industrial capacity. The implementation of Article 4 Directions will be vital to support the economic function of industrial clusters across the capital to help meet the ambitious targets for economic growth set out in the London Plan.
Lichfields’ Article 4 Direction framework brings together robust analysis of local property markets and economic indicators which can help local authorities identify and prepare the case for making a Direction. For further information, please see our information flyer or get in touch.