Cause to pause and think hard now the Summer season is ending?

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Covid-19 is still with us and may be for some time to come. Any early hopes of short sharp crisis followed by a rapid return to the old normality are gone. So rather than just focusing on managing the immediate consequences as necessity has dictated so far, is it not time to start actively investigating some of the new realities in an attempt to predict what bit of the old norm will continue and what the new norm that may emerge might look like?

The 31 August – 1 September 2020 almost certainly marked a watershed for domestic based tourism businesses.  From here on in we will start to get a true feel for which UK businesses have not only survived the initial shock of lockdown but for those that also have the resilience to weather continuing covid-19 related pressures, during what is for many the long and largely lean, off peak and out of season months to come. 

1 September for most marked the end of the school summer holidays and the return to school for most within the week. It was also the beginning of the end for full government subsidised furlough which will now taper to include greater contributions from employers up to the point that the scheme ends in less than two months’ time.  Sadly, it also marked the end for much praised “Eat out to help out” scheme with, we are told, little or no prospect of it returning. We also told that further local and, if necessary, national lockdowns will be imposed, if and when it becomes necessary, and that keeping schools and education open in England will take priority over “pubs” and hospitality.  The other Home Nation’s approach also supports that stance.  Hopefully that is much more of a warning shot aim at the public about taking greater care in their leisure time and not a warning to our industry of things Government feels are likely to come.

Although a watershed it is also the start of a critical transitional period that now runs to the end of October which itself is marked with the last potential holiday hurrah of the Autumn half term (for many the last week of October) and, as the month closes, the end of the furlough scheme.  Thereafter, domestic tourism is on its own and out of season until sometime in late March or early April 2021 and the start of a new holiday season; be that a new season with or without, some or all, covid-19 restrictions still in place.

There isn’t that much more we can do now, other than to continue to lobby for extended or new support for the industry.  We can, however, begin to delve in increasing detail into the impacts, thus far, in order to assess what has been put on hold and should naturally recover post covid-19 and what has been structurally damaged, how and to what degree.  Given the symbiotic nature of most of the constituent parts of the industry, particularly within built and rural destinations, it is only by properly understanding what is and what isn’t going to recover unaided, that we can start to plan to repair that damage or, if necessary, make alternative provision to mitigate against it.

Of the many areas of concern, group travel and in particular coaching is one of the more noticeable.  The loss of coach capacity from the more notable closures like David Urquhart Travel and Specialist Leisure Group’s 8 major coach and coach holiday brands makes this, a potential structural issue and one which leaves many hotels that use group travel as a convenient mid-week and off-season filler, very exposed. It has also left those many place and individual businesses that benefit from either day and staying holiday-based day tours and visits exposed, including many of our most popular heritage towns and individual historic assets.

The good news that David Urquhart’s coach business has been bought by Alfa Leisureplex Group, and SLG’s, Sheerings and National Holidays brands have been acquired out of administration, respectively by Leger Holidays and Just Go! is tempered by the realisation that these deals apparently involve the purchase of the brand, website and database only.  This may help secure the future of the new owner’s business models, in difficult times to come but it doesn’t necessarily address either short term, demand side problems, or longer-term supply-side, capacity issues.  This assessment may be wrong and the arrangements may of course help to see a rapid return of group travel business to pre corvid levels as soon as the current crisis ends?  But with a large slice of the pre-covid coach fleets now apparently missing in action, it is hard to see how that will be easily achieved.

Business tourism, conferencing events and exhibitions are another a mainstay for many urban destinations.  Far from there being light at the end of the tunnel, many conference venues are now fully or partially closed, with limited prospect of them hosting any significant events much before early spring.  If anything, more cancellations or further postponements of events, which typically have an administrative/delivery lead time of 6 plus months and a booking lead time of 1 to 3 years, are as likely for next spring, as any new bookings or confirmation that booked events will proceed in 2021 as originally planned.  The lack of major conferences exhibitions and events is having a direct impact on accommodation providers (and associated hospitality businesses) and increasingly so as these are activities that, in popular, non-core City destinations, tend to be focused on the off peak and out of season months, when leisure tourism has subsided.   Assuming that the venues can weather the downturn, the issues will be: can the hotels and will both the venues and adequate quantities and quality of accommodation be in place to service it once the demand for conferences and events returns at some point next year or beyond?  If both are not firmly in place, these major events can’t easily be planned for, let alone proceed.

There is also similar structural concern regarding the future demand for such larger gatherings in general.  Opinion varies as to whether individual and organisation will want to meet as they once did, whether the specialist companies and organisation that arrange some of the more commercial events will survive the downturn to be able to trade again and what the shape and size of business and the associations, societies, organisations and charities meetings market will look like in future. For many destinations on the conference circuit, one or more theatre and other cultural assets are often part of the conference venue offer.  Whether they are incorporated within the conference and events offer, or are standalone venues, much the same can be said about their current closure. Will these theatres survive to take product post covid-19, or will sufficient producers and artists survive to make and perform the product that theatres, arts and cultural venues will, at some point, invariably need?  Again, a classic chicken and egg scenario.

Retail continues to struggle in most destinations with a downturn in residents, visitors and the absence of local office-based workforce taking its toll.  The latter is also having a more marked effect on hospitality in some towns and Cities that currently have a more limited domestic tourism appeal in general, or just now in the current covid environment.  Without overseas visitors and a large commuting workforce, larger town and Cities are struggling as much if not more than most.  Much of the recent resurgence in domestic tourism has favoured rural areas, smaller towns and Heritage Cities the coast and seaside resort, all largely reached by private car.  Larger Town’s and bigger Cities which normally have the advantage of excellent access by public transport have seen that advantage in many cases become a positive disincentive. A quick win for all would be the active encouragement of an early return to the use of off-peak public transport, for leisure purposes, rather than the current focus primarily on essential commuting. 

Understanding what role physical retail will now play in destinations and the future role of towns and Cities as physical work places, needs to be thoroughly interrogated and the breadth and depth of any permanent or step changes identified.  Both have the feel of a potential structural, rather than passing temporary changes and both may therefore require structural responses.

As with any downturn the problem for all destinations will be the impact of failed businesses premises on the look, feel and appeal of the place as visitor destination.  The odd closed business is normal and manageable; it becomes a structural issue only if too many premises fall out of use, for a protracted period, in too small and all too noticeable an area. Quick fix, poor quality or inappropriate new usage can also be as, or even more damaging to the appeal of the wider place by changing either the nature of the place itself or the nature of the customer base, to the detriment of other businesses still trading.

The search for a means to break the negative cycle of less appeal, fewer customer, more closures, even less appeal isn’t necessarily new.  What is new is the pace of change, its cumulative scale and therefore the increasing urgency to arrest further decline and to start proactive improvement. Casual dining and experiential activities filled much of the post 2008 recession gaps in many towns and cities, but casual dining itself has become a major casualty, starting well before covid-19 and now accelerated by it.  So, what are the post covid-19 innovations going to be for the typical destination High Street? Does it need to be radically different, or is it simply variations on the theme of more of the same old pre-covid solutions? 

The scale of closures and/or the price of retaining weakened but viable tenants is likely to see a painful reduction of achievable rents and a potential, wholesale down grading of commercial property values.  That is a structural shift on a potential scale that is too big for us to easily quantify, let alone to qualify in terms of its likely immediate and longer-term consequence. Nonetheless, the questions need to be asked and the full range of possible implications discussed, even if it results in no firm answers.   In theory at least, it also further undermines the basis for the Business Rates system (assessed, achievable rent), which many now feel, requires radical change and not just the minor adjustments, like those currently being considered by HMG. Is the solution to allowing a significant reduction in the property related cost of doing business in the High Street and letting the market decide what is or is not then occupied? If it is that simple, then what are the intended and unintended consequence of that for public and private sector property related income? If most properties are occupied but the owners, occupiers or the public authority don’t have the means to invest adequately into either the properties themselves or the surrounding public realm, then the appeal of the place may still in time be equally damaged, only by a marginally different mechanism.

More controversially perhaps, the immediate impacts of covid-19 have prompted questions about the very nature and value of popular UK tourism, both at home and abroad. At one end of the scale the largest owner of hotels in Benidorm, in the face of a lack of British tourist, has apparently questioned whether the largely cheap and cheerful, mass tourism market that the resort was built on over the last 60 years, was sustainable even before covid-19, let alone in an uncertain covid or post-covid world.  At home the lifting of lockdown has prompted numerous reports of staying and day trip visitors treating, in particular, our coast and countryside as though it were some massive unfenced, free festival ground to be used and abused, without any reference to social norms. Similarly, many individual businesses, of different types have reported a range of anti-social or needlessly unpleasant behaviours, that they wouldn’t normally expect from their “typical customers”.  At the extremes and between the two, the underlying points being made is about the “wrong type of tourist” in the wrong environment, often paying too little, usually in the too great a number for the carrying capacity of the business or place.  In the Benidorm example the argument is that covid-19 has come as a body blow to a fighter already on the ropes, after years of being hit by increasing local costs and largely static or falling prices/revenues.  The model is said to be broken and higher prices, probably acceptable to far fewer visitors is the suggested way forward. I don’t sense anyone is suggesting that the UK domestic model, as was or as is just now, is broken as such.  It is perhaps just not as well loved, well understood or as well nurtured as it might or should be, relative to its true social and economic contribution?

While in theory, individual business might have the luxury of being more or less selective about their own customer base, it becomes progressively less easy for a defined areas within a destination, let alone an entire destination, sub regions or indeed nations to go (or stay), “upmarket”, especially if that means the number of businesses and the level of employment within the visitor economy has as a consequence to contract as it abandons popular and volume, for higher value, typically lower volume trade. There is seldom any harm in aspiring to be upmarket, provided the reality isn’t so far removed from the aspiration that you fail to please anyone.

The unprecedented, hopefully temporary, changes to the profile and activities with UK tourism market are potentially so marked this year that they do give us a unique opportunity to study the effects and ask some fundamental questions about what kind of tourist, in an ideal world, we would want, where and when within the multitude of often very different UK destinations, already by necessity catering to a range of differing market segments. It is still probably worth doing even if in our heart of hearts, we already know that very often what we actually get, when and why, is to a greater or lesser degree, largely outside of our direct control. I also suspect some may favour the more practical view: be grateful for what you do get and if it becomes a local problem then deal with the consequences as they occur.

 Before we ask any of these interesting question’s we probably first need to establish beyond the anecdotal, what “type of tourist” we actual saw where, in what quantity this year and more important what type we didn’t, that would normally expect to have seen.  That isn’t necessarily the level of information that we can get directly from standard national and local value and volume research so it may prove to be difficult to separate local prejudices and perceptions from the evidenced realities at either local or wider national level. That doesn’t mean we shouldn’t at least try.

In the coming weeks and months, the intention is to identify as many of these emerging potential structural issues for tourism and for popular destinations.  The purpose being to start identifying tactical and operational solutions that we can be applied locally now and to start to  identify strategic interventions that can be flagged up to the Westminster and the Home Nation Governments as they wrestle with these issues, as surely, they must, over the coming months and years.

As ever, member’s views are critical to developing our thoughts on what the issues are and what the options to tackle them may be.  Please let me know what think and especially thoughts on areas where I may have already started to got it wrong or critical areas or issues that are not touched on here, for example, English Language Teaching, scares asset reliant events like airshows, the currently largely obscured loss of routine non-conference and event related business tourism, or even the uncertain performance of domestic VFR.

One thought on “Cause to pause and think hard now the Summer season is ending?

    Andrew Keeling said:
    September 4, 2020 at 6:26 pm

    Hi Peter
    I agree with a lot of what you are saying. There is however perhaps some casue for optimism as a result of the strength of stayaction demand that seaside resorts saw in July and August, which I think should be sustained into September and October and perhaps even into the winter. Resorts should be in a strong position to benefit from the staycation boom in 2021. The challenge and the opportunity is to deliver fantastic guest and visitor experiences to build sustained staycation demand going forward, beyond the pandemic. My research shows strong interest in hotel acquistions in seaside resorts from investors and lifestyle buyers. Government financial assistance would be helpful to support investment in resort hotel and visitor accommodation offers in order to fully capitalise on the staycation boom.

    Resort hotels and guest houses still face many challenges ahead in terms of:

    – the lack of winter conference business;
    – a likely slow return in coach holiday business – although this market could strengthen in terms of higher-rated shorter coach breaks, with the very cheap coach holiday business no longer there with the demise of the larger players at this end of the market;
    – the loss of stag and hen party business – an important market not to overlook;
    – the lack of winter events business related to theatre productions, pantomimes and concerts;
    – the phasing out of the furlough scheme.

    There is a real dange, I think, of hotel and guest house closures in seaside resorts over the coming winter. This could end up with boarded up properties on seafronts or the permanent loss of seafront hotels and guest houses to other uses such as residential, care homes or HMOs. Both outcomes would seriously damage the future potential of resorts as tourist destinations.

    As we have previously discussed, all of this points to an urgent need for robust research to fully understand these various issues, threats and opportunities and to build the evidence base that is need to talk to politicians. Without this evidence, we will merely be commentating on what is happening, rather than doing anything about it.

    Thanks again for your very thought provoking analysis.

    Kind Regards

    Andrew

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