COVID-19 has created an opportunity for holiday rental providers to widen their customer base and to close the gap on hotels. A third of consumers who would consider staying in a holiday rental property have not done so in the past three years, indicating room for significant growth.

Holiday rental properties in the UK will recover faster than the wider travel market, due to their affordability and the associated self-catering aspect, which enables travellers to avoid contact with other unfamiliar people. COVID-19 will also widen the sector’s customer pool, as many consumers will try out rental properties for the first time.

Luxury travellers have become more likely to take a villa/cottage holiday compared to before the coronavirus outbreak. However, holiday rental properties are less likely to be associated with being luxurious compared to hotels. To combat this image there is potential to provide extra services in the booking process such as access to staff.

Many holiday rental property users, particularly younger ones, are open to booking local activities and experiences through holiday rental providers. To connect guests with the right offer for accommodation and experiences, search technology can be enriched with experiential search options, such as a feature that allows guests to describe their motivation for booking a trip (eg ‘to celebrate’, ‘to indulge’).

Key issues covered in this Report

  • The impact of COVID-19 on the holiday rental property market.

  • Characteristics of holiday rental property stays (ie location, companions, booking source).

  • Factors influencing consumers’ choice of holiday rental property.

  • Opportunities for future growth in the holiday rental property market.

  • Perceptions of types of holiday rental properties vs hotels.

  • Company activity of key players operating in the holiday rental property market.

COVID-19: Market context (created 4 November 2020)

The first COVID-19 cases were confirmed in the UK at the end of January, with a small number of cases in February. The government focused on the ‘contain’ stage of its strategy, with the country continuing to operate much as normal. As the case level rose, the government ordered the closure of non-essential stores on 20 March.

A wider lockdown requiring people to stay at home except for essential shopping, exercise and work‘if absolutely necessary’ followed on 23 March. Initially, a three-week timeframe was put on the measures, which was extended in mid-April for another three weeks.

The Health Protections Regulations 2020 came into effect on 15 June allowing the reopening of all non-essential stores in England as well as the mandatory use of face coverings on public transport. Pubs, restaurants, hotels and hairdressers were able to reopen on 4 July, with many beauty businesses following on 13 July. From 24 July, it became mandatory to wear face coverings in shops and supermarkets. Rules on travel remain fluid: from 10 July, travellers from more than 70 “low risk” countries or territories no longer had to self-isolate for 14 days, but on 28 July the removal of Spain from this list of low-risk countries dominated headlines in the UK, and further countries (including France, Portugal and Italy) have been removed from this list. Meanwhile, several countries listed by the UK government still impose entry requirements for UK visitors (eg quarantine rules, undertake a COVID-19 test) or have closed their borders to UK travellers (eg Australia, New Zealand). From 25 October the UK government added the Canary Islands to the travel corridor list, which at that point consisted of 58 countries or territories.

On 9 September, new guidelines were announced in England as a reaction to rising numbers of COVID-19 cases. The major change was a tightening of restrictions on social contact, with people only allowed to socialise with groups of up to six people who they don’t live with.

This was followed by a new wave of nationwide restrictions announced on 22 September, including limits on opening hours for pubs, bars and foodservice outlets, a recommendation that people work at home if possible and stricter regulations on when face coverings must be worn.

On 14 October 2020, following a rising ‘second wave’ of infections, the government introduced a three-tier system of restrictions across England, with Medium, High and Very High alert levels. Those in the ‘Very High’ tier were advised to avoid travelling outside of this area. On 5 November 2020, these tiers were replaced with an England-wide lockdown, initially in place until 2 December. This included restrictions on domestic and overseas travel, except for essential work purposes. On 2 November Scotland introduced its own five-level system of restrictions but no national lockdown had been introduced, whilst Wales had introduced a short ‘firebreak’ lockdown from 23 October-9 November.

Economic and other assumptions

Mintel’s economic assumptions are based on the Office for Budget Responsibility’s central scenario included in its July 2020 Fiscal Sustainability Report. The scenario suggests that UK GDP could fall by 12.4% in 2020, recovering by 8.7% in 2021, and that unemployment will reach 11.9% by the end of 2020, falling to 8.8% by the end of 2021.

The current uncertainty means that there is wide variation on the range of forecasts, however, and this is reflected in the OBR’s own scenarios. In its upside scenario, economic activity returns to pre-COVID-19 levels by Q1 2021. Its more negative scenario, by contrast, would mean that GDP doesn’t recover until Q3 2024.

We are working on the assumption that a vaccine will be available by mid-2021, but that there will be continued disruption to both domestic and global markets for much of 2021. We are assuming, as of 4 November 2020, that the England-wide lockdown will come to an end on 2 December 2020. However, continuing restrictions, local lockdowns and social distancing will remain the norm in the UK and abroad until the health threat has abated. Travel to overseas destinations will continue to be subject to changing rules, restrictions and quarantine requirements.

Products covered in this Report

Holiday rental property refers to holiday lettings including cottages, houses, villas, gîtes, chalets, lodges, town/city apartments, flats or just rooms in a house. Self-catering apartments on holiday resort complexes (eg Butlin’s or package resorts abroad) or other types of self-catering property such as camping and caravanning or boat hire are excluded here.

Data on the size and segmentation of the domestic market is for Great Britain rather than the United Kingdom (ie Northern Ireland is not included), sourced from GBTS. Equivalent data for the overseas rental market is not available, but rentals abroad are covered in Mintel’s consumer research for this Report.

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