What you need to know

Although city breaks are forecast to lose market share to rural/countryside-based breaks as a result of the pandemic, these remain the most desired holiday type in the UK. 38% of those who are planning to take a staycation in the year following October 2020 are interested in taking a city break.

The new lockdown announced in early January 2021 will prolong the recovery of the holiday market, as many people will delay decision-making during what would usually be a very popular booking period. However, demand for staycations during the summer period is expected to exceed pre-COVID-19 levels due to pent-up demand following disrupted travel plans and the continued preference to stay closer to home. Holiday rental properties are expected to recover fastest, while hotels will see a slower recovery.

Over-55s, who tend to take longer domestic holidays, are less likely to take a staycation in the short term. As such, brands will have to entice other demographics to book longer stays. One area of potential growth is working holidays. Employers have shown greater flexibility on working locations since COVID-19 hit, enabling more travellers to stay longer at the holiday destination by combining leisure time with time spent working (remotely).

Consumers’ desire to be outdoors remains strong, from which the UK’s countryside can benefit. Nature-based holidays with cultural elements, adventure or wellness have high growth potential.

Key issues covered in this Report

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

  • Future interest in visiting UK regions, holiday types and holiday activities.

  • Likely behavioural changes among visitors.

  • Factors influencing consumers’ choice of travel company.

  • Opportunities to accelerate recovery.

COVID-19: market context

The first COVID-19 cases were confirmed in the UK at the end of January, with a small number of cases in February. 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. It wasn’t until 15 June that non-essential stores were allowed to reopen, followed by pubs, restaurants, hotels and hairdressers on 4 July, and many beauty businesses 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.

By September, it had become clear that the UK was at the start of a second wave, and social-distancing measures were intensified. Continued increases in infection numbers led to Wales implementing a two-week national lockdown from 19 October, England announcing a full month-long lockdown from 5 November, and Scotland introducing a new five-level system of coronavirus restrictions. 

Despite these restrictions, however, case numbers continued to increase, and after a brief relaxation for Christmas Day, a full national lockdown was announced on the evening of 4 January. There is no defined end date for the lockdown: the legislation presented to Parliament extends to 31 March, but Boris Johnson has said that he hopes that schools will be able to re-open after February half term.

The UK’s vaccination programme started on 8 December, and with both the Pfizer-BioNTech and the Oxford-AstraZenica vaccines licenced for use in the UK, the government aims to offer a vaccine to 15 million people by mid-February.

Impact of the January 2021 lockdown and the vaccination rollout

Much of this Report was prepared in December 2020, before the announcement of the January lockdown, and when the extent of the vaccine rollout was less clear.

However, the content was reassessed and, where necessary, adjusted on 6 January 2020, in order to ensure that our analysis and our forecast expectations still hold true.

Our core assumptions on the path of the pandemic had always included an expectation of severe disruption to markets and consumers’ lifestyles well into 2021, with a strong likelihood that the virus would still be with us even into 2022. Although the second wave of infections and subsequent lockdown puts us towards the negative end of our initial expectations, these developments are still broadly consistent with our previous assumptions.

Similarly, Mintel had factored in the likelihood that an effective vaccine would be available from early- to-mid 2021. The licensing of the Pfizer-BioNTech and Oxford-AstraZenica vaccines puts us slightly ahead of that assumption, but the challenge associated with rolling out a new vaccination programme to millions of people means that our previous assumptions are still broadly consistent with the new reality.

Economic and other assumptions

Mintel’s economic assumptions are based on the Office for Budget Responsibility (OBR)’s central scenario included in its November 2020 Fiscal Sustainability Report. The scenario suggests that UK gross domestic product (GDP) will have fallen by 11.3% in 2020, recovering by 5.5% in 2021, and 6.6% in 2022. GDP isn’t expected to return to pre-COVID levels until the fourth quarter of 2022. The central scenario has unemployment peaking at 7.5% in Q2 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 Q4 2021. Its more negative scenario, by contrast, would mean that GDP doesn’t recover until Q3 2024.

The second wave of infections and subsequent lockdown means that the short-term prospects for the country are consistent with the OBR’s negative scenario, but this needs to be balanced against the fact that the vaccine rollout is ahead of even the OBR’s central scenario. Medium- to long-term, then, we are still basing our forecasts and market analysis on the OBR’s central economic scenario.

Products covered in this Report

This Report examines holidays taken in the UK by its residents. These must constitute a stay of at least one night and do not include business trips, visits to stay with friends and relatives or stays solely for events such as weddings or funerals. Data on the size and segmentation of the market is for Great Britain rather than the United Kingdom (ie Northern Ireland is not included).

Back to top