Despite limited travel options in most of 2020 and the disruption caused for UK travellers, the vast majority (83%) of UK travellers would like to return to their typical holiday behaviour once COVID-19 has fully cleared. Agreement peaks among over-65s at 91%; a group that is rising in volume, confident in its financial situation and among the first to be vaccinated.

The national lockdown announced on 4 January 2021 led to a further decline in holiday bookings, with only one in 10 consumers having booked a trip in the three months to early January compared to nearly three in 10 a year ago. Nevertheless, underlying demand for travel remains strong and brands can expect a surge in holiday bookings once travel restrictions are lifted. The domestic market will continue to recover quicker, due to the likelihood of (entry) restrictions on travel to some countries, potential quarantine measures and the higher cost of overseas travel.

The pandemic will leave its mark on the economy. Over a quarter of UK holidaymakers intend to take fewer holidays per year after the COVID-19/coronavirus outbreak is over than they typically did before the outbreak, particularly to save money. Nevertheless, some consumers have managed to reduce their outgoings over a quiet 2020 with limited travel opportunities. Brands have the opportunity to entice this group to splash out on travel in 2021, for example by offering more premium accommodation or private experiences.

Rural/countryside-based holidays in the UK and overseas beach holidays will be among the better-performing segments when recovery accelerates in the middle of 2021. Brands will have to promote lesser-known areas to stay as many travellers will not feel comfortable being part of crowds.

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

• Trends in booking behaviour.

• Holidaying intentions and likely behavioural changes in 2021.

• Holidaying motivations.

• Company activity during the pandemic.

The first COVID-19 cases were confirmed in the UK at the end of January, with a small number of cases in February. A full UK lockdown requiring people to stay at home except for essential shopping, exercise and work followed on 23 March. Relaxations to lockdown rules were announced in the week of 23 May, including the gradual reopening of non-essential retailers, and increased opportunities for social interaction across households.

Pubs, restaurants, hotels and other accommodation, as well as many leisure facilities and tourist attractions, were allowed to reopen from 4 July 2020, with social distancing and other COVID-secure health & safety requirements in place. Restrictions on overseas travel began to be lifted from 10 July 2020, with quarantine requirements imposed on travellers entering or returning to the UK from most destinations.

On 8 July 2020, the government announced that it would temporarily reduce VAT for hotels along with other hospitality and accommodation providers from 20% to 5%. This was initially planned to last until 12 January 2021. On 24 September, the rate cut was extended to 31 March 2021.

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 their area.

Between 5 November and 1 December 2020, an England-wide lockdown was introduced. All leisure and hospitality businesses, including hotels and other accommodation, were closed to all guests apart from those who have to travel for work purposes and for a limited number of other exemptions.

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.

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

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-AstraZeneca 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.

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 Q4 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.

This Report examines the habits and attitudes of British adults aged 16 or over towards holiday-taking in the UK and abroad. For the purposes of this Report, Mintel defined a holiday as a stay of at least one night that is primarily for leisure purposes. Business trips and visiting friends or relatives are not included.