38% of UK adult overseas travellers are interested in hiring a car during a holiday abroad within the three years from November 2020, which is noticeably higher than the 29% who hired a car in the previous three years. Interest peaks among families and affluent travellers, indicating greater demand for larger cars and premium vehicles.

The national lockdown from the start of January 2021 has further delayed a recovery of the holiday market, with just 13% of UK adults having booked their main holiday for 2021 as of early March. Uncertainty about the lifting of international travel restrictions is increasing demand for staycations. However, with 40% of holidaymakers still planning to go abroad, a surge in car hire bookings and self-drive (touring) holidays is likely once it is confirmed when and where Britons can travel.

Due to economic uncertainty and lingering COVID-19-related concerns, more Brits will cut back on the number of holidays they take and/or take a staycation in lieu of an overseas trip. While this could depress demand for holiday car hire abroad and self-drive holidays from the UK, new opportunities will arise for brands to develop and promote self-drive touring holidays in the UK.

As a result of the emergence of innovate app-based car hire platform service start-ups, car hire companies have an opportunity to create an on-demand, frictionless and flexible car hire experience for their customers. This can help unlock hidden demand for day trip rentals from city centres and help fight competition from rideshare companies.

Key issues covered in this Report

  • The impact of COVID-19 on holiday car hire and self-drive holidays.

  • Experience and interest in holiday car hire and self-drive holidays.

  • Motivations for holiday car hire and self-drive holidays.

  • Competitive threats to traditional car rental companies.

  • Company activity during the pandemic.

COVID-19: market context

The first COVID-19 cases were confirmed in the UK at the end of January 2020, with a small number of cases in February. Rapidly rising case numbers led to the first national lockdown, starting 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.

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 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. All four UK nations tightened restrictions further in January 2021, effectively leading to a full UK-wide lockdown.

On 22 February, Boris Johnson announced the roadmap to an easing of restrictions in England, starting with the reopening of schools on 8 March, followed by easing of restrictions on outdoor gatherings on 29 March and with a hoped end to all restrictions by 21 June. The Welsh and Scottish governments also gave more details on their plans to ease restrictions, with both nations taking a slightly more cautious approach to the one planned for England.

The UK’s vaccination programme started on 8 December 2020, and with the Pfizer-BioNTech, Moderna and Oxford-AstraZeneca vaccines licensed for use in the UK, the government aims to offer a first dose of the vaccine to 32 million people by mid-April.

The UK government’s roadmap states that domestic holidays in self-contained accommodation will be allowed from 12 April, for use by members of the same household, as long as four conditions are met. These include the vaccine rollout going smoothly, no surge in hospital admissions, evidence to show vaccines are working at reducing deaths and hospital treatment and that new variants do not threaten any of the above. The rest of the accommodation sector may be allowed to open from 17 May, but will be subject to stage three social mixing rules, which limit indoor gatherings to six people or two households. On 12 April, the Global Travel Taskforce will publish a report with recommendations for the restart of international travel. After this, the government will issue further guidance on when to resume international travel, which will be no earlier than 17 May.

Economic and other assumptions

Mintel’s economic assumptions are based on the Office for Budget Responsibility’s central scenario included in its March 2021 Economic and Fiscal Outlook Report. After the fall of 9.9% over the course of 2020, the scenario suggests that UK GDP will grow by 4% in 2021 and 7.3% in 2022.

GDP isn’t expected to return to pre-COVID-19 levels until Q2 2022, although this is six months earlier than the OBR forecast in November 2020, mainly because of the faster-than-expected rollout of vaccines.

Unemployment is expected to peak at 6.5% in Q4 2021. As with GDP, this is more positive than the OBR’s November forecast, but the OBR does raise the prospect of long-term scarring on employment, especially in the more exposed retail and hospitality sectors.

Mintel’s forecast is based on the assumption that the vaccine rollout will limit the risk of any new outbreaks and will lead to a gradual opening up of international travel. However, some measures to control the virus, such as testing and quarantine measures, may be in place for some time, making international travel more difficult. The forecast is furthermore based on the assumption that the emergence of vaccine-resistant strains can be well contained.

Products covered in this Report

This Report focuses on holiday car hire/self-drive holidays abroad, but self-drive touring holidays in the UK are also referred to. Business trips and visiting friends or relatives are not included. Bookings may be made in the UK, but the primary use for a vehicle must be for a holiday abroad.

Overseas self-drive holidays are defined as:

  • Holidays involving driving from the UK to an overseas destination (via tunnel/ferry), involving an overnight stay.

  • Holidays involving using a hire car, or private vehicle located abroad, to travel to multiple overseas destinations after using another form of transport (eg flight, train, ferry) to leave the UK, involving overnight stays.

A self-drive touring holiday in the UK is defined as a holiday involving using a hire car or private vehicle to drive between multiple destinations involving overnight stays.

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