22% of adults have stayed, or expect to stay, in holiday rental property during 2021, compared with 10% in 2020. This points to a strong surge in demand for domestic rentals as UK tourism continues to open up and uncertainties persist over travel abroad. Holiday rental property has the highest level of future growth potential of any holiday accommodation type. Some 47% of adults would be interested in staying in future, compared with 26% who have stayed in the past three years.

Like all travel, holiday rentals were heavily impacted by COVID-19 in 2020, but the staycation surge of 2021 will leave a positive legacy for the market, raising demand to a higher level than seen prior to the pandemic. Overseas rentals will be slower to recover, but in the long term should benefit from rising consumer interest in alternatives to hotel/resort accommodation.

The short-term rentals market is under growing scrutiny over its social impact in local communities, for example its effects on local housing stock and over-crowding in popular locations. Failure to manage these impacts sustainably may result in local and national regulation and will tarnish the image of rental brands.

Opportunities include: property in remote, off-the-beaten-track locations for those seeking escape from the city; premium/luxury rentals; and larger properties as the end of COVID restrictions unlocks consumer demand for extended family gatherings and getaways for groups of friends.

Key issues covered in this Report

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

  • Long-term potential in the holiday rental property market.

  • Key players, distribution trends and new launches in the holiday rental property market.

  • Important factors consumers look for when booking holiday rental property.

  • Other consumer preferences and opportunities for holiday rental property.

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.

Data on the size of the domestic market is for Great Britain rather than the United Kingdom (ie Northern Ireland is not included), sourced from GBTS for the period up to 2019 and estimated/forecast by Mintel thereafter. Equivalent data for the overseas rental market is not available, but the volume of rentals abroad is estimated by Mintel and this segment is included in our consumer research for this Report.

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, the Prime Minister 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.

From 12 April self-contained accommodation such as campsites and holiday lets were reopened for those living within household bubbles. Hotels, hostels and B&Bs were allowed to reopen from 17 May, and the ‘rule of six’ or two households then applied for all indoor gatherings. It was intended that all social restrictions would end by 21 June, although the growth of the Delta variant means this final lifting of restrictions was delayed (currently expected on 19 July). 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.

As of 1 July 2021 overseas holidays are permitted for a limited number of ‘green list’ destinations (with testing requirements but without quarantine). The government advises against travelling to ‘amber list’ destinations but this is not against the law provided travellers take tests and quarantine on return. Holiday travel is not permitted to ‘red list’ countries.

Even before the full reopening of the economy, retail sales and Mintel’s own household finances tracker provided encouraging signs of a return to consumer confidence, and a willingness to spend at least some of the savings that many households were able to build up over lockdown period.

The UK’s vaccination programme started on 8 December 2020. As of 30 June 2021 85% of the UK population had received their first dose of the vaccine and 62% had received their second dose.

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, but also take into account predictions made by other economic forecasts, including the Bank of England.

After the fall of 9.9% over the course of 2020, the OBR’s scenario suggests that UK GDP will grow by 4% in 2021 and 7.3% in 2022. GDP is not expected to return to pre-COVID-19 levels until the second quarter of 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 the fourth quarter of 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.

The rapid vaccine rollout and the continued efficacy of the vaccine, however, means that more recent economic forecasts have been significantly more optimistic than the OBR’s March forecast, even given the rise of the Delta variant. We have factored this rise in optimism into our market analysis and scenario forecasts.

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