Will there be a British summer holiday boom bonanza?

At the Crown Hotel in Wells-on-Sea on the beautiful North Norfolk coast, Chris Coubrough is waiting patiently, again. The New Zealand chef and owner of the Crown says he can smell a shift in the sea air, a wave of optimism after one of the bloodiest years ever experienced by Britain’s holiday industry.

“You can sense a new mood of optimism percolating through the gloom. If the PM says hotels and the hospitality industry can open up in the spring when he sets out his roadmap out of lockdown on 22 February, then the mood will start bubbling again. And the phones will start ringing again off the hook. ”

And it doesn’t take much to swing the public’s mood. Coubrough says that within 48 hours of Matt Hancock saying at a recent TV press briefing that he would be holidaying in Cornwall this year, the phone started buzzing again after a long bleak winter.

“The last 10 days have been busy with people booking for the summer – many of them who cancelled from last year. If travel restrictions and quarantine stay in place, then I hope we may be looking at a summer bonanza.

“I am hearing the same from other hoteliers along the coast – once we are out of lockdown, the Brits are going to fill up our beaches from coast to coast. Planning a holiday abroad is too full of problems – even we’ve cancelled ours to Ibiza.”

It’s a view shared by hoteliers and holiday operators across the country who, like Coubrough, are hoping for, if not quite a bonanza, then certainly a boost to the UK’s tourism industry as the great British public decide that a staycation is by far the most sensible option during such a period of uncertainty.

Whether Britons choosing to stay here at home will make up for the decimation of the hospitality industry over the last year is quite another matter. Hoteliers like Coubrough have, despite being able to put staff on the furlough scheme, still had to dip into savings or take out the government Covid business loans – or both – to keep afloat.

No one thinks of all the associated costs involved in running an empty hotel, he says: “I’ve still had to pay the license fee for all the TVs in our rooms, had to keep the fridges running because they work better if they are on all the time and pay whacking insurance on the hotel throughout.” Plus he has to sleep on the premises because of insurance requirements.

Like Coubrough at the Crown, hoteliers and other holiday destinations from Cornwall to Pembrokeshire to St. Andrews are reporting serious interest from Britons planning a staycation.

If the majority of Brits decide against jetting off, then the industry could indeed be in for a boost. In 2019 – the last “normal” year – UK residents made 58.7 million holiday visits abroad and spent £62.3 billion on their trips in 2019. By contrast, overseas residents made 40.9 million visits to the UK in 2019 and spent £28.4 billion.

While the numbers suggest an uptick in spending if people stay at home – around £14bn – there are many reasons why the overall impact is unlikely to be so great. First, this will be a short season – let’s say from May to August. Second, holiday destinations will not be able to operate at full capacity. Third, foreign visitors to Britain, particularly the Chinese, spend more per head here than British tourists do. As one Scottish mill owner said, the Brits buy a pair of socks or two to take home as a momentoe while the Chinese buy the entire cashmere jumper colour range.

Finally, labour costs. The double-whammy of the pandemic and Brexit has meant that many EU workers, who were employed in the British hospitality trade, have returned home. Anecdotally, hoteliers and restaurateurs say they are unable to quantify the impact of losing so many workers on labour costs because of the exceptional circumstances of the pandemic.

At one stage, 80 per cent of the staff that Coubrough employed at the Crown came from the continent but today he – and one Polish employee – are now the only non-Brits. So far, he has not had any problems employing local workers or faced higher costs.

So what would it take for this summer to turn into the Great British Summer Holiday?

Visit Britain, the country’s trade organisation for the tourism industry, also reports a groundswell of interest in staying at home. Yet for all the obvious reasons, it’s official forecast is circumspect. The trade body estimates there will be a recovery to £62 bn in domestic tourism spending, some 79 per cent up on 2020 yet still only 67 per cent of the level of spending seen in 2019. This breaks down to £18bn being spent on domestic overnight tourism spending – an 82 per cent growth on 2020 but 73 per cent of the 2019 level – and £44 bn in leisure day trip spending, 82 per cent higher than last year  and 67 per cent of the 2019 level.

Visit Britain director, Patricia Yates, cautions this is a short-term forecast, involving many assumptions and simplifications due to the fast-moving and fluid situation brought about by the pandemic.

However, VisitBritain forecasts that even if there is a relaxation of restrictions in the spring for hotels, B&Bs and other holiday accommodation, the year as a whole will not be back to pre-Covid levels of spending in any form for domestic tourism.

But it’s not too ghastly a prognosis: by the end of the year the value of spending will be back to 84 per cent of 2019 levels – though not enough to make up the gap.

Indeed, VisitBritain’s latest scenario forecast for inbound tourism in 2021 – assuming no big changes to quarantine rules – is for 11.7 million visits, up a fifth on 2020 but less than a third of 2019 levels. It estimates that £6.6 billion will be spent by inbound tourists, up 16 per cent on 2020 but less than a quarter of the 2019 level, a big fall on original forecasts.

John Boston of the British Holiday & Home Parks Association is another holding his breath for the Prime Minister’s roadmap. Over the last year the BH&HPA, which represents 2,300 holiday parks ranging from caravan to glamping sites throughout the country, has been decimated by lockdown closures. While most of these holiday parks are either SMEs or family-owned businesses, they support 170,000 jobs and generate £9bn a year. Like Coubrough, Boston sees some glimmer of hope, albeit it from a devastated base.

“Bookings for this summer are coming in now, but many of them were held over from last year and have been transferred. Even if bookings are higher this year because of people choosing to have a staycation, many of these parks will not be able to operate as before because social distancing measures will have to stay in place. Hopefully, this year will be better than last year but it’s going to be tough for these mainly family-owned businesses.”

Another glimpse of how badly the hospitality trade has been hit comes with new figures from UHY Hacker Young which estimates that the UK’s 100 top-earning restaurant groups collapsed into the red to  to the tune of a ghastly £571m last year. This compares to losses of £269m at the end of last March.

To help stave off bankruptcy, the industry’s trade body, UKHospitality, wants the government to do more to help the sector by extending the reduced 5 per cent rate of VAT until the end of 2021 to prevent another wave of redundancies. VAT is scheduled to revert to 20 per cent at the end of March.

Yet economist Julian Jessop takes a more sanguine outlook for the UK economy post-lockdown. Jessop reckons that – assuming restrictions are eased by the end of the spring – that UK economy could be back to pre-Covid levels by the autumn. He says that on the basis that lockdown reduces GDP by 10 per cent, each month costs about 0.8 per cent of a full year’s output. Put another way, the cost of three more months of lockdown is about £55bn sliced off growth.

If the benefits of a faster vaccine rollout means the UK can open up three months earlier, then he reckons there could be a boost to the UK economy of 2.5 per cent this year. And if so that would largely be due to the £125bn that the Brits have squirrelled away during the last year, the money they haven’t spent going to pubs and restaurants – or going abroad – and all those other frivolities we used to splash our cash on.

Even the Bank of England’s forecasts have been jollier of late. Andrew Bailey, the Bank’s governor, said recently that growth is projected to recover rapidly towards pre-Covid levels over 2021, as the vaccination programme is assumed to lead to an easing of ‘Covid-related restrictions and health concerns.’

As Jessop says: “We saw after the lockdown last spring which knocked 25 per cent off GDP in one month that consumers behaviour changed very quickly. Once we were out of the spring lockdown, people were out and about and spending as usual. There is huge pent-up demand. The same could happen again this summer, and this could be a great boost to Britain’s holiday industry but also the wider economy.”

What happens, though, if Spain and Greece come to some sort of deal with Britain on “vaccine passports” for those over 50s who should have had their vaccines by May? Will that shift the air again, drawing holidaymakers back to the hotter climes of the Mediterranean? It’s far too early to say but the thought of those even longer airport queues wearing masks, being socially distanced and having to quarantine when you return will surely put off many would-be travellers. I for one will be heading up to those vast Norfolk skies.