As the cost-of-living crisis continues apace, and the value of pound remains low, affordable staycations are back on the agenda with people choosing to holiday near UK tourist hotspots, instead of taking trips abroad. With this in mind, AGO Hotels is looking at what this means for its own business and the wider UK hospitality market.
The latest increase in interest rates is the highest single jump in 33 years. With this at the forefront of minds for the majority of the UK population, affordability has become the focus. Travel, much like most other commodities has substantially risen in price. As a result of the cost-of-living crisis, which is severely impacting household budgets, it is very likely the UK economy / budget hotel sector will see an upsurge in staycation demand. For those opting for a staycation they will be looking for value, balanced with quality and location. Location plays an integral part of the decision-making process and knowing there will be suitable activities and attractions available so the guests can make the most of their holiday. Hoteliers must now more than ever try to capitalise on any and every opportunity, endeavouring to demonstrate the benefits of their location from the very first time the guest views the hotel online to when they work through the door. This could, arguably should include offers and packages for guests at the local attractions, “stay in our hotel and receive a discount or complimentary entry to local attractions”. Pre-arrival communication with the guests, and again on arrival, if it is relevant, provide guests with information on how they can make the most of their stay. As far as is relevant to the style of hotel, guests will expect the very best stay and in times of economic uncertainty, hoteliers must not lose track of how important a straightforward, positive experience is for guests, achieved through ease of booking, seamless check-in and a top sleep experience.
As well as the weak pound having an impact on the movements of UK residents, we are seeing how it is driving change from overseas. There has been a recent increase in tourism as overseas opportunistic travellers are looking to capitalise and take full advantage of the weak pound, which is providing a welcome boost for many hoteliers. Some hotels in key locations are reporting significant increases to their occupancy level and tour operators have been calling Quarter 3 2022, their best trading period for bookings since October 2019. This is particularly true in the case of tourism from the US. The US has always been one of the strongest feeder markets of tourism into the UK and there is every sign this will continue if the costs of flights remain manageable and there is no further disruption at airports as we saw in the early part of summer.
At AGO, we expect to see the benefits of staycations across our entire portfolio. Those hotels closer to attractions and visitor experiences, and in more leisure destinations will clearly have a greater demand, though with the weak pound attracting the foreign guests there will likely be demand from a broader pool of guests. With very competitive room rates we remain committed to providing those wanting a trip away this winter, a cost-effective comfortable option.
While we do try to create growth in occupancy, we must not lose sight of the significant impact caused through the economic crisis the UK is experiencing. This is impacting room rates, and with ever increasing inflation, costs of running the business are higher than ever. The impact of paying higher wages, higher supplier costs and a raft of other increases in costs means the conversion to the bottom line is under significant stress. Remaining profitable and staying open to welcome guests is ever more uncertain. As we move into winter, and the quieter season for the UK hotel market, the coming months will be very telling.