31st July 2019
THE UK HOLIDAYS SECTOR REMAINS BUOYANT DESPITE BREXIT
The uncertainty created by Brexit has led to an increase in the number of Brits choosing to holiday in the UK – meaning there has never been a better time for property investors to purchase holiday homes.
The Brexit factor
A report by Sykes Holiday Cottages reveals that the Brexit factor is having an influence on where British holidaymakers are choosing to travel. The Sykes Staycation Index, which uses booking figures, consumer research and data to reveal trends in the UK holiday market, shows that the prospect of Brexit has convinced a quarter of Brits to holiday in the UK in 2019.
Market research specialist Mintel have also found that Brexit is having a clear impact on holiday choices. Marloes De Vries, travel analyst at Mintel, said: “While taking a holiday remains a clear priority for Brits, Brexit and economic uncertainties are bringing unwanted storm clouds over the holiday market. As a result, more travellers will consider staycations.”
Staycations on the rise
Sykes have released figures to illustrate the growing interest in holidaying at home. They show that 66% of Brits enjoyed a staycation last year, which is a 10% rise compared to 2017. It was a record year for Sykes in 2018 – with bookings up by 38% compared to the previous year.
Currency rates influencing second home-owners
Currency rates continue to make overseas holiday properties more expensive. Sykes report that this has resulted in increased demand from second home-owners in the UK, who are keen to make the most effective use of their properties all year round. The number of new owner enquiries also saw an increase of 37% during 2018.
Increased revenue for UK hospitality and leisure businesses
The rising demand for UK breaks has resulted in hospitality and leisure businesses reporting increased revenue.
Destinations such as North Yorkshire, the Lake District, Scotland and Cornwall - which are traditionally popular - remain attractive to holidaymakers, while other areas of the UK are also attracting keen interest. The Isle Of Wight enjoyed a 5% tourism increase in 2018, with the the north-east and the Midlands experiencing the biggest rise in demand.
The Great British staycation report, published by Barclays Corporate Banking, shows that 67% of hospitality and leisure businesses in the north-east report an increase in visitor numbers. Of the Midlands businesses surveyed, 63% report a rise since 2017.
Mike Saul, head of hospitality and leisure at Barclays, said: “The top-quality services provided by our hotels, restaurants, resorts and leisure providers are helping the British public enjoy great experiences without having to travel too far.”
“Positive recent experiences” help reinforce domestic breaks habit
The Great British staycation report reveals that after convenience, the main reason for Brits holidaying at home is “positive recent experiences of domestic holidays that people want to repeat”. The figures show that 21% of those planning extra UK holiday time stated that reason as a key factor, which suggests the habit of domestic breaks is being positively reinforced.
The report also shows that more than half of the 25-34 age group (52%) expect to devote more of their holiday time to UK breaks than in previous years. Almost two in five of both 18-24s (38%) and 35-44s (39%) are also increasing their UK time - far greater than the figures for those planning more overseas breaks.
Luxury holiday homes an attraction
Staycationers are increasingly keen to ensure their home comforts are catered for when they take a break. Luxury holiday homes attracted an 39% rise in demand since 2017, Sykes report. Properties with hot tubs, for example, earned 54% more than other properties in the same area. The presence of WiFi and open fires also make a property more attractive to holidaymakers, increasing revenue by 16% and 14% respectively.
Increase in holiday let mortgage applications
The demand for UK holiday properties shows no sign of slowing down, with investors attracted by the growing staycation trend and the tax benefits associated with holiday lets. Leeds Building Society, who were one of the pioneers of holiday let mortgage lending, say that demand has been growing for their products since then.
Matt Bartle, Leeds Building Society’s director of products, commented: “We were the first lender to launch a dedicated holiday let mortgage range in 2013 and continually review our products to meet the needs of borrowers.
“We saw an almost 10% increase in holiday let mortgage applications in 2018 when compared with 2017. Buying a property as a holiday let, like any other property investment, does carry risk but it enables an investor to diversify their portfolio risk by letting weekly to a range of occupiers, rather than relying on one individual to pay their rent each month.”
“There’s never been a better time to invest”
Graham Donoghue, CEO of Sykes Holiday Cottages, points out that with the UK tourism industry going from strength to strength, it is paying dividends for holiday property owners. He says: “With holiday let yields continuing to outpace residential buy-to-let growth, they’re becoming an increasingly attractive option to investors, in terms of low risk and high yielding assets.
“With a surge in demand for staycations, our cottages are generating more revenue than ever before. And with staycations set to soar further, there’s never been a better time to invest.”
To illustrate this, the average property owner letting their holiday home via Sykes Holiday Cottages earned £20,000 in revenue last year – compared to £18,000 in 2017.
Aria Resorts encouraged by market trends
As an emerging force in the UK holiday property investment sector, it is encouraging for Aria Resorts to see the growing demand for staycations.
Ben Nolan-Stone, sales director for Aria Resorts, said: "Many of the experienced investors who approach us have done their detailed research. They are aware that sophisticated investment funds are focused and active in the UK holiday property sector. We expect this level of activity to continue. The great thing about our product is that it works equally well for a qualified individual investor who wants to buy one holiday home or the institutional investor who may buy several. All of the research from highly credible sources is showing that the UK holiday property sector is performing very well and has been resistant to the cloud of Brexit."