How Holiday Lets Are Evolving the UK’s Hospitality Industry

Beyond the usual lines for security and waiting for your bags after the flight, in many areas of the UK, we have been seeing huge queues and backlogs at airports throughout the year.

A perfect storm of staff shortages and a pent-up demand for trips abroad have all contributed to the chaotic scenes. This, coupled with the current cost of living crisis, has meant many families have been choosing to save themselves the pain and the money of flights by spending their holidays in the UK instead.

This continued high demand for staycations has resulted in an ever-increasing number of holiday lets available in the UK. In England alone, there has been a 40% rise over the past three years. Nationally, according to the CPRE (Campaign to Protect Rural England), between 2015 and 2021, there was a 1,000% increase in short-term lets.

Converting for investment

Converting a second home, annex, or even a spare room into a holiday rental has become a second source of income for many. According to a recent survey conducted by Airbnb, over a third of current UK Hosts responded that they had decided to become Hosts to help combat the cost of living crisis. The average Airbnb also generates around £6,000 a year, so it’s not difficult to see why more people are signing up. 

The Sykes Staycation Index 2021 from Sykes Holiday Cottages reported that enquiries from second-home owners looking to convert their property into a holiday let were up by 91%.

Airbnb occupancy rates are also going up in the UK. This suggests that the popularity of these types of holiday lets is only growing – but what impact is this having on the hospitality industry?

The impact on hospitality

There’s no doubt that the hospitality industry is already facing huge challenges. Whether it’s staff shortages, soaring costs of food and energy, or tax rises, hospitality’s post-pandemic recovery is being hampered.

Despite this, revenue for businesses is expected to rise by 30%, according to the recent UK Hospitality Challenges report. Most of this is expected to come from food and drink outlets such as restaurants, pubs, and bars.

More holiday lets can mean more visitors in certain areas who will go on to spend money at local businesses, restaurants, attractions and so on. So, in some ways, more rentals can give the hospitality industry a boost. 

For more traditional accommodation such as hotels and bed and breakfasts, however, the rise in short-term holiday lets could see more of a negative impact. Currently, the number of holidaymakers staying in hotels versus holiday rentals is roughly equal. However, if more people choose rentals, hotels will feel the impact of less income. 

The impact on local economies

Apart from the benefits listed above, a growing number of holiday rentals can also have a positive impact in other areas. They can create jobs not only in other hospitality sectors but also in services that those rentals will require, including cleaners, tradespeople, and decorators to spruce up properties. In fact, in employment terms, tourism has been the fastest-growing sector since 2010. It is predicted to be worth £257.4 billion by 2025, according to Visit Britain

However, holiday rentals have been receiving more negative attention recently as their increased number can lower the amount of available housing. This then pushes up property prices, which residents struggle to afford. Outside of tourist seasons, it can also leave small villages emptier than they would otherwise be. This has a negative impact on local businesses.

Because of this, calls are growing for more regulation of the holiday rental market.  Scotland, Northern Ireland, and Wales have already begun to implement new regulations, and they are currently under consideration in England

How will hospitality look in the future?

Since its inception in California in 2008, Airbnb has been a huge disruptor in the hospitality industry. It has grown into the third most used online travel agency (OTA) after Booking.com and Expedia. 

One of the main reasons customers choose rentals like Airbnb is because it offers a more local experience. Hosts will commonly chat with the visitors and give recommendations for places to go. 

Taking lessons from Airbnb, the hospitality sector is beginning to diversify its offerings. Premium services, meal kits from restaurants, and more locally-sourced produce are just some of the ways hospitality is attempting to recover in the post-pandemic world.

Hospitality is shifting more towards creating memorable experiences for guests. So before getting out the step ladders and painting, it’s worth considering what value a refurbishment can bring. Does it create a more personalised, localised experience for guests? Can it be made more customisable for those seeking more luxury staycations? 

These are the questions that the hospitality industry will find itself asking going into the future.