Skip to main content Skip to footer

Inflation, energy and last-minute breaks boom

Blog Inflation energy and last minute breaks boom hero

As we embark on the last few weeks of the UK school summer holidays it appears that once again the staycation may have become the preference for holidaymakers this year.


Operators are reporting that last-minute domestic bookings have picked up as airlines and airports have made it clear that they’re unable to cope with consumer demand due to lack of staff and sickness; the UK’s busiest airport has even put a daily limit on their capacity numbers – something we’ve never seen before.

Towards the end of last year some sub-markets were already exceeding 2019 RevPAR levels, such as the coastal towns of Bournemouth, Blackpool and Plymouth, and many other markets were achieving higher average daily rates. Nobody ever thought that 2021’s peak rates would be sustained this year, as government backed savings resulted in a bumper trading period particularly in staycation locations. Last year both customers and operators were navigating through a roadmap to increasing freedom, so booking ahead was essential if you were to secure a place to stay away from the confines of your own home. This year with no restrictions in place, customers (particularly those not confined to the academic timetable) have more flexibility around bookings, reducing that pent-up demand operators had last year and compressing daily rates. This last-minute surge in demand could see rates rise once again.

However, there is still a lot of pent-up demand, and net savings in the UK economy increased by £185 billion over the course of the pandemic which under normal circumstance would lead us to several years of positive economic growth.  While this is still true, a lot of it is helping to fuel inflation, now approaching almost record levels, and ADR’s in hotels are certainly benefitting from this.

Transactional activity

From a hotel agency perspective this has been a solid year of trading. At Colliers, so far, we have completed 37 transactions, on par with last year’s activity levels which constituted a record year. There appears to be no let up in interest levels from buyers, both domestically and from overseas investors. Our busiest locations have once again been the staycation markets, with the Lake District, Cotswolds, South West, Wales and parts of Scotland leading the way. We’re seeing many established or growing operators acquiring assets previously owned by private families where in some cases debt added during COVID and the lack of ability to invest are fundamentally altering business models and viability, and these purchases are now encouragingly being supported by the banks.

During 2020 and 2021 there were a noticeable amount of individual and private buyers taking a step into the provincial hotel market as well, purchasing small guesthouses or pubs with rooms in the countryside, however 2022 has seen a slightly lower level of these types of buyers largely driven by funding availability. 

Larger hotels are still attracting a good deal of interest, and there are examples of overseas backed buyers returning to acquire UK hotels. Indeed, in the last fortnight we completed the landmark sale of the Daffodil Hotel & Spa in the Lake District, purchased by Fairtree Alternative Real Estate and backed by Funds advanced by Blantyre Capital Limited. The Daffodil is one of the leading independently-owned four-star hotels in the north west of England. Set in around nine acres of landscaped gardens and woodland, it offers 78-luxury bedrooms, high-quality bars, function facilities and the Spa at the Daffodil leisure facility.

Whilst the regions have been busy, London continues to be a fairly quiet market for transactions, though it is now experiencing its own post-pandemic trading recovery that we expect will give rise to an increase in activity levels next year. 

Customer behaviour

With some international travel returning, the cities which rely on overseas tourists and business travellers are expected to fare much better this year, and the staycation locations should also start to see the return of international travellers.

What is interesting to note about customer behaviour is that hotel bookings are increasingly being made from smartphones, some even suggest as much as 80 per cent of them are made this way – which highlights the need to ensure operators have a mobile-friendly website. While considering consumer behaviour online we have to be mindful of online reviews and their impact on bookings. Observing reviews there’s a lot more criticism out there for those that hiked up their rates but failed to provide the premium service expected with premium pricing. Anecdotally it appears that those who capitalised on last year’s demand may not be faring as well in occupancy levels this year.

Aside from the above, there are increasing numbers of options for where people can choose to holiday. During the last three years there has been a 40 per cent increase in holiday lets available in the UK – websites such as Airbnb.co.uk have made this short-term accommodation option much easier to market, however the call for stricter regulations is likely to dampen supply in the future.

The last-minute uplift in bookings will be a welcome relief for operators, nevertheless the ongoing challenges around staffing recruitment, and retention, are now part of everyday life. Hospitality, just like many other service sectors, is still struggling to replace the staff numbers lost during the pandemic. Shortages can impact on the number of rooms that are made available or the amount of services possible through the on-site catering or additional facilities. All the while there are headwinds from the rising costs of energy, which will obviously affect those with the most luxurious offerings of spa and pool, and also inflation pushing up the costs of food, beverages and sundries. 

However, despite these challenges, the expectation is that RevPAR will once again exceed the pre-pandemic 2019 levels in most key locations and there is a real confidence in the market as operators continue to expand their portfolios across the UK.

View our Hotels services


Related Experts

Julian Troup

Head of UK Hotels - Agency

Hotels Agency

London - West End

I originally trained with a long established firm of Chartered Surveyors based in Manchester and have been working in the licensed, leisure and hotel property market since 1987. I joined Colliers in 2007 to head up our UK Corporate hotel operation. I was appointed Head of UK Hotel Agency during 2011.  Since the beginning of 2003 I have sold or acquired over 100 provincial hotels on behalf of clients of asking prices ranging from £1.2m to in excess of £20m.  In addition to the managerial responsibilities, I remain focused on handling larger private and corporate hotel transactions throughout the UK.

View expert