Focus on... reopening

Updated: 16th June

Our Hotel & Leisure sector index has shot up since restrictions were eased in May, fuelled by the UK’s huge appetite to eat out.

Opentable restaurant bookings rose from 42.1 on the 17th May to 189.2 on 5th June, they fell back to 143 on the 9th but the data shows that the volume of people eating out is well ahead of its pre-pandemic level. This is encouraging for the sector as it suggests there is a clear willingness (for the time being at least) from people to spend some of the money they have saved during lockdown periods. Clearly, the sector still faces huge challenges after the impact on revenues last year and staff shortages as a result of Brexit and Covid have recently come into the spotlight.

Hotels have further to go but are on a promising trajectory. RevPAR has reached 64.9, the highest level since the pandemic began and more than double where it was in early May. The exposure of hotels in cities to international and business travel will continue to weigh on recovery while significant international travel restrictions remain. As more cultural venues, like theatres and concert venues, resume programming, we anticipate this will provide a boost to hotels in cities.

Gavin Brent, Managing Director - Leisure at Avison Young, adds:

“As ever there is a significant amount of activity across the leisure sector and much of it is good news. Of particular note is that two major budget fitness club operators, PureGym and Gym Group, have reported a much quicker recovery than anticipated, both in terms of membership recovery and higher usage of their gyms. Both these operators are still opening clubs and we are acting for other operators who are looking to open clubs or expand their existing facilities.

The holiday property sector continues to boom, with a 25.5% increase in spending reported on staycations in May and a number of our clients forecasting record trading levels in June, despite requirements for social distancing.

We have also seen a recent uptick in activity from banks and institutions, particularly following the lifting of the Material Valuation Uncertainty Clause and we expect to see increasing levels of M&A activity, as investors and well-funded leisure operators are positioning themselves to take advantage of the sector’s recovery.

However, some leisure operators, like nightclubs, are yet to open and others, like city centre bars, are struggling to operate at levels which make them viable, given not only the limited return to office but also the need to accommodate social distancing.

The postponement of the final step in our roadmap out of lockdown will come as a blow for affected operators and there is also increasing concern over accumulated debt and rent arrears, in particular, with the impending lift of the moratorium and this may lead to more CVAs and restructuring.”

Focus on...

This index has been prepared by Avison Young for general information purposes only. Whilst Avison Young endeavours to ensure that the information in this index is correct it does not warrant completeness or accuracy. You should not rely on it without seeking professional advice. Avison Young assumes no responsibility for errors or omissions in this publication or other documents which are referenced by or linked to this index. To the maximum extent permitted by law and without limitation Avison Young excludes all representations, warranties and conditions relating to this report and the use of this index. All intellectual property rights are reserved and prior written permission is required from Avison Young to reproduce material contained in this index.