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COVID-19 has been bad for business, especially the UK’s travel and tourism industry. Alison Coleman examines what lifting lockdown measures will mean for the sector.

The last decade has seen the UK tourism industry become one of the country’s fastest growing sectors, with a value forecast to reach £257bn by 2025. But that was before the global COVID-19 pandemic.

Now the industry is set to lose £37bn this year alone, according to VisitBritain, with a sharp fall in visitor numbers both from overseas and the domestic market. SMEs in the hospitality and leisure sectors have been the worst affected by this coronavirus, losing over half (54%) of their monthly business income, according to research from Aldermore.

For some, the impact of quarantine measures for overseas visitors means that 2020 has been all but written off. Last year, inbound tourism was worth £28bn to the UK economy, but since March it has earned very little revenue.

Joss Croft, CEO of travel trade association UKinbound, says: “The reopening of hotels, attractions, pubs and restaurants is a positive step. But for the majority of our tour operator and destination management company members, which rely solely on international visitors for their entire revenue, only when quarantine measures are lifted will they see business begin to recover. Realistically, most will be unable to earn any substantial revenue until spring 2021 at the earliest.”

With the easing of lockdown measures signalling a reopening of hospitality, travel and leisure businesses in July, hotels, holiday parks, restaurants and attractions will have the opportunity to benefit from domestic tourism. But they face huge challenges in remaining viable, while complying with strict COVID-19 health and safety regulations.

Hotels and restaurants

The pandemic has brought wholesale changes to hospitality venues and the way they can serve and accommodate their customers, with the biggest challenges around the areas of hygiene, safety and social distancing.

Restaurants are investigating different seating options to safely allow for a profitable density of diners. The focus for many is on outdoor seating, as long as they have the outdoor space and money to invest in heating and weatherproofing. Technology is expected to play a key role in maintaining safety and viability, for example, via mobile apps for placing orders and paying for them to keep physical interaction to a minimum.

In hotels, high-density accommodation and eating spaces mean that space will need to be reconfigured. Buffet food service will be a thing of the past, while areas normally designated for meetings and events need to be repurposed. New COVID-19 cleaning protocols could cost a 250-bed hotel on average £100,000 a year, according to hotel operations platform Optii Solutions.

For many, the decision to reopen is a difficult one. “There is no point opening a business to lose more money than it already is,” says James Berkeley, Managing Director of Ellice Consulting. “The simpler the business, the easier it is to make the call. Some will be wiped out, but I think the majority can be reconfigured. We will also see innovation among smaller brands, structured in a way that is lean and simplified, but allows them to get up and running where other businesses can’t.”

Some hotels are pivoting to an exclusive-use only model, offering private rental of the property and its grounds for large groups. As hospitality consultant Hannah Frances Boulton explains: “Private rental, for example, for weddings and events, is generally limited to maintain exclusivity of the property; however, in the post-pandemic environment, private rentals are a safe and luxurious option for groups – and group travel will be especially compelling after months of isolation.”

Exclusive use can be very lucrative for hoteliers, with high-end destination hotels charging up to £50,000 a night for exclusive use of all bedrooms and grounds, plus minimum food and beverage spends of up to £20,000. Depending on the service level, overheads are considerably reduced.

Boulton adds: “Hoteliers may opt to reduce housekeeping, front of house and catering staff in order to keep contact levels to a minimum for the protection of both guests and staff.”

Caravan parks and camping

Holiday parks and campsites generate £9.3bn a year in visitor expenditure, equating to £5.3bn gross value added to the UK economy, according to the UK Caravan and Camping Alliance. Post-lockdown, caravan accommodation on holiday parks provides safe, isolated spaces without the person-to-person interaction found in other types of holiday accommodation, such as hotels and B&Bs.

“Most parks will be operating with only essential facilities remaining open, due to the effect of implementing social distancing measures. However, this will also help holiday parks keep their costs down for the remainder of the year,” says Gareth Irving, Founder and CEO of UKcaravans4hire.com.

Due to the seasonality of caravan and holiday parks, investment generally takes place over the winter period in preparation for the year ahead, but in the absence of any Easter season income this year, operators have struggled with cash flow. “Advance bookings have been taken to generate much-needed income and restore cash flow imbalances, and many operators are offering generous refund terms to attract as many bookings as possible,” says Irving.

Camping also equates to safe, self-contained holidaying, and the sector was one of very few to receive a boost this year thanks to the lockdown trend of garden camping. Since the beginning of lockdown, camping equipment retailer OLPRO has seen a 13% increase in total revenue, a 32% increase in website traffic and a 53% increase in total orders.

Its Managing Director Daniel Walton says: “At the start of the pandemic there was a slump in the demand for camping equipment as people couldn’t go anywhere during lockdown. Then they discovered garden camping and by May business had really started to return. I think a lot of people who were looking forward to holidays abroad are now looking at camping in the UK instead.”

Social distancing will clearly have an impact on capacity and demand for visitor attractions and leisure facilities. In the seaside resort of Blackpool, which attracts more than 18 million people a year, its famous attractions, including the Pleasure Beach and the Tower, are managing this challenge through online booking, allocated time slots where appropriate and controlled queuing systems.

The town’s annual seafront Blackpool Illuminations extend the normal tourist season by a further nine weeks from the start of September into late autumn. To help the resort to recoup some of the trade lost in the first half of the year, this year’s Illuminations season will be extended to 3 January 2021.

With uncertainty and a degree of anxiety about taking foreign holidays, domestic tourism is likely to increase, at least in the short term. There is also the economic impact to consider – people may only be able to afford short staycations. In the longer term, if UK tourism businesses can innovate to offer the experiences that visitors want and expect, the industry should make a sustained recovery.

Location, location, location

Some areas of the UK, such as the south-west (including Cornwall and Devon), Cumbria and North Wales, are perennially popular with ‘staycationers’, and their tourism businesses are battling hard to overcome the effects of COVID-19.

Last year, Cumbria’s visitor economy contributed £3bn to the county. But by the end of May, the pandemic had cost more than £1.45bn – almost half of tourism-related income for the county for the year – according to new research from Cumbria Tourism.

Its Managing Director Gill Haigh says: “Around a third of businesses were expecting to fully reopen in early July, while others will partially reopen. While they are eager to welcome visitors back, the average opening capacities will be around 60%. This is why it is absolutely crucial that financial support for the sector is forthcoming. Our research also found that increased costs are a major worry for three-quarters of businesses, with a fifth expecting to make redundancies or reduce staff wages.”

The south-west has also been affected, as John Turner, CEO of Visit Somerset, explains. “Demand for self-catering and camping sites is currently high, however, most operators are running at around 40% of turnover compared to the previous year,” he says. “In the short term, the self-catering and B&B sectors are expected to retract with some closures, but recover within the next 12 months.”

Somerset’s hotel sector remains stagnant. It’s running at 30% of capacity, with recovery being based on government guidelines and likely within 12 months, says Turner, with government support for the sector.


City breaks may now seem less appealing – they are more crowded and attractions such as theatres may not be fully open for some time. However, James Berkeley from Ellice Consulting believes that some areas of the city-based accommodation sector will bounce back fairly quickly.

“Serviced apartments, such as Frasers Hospitality and Native, by the nature of their structure, are very easy to run,” he says. “If people come to London or Edinburgh from overseas, for example, and have to quarantine for two weeks, better to do that in an apartment with some size and scale than in a small hotel room. That business will come back.”

Select service hotels, such as Travelodge and Holiday Inn, offer a scaled-back hotel with a fairly limited offering. In city tourism hotspots such as Bath, Oxford, Exeter, Glasgow and Chester, that business is likely to recover because cash-strapped visitors are willing to trade some of the hotel experience for a more basic option.

“It is easier to manage, from a staffing point of view, and also from the simplicity of the business model,” Berkeley adds.

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  • Update History
    11 Aug 2020 (12: 00 AM BST)
    First published
    26 Apr 2023 (12: 00 AM BST)
    Page updated with Related resources section, adding further reading on how to steer your business through an economic downturn. These new articles provide fresh insights, case studies and perspectives on this topic. Please note that the original article from 2020 has not undergone any review or updates.