Another summer, another heatwave across southern Europe. With wildfires spreading in Greece, Albania, North Macedonia and Croatia, this year is shaping up to be a worrying replay of 2023 when 2,000 tourists were evacuated as fires raged across Rhodes. Clearly, global warming is already affecting travel and hospitality.
What does this mean for tourism in damp and soggy Britain? Many families want guaranteed sun and blue skies for their summer getaways, and so it is particularly unfortunate that the UK school holidays coincide with peak temperatures in southern Europe.
Comments like this one from a British tourist in Corfu are likely to become more common: "It's properly hot - too hot to go outside in the day, except when you're in the sea. We've had to stay in our room most of the day." Ultimately, such experiences will compel travellers to either seek more northerly destinations or visit Spain, Italy and Greece at cooler times of the year.
The pandemic, of course, put the spotlight on domestic holidays. 2021 was a bumper year for staycations although the latest official figures show a 7 per cent decline in domestic overnight stays in 2023 compared to 2022.
Looking at this year, Joss Croft, CEO, UK Inbound, commented: “The cost of living crisis is hampering domestic visitation in two senses – if people have money they are tending to travel overseas this year, and those who are not travelling overseas don’t have the money to undertake the domestic tourism that maybe we saw in the past two or three years and even during the pandemic. Inbound tourism is definitely filling that gap.”
The return of US tourists has been particularly strong, and, traditionally, the UK - London in particular - is a summer haven for visitors from the Middle East and Europe escaping the heat at home.
Needless to say, climate change is impacting the UK too, although one outcome is positively benign: the fertile vineyards that stretch across Kent, Surrey, Sussex, and elsewhere. Investment in English wine from French, American and Spanish producers has increased from £20 million in 2017 to £80 million in 2023, according to property consultancy Strutt & Parker.
In parallel, the tourism offering from UK wine estates is growing year-on-year and includes tours and tasting rooms, cafés and restaurants, with several of the larger estates offering hotels and accommodation. Denbies Wine Estate in Surrey, for instance, includes a 17-bedroom hotel, a restaurant, and health & wellness centre.
The south west of England is the most popular holiday region with UK residents, accounting for almost a third of all domestic spend and overnight stays.
Cornwall’s economy has long been sustained by tourism, but now its mining heritage has been reactivated by the discovery of lithium carbonate, the key component in electric car batteries.
Global demand for lithium is expected to triple in the next decade and experts believe Cornwall could become a very significant player in the industry. Such developments will increase the demand for corporate travel and accommodation in the region.
Looking at investment in UK hotels generally, the first half of 2024 was characterised by the return of portfolio transactions: the £850 million acquisition by Blackstone of the 33-strong regional Village Leisure portfolio; Starwood Capital Group’s £800 million purchase of 10 Radisson Edwardian Hotels in London; and Landsec’s £400 million disposal of its hotel portfolio to Ares Management; and the £210m acquisition of 66 Travelodge hotels from its largest landlord LXi REIT.
The second half of 2024 is looking busy too with many hotel groups looking to be sold. Selling individual hotels will still be tough, but more opportunities are coming up, according to Knight Frank.
Henry Jackson, partner and head of hotel agency at Knight Frank, said: “With a strong pipeline of hotels currently in legals, we expect momentum to continue, and interest rate cuts will serve to further enhance the current optimism for investment in the UK hotel market.”
One notable single asset transaction is UK private equity firm Millemont’s purchase of the 276-roon Yotel in Edinburgh’s New Town.
Ashley Shaw, chief executive and co-founder of Millemont, said: “Edinburgh is one of the best-performing hotel markets in Europe, and we are delighted to increase our presence in this thriving city.”
Indeed, in the face of global warming, when it comes to tourism and investment, the UK’s comparatively mild climate starts to look like a distinct asset. Damp and soggy to some maybe; cool and refreshing to others.