Support from local authorities provides a lifeline for cities.

Avison Young’s UK Cities Recovery Index has identified a significant drop in the Hotel & Leisure Index. Since last week, the sector declined by 2%, but a 27% decrease since the end of August has highlighted the volatility being seen across the industry. The ‘Rule of 6’ and the 10pm curfew continue to add increased pressures and concerns, particularly as the end of the furlough scheme nears.

The Recovery Index uses a variety of high-frequency indicators to track key aspects of city life and includes detailed analysis and insights into the rate and trajectory of recovery following the impact caused by COVID-19. By monitoring the way in which the pandemic impacts different aspects of the economy and society almost in real-time, Avison Young is able to identify early signs of any significant shift in recent trends.

Daryl Perry, Head of UK Research at Avison Young comments:
“Leisure, hospitality and culture are at the heart of our cities, so the sector needs additional support due to the increasing impact of COVID-19. Local responses are incredibly important to help keep the sector moving forward in the current, difficult climate.

There has been a notable lack of support for hospitality and the arts, yet it is interesting to see this being taken on at a local level. Liverpool City Region recently announced a £40million fund to help businesses in the hospitality sector, which supports over 50,000 jobs in the city. CareerScope, a partnership between five organisations has also been set up to provide a free service for those who have either lost their job or are struggling to find work in the sector. As the end of the furlough scheme nears, support from local authorities will be more important than ever as the rise in unemployment is likely to affect the hospitality sector disproportionately when compared to other key sectors.”

A spotlight has been shone onto cinemas this week following the announcement that the latest James Bond film will be postponed again, and Mulan has been released online and skipped cinemas altogether. This has led to various cinemas announcing additional closures and reducing opening hours, demonstrating the widespread decline across the industry. Box office revenues have also been hit, with a dramatic drop in September’s numbers. The box office indicator suggests a 78% drop has been recorded from the 3rd September to the 4th October.

Hotels, bars and restaurants are continuing to see a decline in revenue following the end of the ‘Eat Out to Help Out’ scheme. The year-on-year change in restaurant activity peaked at over 200% on 31st August but has since tailed off, with the latest figures showing a 4% decline in the last week.

London’s Rate of Recovery

London’s recovery comes from a lower base than the national index as the indices fell as low as 29 on the 18th April, compared to the national average of 33. The steeper drop was largely due to the impact on the mobility, return to office and hotel & leisure sector indices.

The Recovery Index reveals the challenges faced by our largest cities that function as major commercial, leisure and tourist hubs and are largely reliant on public transport. These cities are suffering from travel restrictions and wider public concern in the face of resurging infections nationally. Interestingly, this is despite the fact that London is currently experiencing lower infection rates per 100,000 than many other UK cities.

The number of people using the tube has flatlined since the beginning of September and remains low as of the 4th of October. The anticipated increase in the number of commuters using public transport to return to offices was curtailed by the change in government guidance on returning to work.

The vastly reduced number of people in the capital has meant that the footfall indicator has lagged consistently behind other cities. As of the 4th October, this indicator was 25% below the national average, again showing the challenges faced by large cities reliant on office workers and tourists.

Dr Nick Axford, Principal, Global Head of Research at Avison Young comments:
“Our Recovery Index has shown a similar picture to the UK Manufacturing & Services Purchasing Managers Indices (PMI). Both are demonstrating that the recovery evident throughout July and August has begun to reverse in recent weeks.

“On a positive note, the Chancellor is clearly committed to using monetary policy and other tools to support demand and aid the recovery. The Monetary Policy Committee has repeatedly affirmed its willingness to provide further policy support as necessary, which will help to underpin the recovery longer term. Whilst there is much debate over the most appropriate way to respond to the recent rise in infections, the Government’s focus on avoiding another full lockdown and limiting the structural damage to the economy will help our major cities weather this latest phase of the pandemic.”

The UK Cities Recovery Index is available here: www.avisonyoung.co.uk/ukcitiesrecoveryindex

Nick Axford

+44 (0)20 7911 2939