UK hotel Sector trading still not expected to return to pre-pandemic levels by end of 2022
Demand is gradually returning for the UK hotel sector, but trading is not expected to hit pre-pandemic levels by the end of 2022, according to PwC’s UK Hotels Forecast 2021-2022.
The forecast for occupancy rates by the end of 2022 was between 70% and 90% of pre-pandemic levels in London – between 87% and 96% outside of London.
The report said the speed of recovery will be the major issue in 2022, driven by factors outside of the sector’s control: the pace and size of the return of tourism, international and domestic business and events.
However, a difficult start to 2022 is widely expected, with most government financial support schemes coming to an end and rent and tax bills due. Meanwhile, rising payroll cost pressures are likely to continue into 2022 as labour shortages in hotels are at a critical level, leading to an above-inflation increase in wage rates as hoteliers struggle to retain and attract staff.
The average daily rate (ADR) for London was expected to recover to £112.26 in 2022, an increase of £27.78 on 2021, driving an overall revenue per available room (revpar) of £63.69 in 2022.
And while staycations have provided a significant boost for coastal and leisure destinations, with occupancy and ADR in August 2021 significantly outperforming August 2019, some cities and non-tourism destinations were still experiencing dampened demand.
Summer 2022 may again see difficult trading conditions if international travel is back on the agenda for the domestic market, although PwC said 37% of people still plan to holiday within the UK in 2022. Staycation demand was expected to be similar to the summer of 2021 but be more evenly spread throughout the year.
A moderate recovery in the regions could see ADR reach £67.05 in 2022, up from £61.59 in 2021. Revpar could also increase to £42.36.
And the viability of large-scale events, conferences and meetings with long planning cycles meant the events market may take further time to recover, especially if uncertainty persists around potential restrictions.
Sam Ward, UK hotels leader at PwC, said: “The hotel sector recovery has a long way to go. The speed of recovery in the capital is likely to be dependent on international tourism and the speed at which business travel returns as markets lift their own restrictions on citizens travelling to the UK…
“Recovery will not be easy or straightforward, but with the right planning and strategy, hotels across the UK can look forward to significantly better trading over the next 12 months.”
The original version of this article was first published on The Caterer
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