Beyond 2022 recovery for UK hotels, report shows

Beyond 2022 recovery for UK hotels, report shows

[Credit: Jacques Bopp on Unsplash]

UK: The UK Hotels Forecast 2021-2022 by PwC reveals signs of recovery for the UK hotel market throughout next year, though still below pre-pandemic levels.

The PwC Hotels Forecast is based on quarterly economic analysis of the hotel sector, supported by data from STR and other providers. Predictions cover the the next 12 months.

In the latest repot, 63 per cent of people said they plan to take more or the same number of holidays next year, with occupancy expected to reach between 70 and 90 per cent of pre-pandemic levels in London. In the regions, this forecast is even higher at 87 per cent and 96 per cent by year end. However, the speed of recovery is expected to be the major issue in 2022. 

The majority of government financial support will end early 2022, and rent and tax bills will be due. Rising payroll cost pressures are also likely to continue into the year as a result of labour shortages, leading to an above inflation increase.

In London, ADR is expected to recover to £112.26 in 2022, up by £27.78. This drives overall RevPar to £63.69. For the luxury hotel market, which has seen occupancy as low as 18 per cent this year, recovery will depend on global tourism and air travel passenger numbers returning.

In the regions, staycations have boosted occupancy and ADR throughout the summer season, resulting in August 2021 outperforming August 2019. 37 per cent of people still plan to holiday within the UK in 2022, with ADR expected to reach £67.05 next year (up by £5.46) and RevPar could increase to £42.36.

Overall, trading is not expected to return to pre-pandemic levels by the end of 2022.

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. Hotels must continue to innovate and adapt to the markets available to them. Many businesses have publicly stated their ambitions to cut business travel even as restrictions are lifted. Hotels that previously focussed on the business market should think about how to capture domestic tourism, looking at this as a real opportunity and, as it returns, the international tourism market.

“In what could be described as a perfect storm, a raft of operational cost increases coincide with the increase in the rate of VAT next April. The ability for hoteliers to endure these costs and preserve profitability, will present a challenge in markets where demand is weaker and more hotel rooms are available. 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.”

To download the Hotels Forecast 2021-2022, click here. 

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