UK occupancy recovery; 4 years

England

UK occupancy rates could take four years to recover, according to a study from PwC.

UK hotel trading performance was set to decline significantly in 2021 due to the impact of the pandemic, the group said.

Hotel occupancy rates in 2021 were forecast to be 55% across the UK. 

Although seeing some relief to the precipitous decline of 2020, the forecast for occupancy rates in 2021 was 52.4% for London and 59.2% for the regions, assuming there was a vaccine by next summer. This was in comparison to pre-Covid-19 2019 occupancy rates of 83.4% and 75.4% respectively.

A slow recovery in corporate international travel and weak demand for business trips, meetings and events meant the forecast is particularly bleak for London where the overall revpar was forecast to fall significantly in 2020 to £28.72, £100 less than in 2019. With a vaccine, it was expected to recover to £64.81 in 2021 but in the long-term it was unlikely that occupancy, ADR and revpar would return to 2019 levels until at least 2023.

The UK regions were expected to fare better than the capital in 2021, whether a vaccine was developed or not. A stronger staycation market would remain a fixture, whilst unpredictable overseas travel, ongoing restrictions and local lockdowns, will further fuel demand for domestic leisure tourism. 

Sam Ward, UK hotels leader at PwC, said: “As the UK travel and tourism sector bears a considerable brunt of the impact of COVID-19 this is far from business as usual. No previous event has had such a deep and long-lasting negative impact on hotels and there is no quick fix. The silver lining is that UK regions should benefit from increased staycation demand in 2021 and coast and country properties offer potential. Meanwhile the fall in corporate demand, coupled with the complete lack of sports and music events will see big city hotels suffer disproportionately.

“Amid so much uncertainty, it’s imperative that hotels ready themselves for a difficult winter and act swiftly to demonstrate their adaptability. This is the time for hoteliers to look at their business model and find ways to cut costs. Those who can shift their focus to new customers, reorganise their operations and find innovative solutions stand the best chance of weathering the storm.”