PwC warns no recovery of U.K. hospitality until 2023

 Tuesday, October 27, 2020 


According to a research from PwC, the U.K. hotel trading performance is set to decline significantly in 2021 due to the impact of the COVID-19 pandemic. It has reported that the current records are the bleakest outlook since benchmarking began in the 1970s, while hotel occupancy rates in 2021 are forecast to be 55% across the U.K.

The consultancy firms also stated that the current levels could take four years to return to pre-pandemic levels. The latest prediction is a part of the U.K. Hotels Forecast 2020-2021, an analysis into market conditions for hotels over the next 12 months.

The forecast for occupancy rates in 2021 is 52% for London and 59% for the regions, assuming there will be a vaccine by next summer. Though the difference is high as compared to the pre-COVID-19 2019 occupancy rates of 83% and 75% respectively, the data still brings some to the precipitous decline of 2020.

The overall revenue per available room (RevPAR) is forecasted to fall significantly to £29 in the capital this year that is £100 less than in 2019. With a vaccine, it is expected to recover to £65 in 2021 but in the long-term it is unlikely that occupancy, ADR (average daily rate) and RevPAR will return to 2019 levels until at least 2023. It is also being said that aslow recovery in corporate international travel and weak demand for business trips, meetings and events has resulted in a bleak forecast for London.

The UK regions are expected to fare better than the capital in 2021, whether a vaccine is developed or not. It is also being predicted that a stronger staycation market will remain a fixture, while unpredictable overseas travel, ongoing restrictions and local lockdowns, will further fuel demand for domestic leisure tourism. Sam Ward, U.K. Hotels Leader, PwC, said in a statement that as the U.K. travel and tourism sector bears a considerable brunt of the impact of COVID-19 this is far from business as usual.

He mentioned that no previous event has had such a deep and long-lasting negative impact on hotels and there is no quick fix. He stated that the only silver lining is that U.K. regions can benefit from increased staycation demand in 2021 as coast and country properties offer potential. He shared that the fall in corporate demand, coupled with the complete lack of sports and music events will see big city hotels suffer disproportionately.

He further added that amid so much uncertainty, it is imperative that hotels will be ready for a difficult winter and act swiftly to demonstrate their adaptability and shared that this is the time for hoteliers to look at their business model and find ways to cut costs. He said that whoever shifts their focus to new customers, reorganise their operations and find innovative solutions will stand the best chance of weathering the storm.

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