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UK Hotels Forecast 2020 - 2021

From endurance to recovery

A volatile outlook into 2021

In the bleakest outlook since benchmarking began, hotel occupancy rates in 2021 are forecast to be 55% across the UK, and could take four years to return to pre COVID-19 levels. This is a stark reality for a once optimistic industry, which has seen a decade of growth post the global financial crisis and is a concerning trend for hotels and the wider hospitality industry.

Given the large number of uncertainties around COVID-19 restrictions, forecasting hotel trends is extremely challenging. The availability of a vaccine that can be quickly and widely administered is key to demand recovery coupled with consumer confidence to travel.

Although forecasts for 2021 show some relief compared to the precipitous declines of 2020, this is far from ‘business as usual’, with room occupancy rates across the UK forecast to be at the lowest level since hotel benchmarking services began.

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The forecast at a glance; sharp drops in hotel industry performance

Infographics: 2020 hotel performance - London vs regions

As the UK hotel sector reflects on the worst revenue per available room (RevPAR) figures since benchmarking began, those looking for signs of potential new revenue streams are identifying the trend for staycations in the UK regions.

Whereas London hotels are more dependent on business trips, meetings and events, as well as international travel – all of which show weak demand. In addition, fewer UK domestic tourists are visiting the capital for a staycation in a concerning trend for London.

 

The impact of weak demand and new room supply coupled with a move towards lower-priced leisure travel, as well as an above-average increase in new supply, all contribute to the forecast low levels of occupancy and average daily rate.

Hotels must act now to recover

The recovery in occupancy is likely to take longer than recovery from the 2008 Global Financial Crisis. It appears unlikely RevPAR in London will return to 2019 levels in real terms until 2024, with the UK regions possibly achieving the same result a little earlier in 2023 subject to a successful vaccine implementation in 2021.

While the route to recovery is unlikely to be smooth, there are actions hoteliers, and those who invest in the industry, can take to put themselves on the right path.

 

Infographics: 2020 hotel performance - London vs regions

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Contact us

Samantha Ward

Samantha Ward

Hotels Sector Leader, PwC United Kingdom

Tel: +44 (0)7923 289644

David Trunkfield

David Trunkfield

Hospitality, travel and leisure leader, PwC United Kingdom

Tel: +44 (0)7764 235446

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