PwC report warns of decline in hotel trade in 2021

PwC’s UK Hotels Forecast for 2020-2021 predicts that hotel trading performance is set to decline significantly in 2021 due to the impact of the Covid-19 pandemic.

Containing detailed analysis into market conditions for UK hotels over the next 12 months, the report states that hotel occupancy rates will be 55% across the UK and could take four years to return to pre-pandemic levels.

Occupancy rates in 2021 are estimated at 52.4% for London and 59.2% for the regions, in comparison to pre-Covid occupancy rates of 83.4% and 75.4% respectively in 2019.

A slow recovery in corporate international travel and weak demand for business trips and events means the forecast is particularly bleak for London.

Overall revenue per available room in London is forecast to fall significantly in 2020 to £28.72, £100 less than in 2019. With a vaccine, this is expected to recover to £64.81 in 2021 but in the long-term it’s unlikely that occupancy, ADR (average daily rate) and RevPAR (revenue per available room) will return to 2019 levels until at least 2023.

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. Those who can shift their focus to new customers, re-organise their operations and find innovative solutions stand the best chance of weathering the storm.”