UK hotel trading performance is set to decline significantly in 2021 due to the impact of the Covid-19 pandemic, according to research from PwC.
In the bleakest outlook since benchmarking began in the 1970s, hotel occupancy rates in 2021 are forecast to be 55 per cent across the UK.
Levels could take four years to return to pre-pandemic levels, the consultancy firms argue.
The prediction forms part of UK Hotels Forecast 2020-2021, analysis into market conditions for hotels over the next 12 months.
Although seeing some relief to the precipitous decline of 2020, the forecast for occupancy rates in 2021 is 52 per cent for London and 59 per cent for the regions, assuming there will be a vaccine by next summer.
This is in comparison to pre-Covid-19 2019 occupancy rates of 83 per cent and 75 per cent respectively.
A slow recovery in corporate international travel and weak demand for business trips, meetings and events means the forecast is particularly bleak for London.
The overall revenue per available room (RevPAR) is forecasted to fall significantly to £29 in the capital this year, £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.
The UK regions are expected to fare better than the capital in 2021, whether a vaccine is developed or not.
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, 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.”
Ward added: “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.”
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