UK hotels won’t return to pre-pandemic trading levels until 2023, figures indicate

But more than a third of those surveyed still plan to holiday within the UK next year

UK hotels have been hit hard by the pandemic (Getty Images/iStockphoto)

Despite signs of recovery in the travel industry, new figures forecast that UK hotels won’t be back to trading at pre-pandemic levels until 2023.

Figures published in PwC’s UK Hotels Forecast 2021-2022 suggest that occupancy rates in London will only have risen to between 70 and 90 per cent of pre-Covid levels by the end of 2022.

In the regions, recovery is looking slightly better, with hotels forecast to return to between 87 and 96 per cent of normal business by the end of 2022.

A difficult start to 2021 for hotels seems inevitable, with government support for the industry ending this autumn, and incoming tourism from many countries still hampered by UK travel restrictions.

Labour shortages within the hospitality industry have also hit UK hotels hard - a survey of 200 senior executives from across the hospitality industry earlier this month found that one in six jobs currently lies vacant, and 96 per cent of business leaders are seeing staffing shortages for some roles.

A VAT increase set for next spring is predicted to make matters worse.

“In what could be described as a perfect storm, a raft of operational cost increases coincide with the increase in the rate of VAT next April,” said PwC’s UK hotels leader Sam Ward.

“The ability for hoteliers to endure these costs and preserve profitability, will present a challenge in markets where demand is weaker and more hotel rooms are available.

“Many businesses have publicly stated their ambitions to cut business travel even as restrictions are lifted. Hotels that previously focused on the business market should think about how to capture domestic tourism, looking at this as a real opportunity and, as it returns, the international tourism market.”

In more positive news, 63 per cent of people surveyed by PwC said they plan to take either more or the same number of holidays in 2022, while more than a third (37 per cent) still plan to holiday within the UK next year.