The seventh update of 'From Survival to Recovery' from Hotel Solutions, providing further information on how COVID-19 impacts the UK tourism industry.
This is the seventh ‘From Survival to Recovery’ update from our friends at Hotel Solutions providing further information on how the COVID-19 crisis is affecting the UK hotel and visitor accommodation industry, as the pandemic continues and the industry hopefully moves towards some form of recovery in 2021.
Unsurprisingly this seventh update shows a challenging winter ahead for the country’s hotel and visitor accommodation sector as a result of the continuing restrictions; but there is growing confidence about the start of a recovery in the second half of 2021, assuming the successful rollout of a national vaccination programme.
The recovery looks likely to be driven largely by an expected boom in staycation demand, which will see a quicker and stronger recovery for hotels and visitor accommodation businesses in coastal and rural holiday destinations (which could point favourably for Greater Lincolnshire). However, city hotels look likely to continue to struggle, with a much slower recovery expected in the corporate travel, MICE, international tourist and music and sports events markets.
The Impact of the second lockdown continues to have an effect. STR Global’s latest UK hotel performance update on 24 November shows a softening of hotel occupancy following the introduction of the second lockdown on 5 November, a drop in ADR and a steep decline in RevPAR. Cities, many of which had already seen the introduction of new restrictions in October, continue to struggle, with occupancies struggling to get above 35%.
However, coast and country markets have held up much better with the Lake District, Devon & Cornwall and Norfolk & Suffolk recording hotel occupancies of 75-80% in October. Unfortunately, forward bookings for December are very muted, at below 10; but this could pick up with the five-day easing of restrictions over Christmas.
With regards to forecasts and the overall outlook, PwC projects the start of a recovery in UK hotel performance in 2021, following the decline in 2020, but does not expect the country’s hotel industry to return to pre-COVID 2019 performance levels until at least 2023.
The only market that is expected to grow strongly in 2021 is UK domestic tourism. This will particularly benefit coastal and rural hotels, which again could present an opportunity for Lincolnshire and Rutland.
A report on the European serviced apartment sector just published by hotel consultancy HVS shows that while serviced apartment performance has been adversely affected during the pandemic, the sector proved to be more resilient than other parts of the hospitality industry. Serviced apartment businesses have remained largely in profit, albeit with reduced margins, having benefitted from the fact that serviced apartments are self-contained, making it easier for guests to socially distance. Many have switched from corporate bookings to catering for key workers and those self-isolating during lockdowns.
From an investment point of view, while many serviced apartment development projects have faced delays, few have been cancelled and most operators are continuing with their expansion plans. Over 70% of investors surveyed for the report said that they were actively looking for serviced apartment investment opportunities.
Despite the glimmer of hope now on the horizon, there is still evidence of growing numbers of staff redundancies in the sector: Research undertaken in early November by Fourth, the leading global software provider for the hospitality sector, has shown the impact that COVID-19 continues to have on hospitality jobs, with a fifth fewer sector jobs compared to a year ago. Proving that support and assistance are still needed to get our crucial industry back on its feet again, once we are finally out of any restrictions.