After the most volatile trading period since benchmarking began, the PwC Hotels Forecast 2021-2022 reveals the green shoots of recovery as demand returns. Though performance is not expected to return to pre-pandemic levels by Q4 2022, there are finally encouraging signs for hoteliers.

By the end of 2022, the forecast is that revenue per available room (RevPAR) in London will return to between 43% and 86% of pre-pandemic levels. In the regions, this figure is higher with the forecast between 64% and 100% of pre-pandemic levels.

Source: PricewaterhouseCoopersSource: PricewaterhouseCoopers
Source: PricewaterhouseCoopers

The speed of recovery will be the major issue for the sector in 2022. Driven by factors outside of the sector’s control, the pace and size of the return of tourism, international and domestic business and events will determine the speed and extent of the recovery. There are, however, encouraging signs for the return of tourism. When surveyed by PwC Research, 63% of people said they plan to take either more or the same number of holidays in 2022.

This year has seen above-average new supply with cities such as Bristol, Manchester, London and Glasgow all seeing significant new openings. This new supply coupled with dampened demand is taken into account in our forecast. With many businesses now operating a hybrid working model for employees, this is likely to subdue demand across both London and regions for domestic business stays.

Common across all areas of our forecast is a difficult Q1 2022. With revenues at a reduced level, the majority of government financial support withdrawn and rent and tax bills due, managing cash flow and operations will be critical to ensure success for hotels across the UK. 

Real GDP growth, revenue per available room (RevPAR) 1979-2022F— Photo by PricewaterhouseCoopersReal GDP growth, revenue per available room (RevPAR) 1979-2022F— Photo by PricewaterhouseCoopers
Real GDP growth, revenue per available room (RevPAR) 1979-2022F— Photo by PricewaterhouseCoopers

In our previous forecast, we predicted a dramatic fall in virtually every part of the sector. Regrettably, the reality was even harder for hotels as new lockdowns caused trading to cease for almost five months at the start of 2021. This year, to help account for the unpredictable path of the pandemic, we have modelled three scenarios: slow, moderate and strong rebounds. 

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Samantha Ward
PwC | UK Hotels Sector Leader