UK regional hotels can expect strong demand this year despite restrictions easing on international travel, according to hospitality data analyst STR.
Robin Rossmann, STR managing director, reported the UK domestic market had “an amazing 2021” and said: “Cornwall and Devon show more business on the books in the first half of this year than last. They will have amazing first and second quarters, and business on the books is at least as strong for the rest of the year as last summer.”
Overseas destinations would have to wait till the spring to recover, he said, noting: “Spain’s first quarter will be mostly lost to Omicron. But it should be better by Easter and the Balearics look strong for summer.”
He reported hotel occupancy in Europe came back to about two-thirds of the 2019 level last year, but overseas destinations lagged domestic markets.
Rossmann said: “Hopefully, we’re in the end game of the pandemic. The UK is scaling restrictions right back [and] demand has not gone away. People may be unwilling to go into the office but are happy to take a flight to the beach.”
However, he noted: “Business travel is pretty depressing. Cities which rely on business travel have struggled to recover.” He reported 2021 ended with average hotel occupancy in London at 46% of 2019 levels and Paris at 41%.
He insisted: “Long-term hotel demand is highly correlated to economic activity and GDP growth. That correlation was broken by travel restrictions. GDP is back at pre-pandemic levels in most countries. You have to ask have people’s habits fundamentally changed?
“Weekday occupancy in the US has already recovered to 92% of the 2019 level. In Europe, weekday occupancy is back to 80% in London and Paris.”
The Omicron wave of Covid-19 hit overall occupancy in London, with STR recording 66% occupancy in November, 57% in December and 40% in January. But Rossman said: “Business on the books is already stronger than last year and stronger than many would expect.”
He added: “UK regional demand bounced back in the last three weeks of January.”
The average daily rate (ADR) in London was 79% of 2019’s level last year, or 21% down, when ADR growth in Bournemouth was 43% and in York 30%, and Rossman forecast: “Regional markets are likely to outperform cities in 2022.”
Events market ‘will be slower to revive than leisure sector’
The meetings and events market will be slower to recover than leisure, especially international events “with lots of planning involved”.
That is according to hospitality analyst STR, whose managing director Robin Rossmann suggested the German market was a bellwether for the sector in Europe.
He argued: “Germany didn’t recover as much as other countries [in Europe] in 2021. Occupancy didn’t change much on 2020. Nowhere was it over 40%. In many cases there were rate declines. A major reason was the reliance on business travel and events.”
Rossmann forecast personal events that people have had to postpone would lead the recovery in the sector, with demand “compressed into spring and autumn when travel will be more certain [and] likely to be well in advance of capacity”.
He added: “The supply pipeline [of hotel rooms] in Europe has not changed. We’ll exit the pandemic with more supply than we entered it.”
But he noted inflation “represents a real challenge”, with US hospitality wages “20% higher than pre-pandemic and rising rapidly”, although to date “wage inflation is being offset by Labour shortages. Hotels have not been able to employ enough staff.”
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