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The UK hotel market rebounded during the summer months of 2021, with this positive momentum continuing into the autumn, according to new analysis from global property consultancy Knight Frank.
In September, hoteliers recorded the highest level of profitability since the start of the pandemic, with the month yielding stronger results than expected.
According to Knight Frank, as restrictions eased, the demand for staycations boosted hotel occupancy to 66.2% in August for regional UK hotels, “demonstrating the strength of pent-up leisure demand”.
While occupancy levels were largely bolstered by staycations, the predicted decrease in leisure demand in September was replaced with an uplift in domestic corporate demand, project work and transient business-related travel.
According to the analysis, regional UK hotels recorded market-wide occupancy of 67.9% for September, with early indications that October figures will also show strong levels of demand.
In addition, confidence in the return of corporate meetings and events business is reportedly improving, with “clear signs” of increasing demand in the larger regional cities. Notably, year-to-date occupancy has outperformed the 2020 occupancy rate for the same period, reaching 39.4% compared to 34.1% in 2020, despite the extended lockdown at the start of the year.
For London, the pace of recovery has been slower, however, with year-to-date occupancy reaching 21.7% against 25.1% for the same period in 2020. It did report 17.6% growth in its average daily rate (ADR) performance for the month of September, following an uplift from the resumption of international visitors arriving at Heathrow.
For regional hotels, ADR increased by 81% since the beginning of May 2021 to £107, a 17% uplift on September 2019. Knight Frank says that ADR across the UK has been positively impacted by the temporary reduction of VAT.
Meanwhile, in September 2021, RevPAR for regional UK hotels reached its highest level since September 2019 at £72.60, whilst the London hotel market reported 37% month-on-month uplift in RevPAR for September to £82.70, its best performance since February 2020.
Philippa Goldstein, senior analyst, Hotels and Leisure at Knight Frank, said: “The easing of covid-19 restrictions and with significant pent-up leisure demand, hotel fundamentals have continued to improve during the summer months and early autumn.
“How the pandemic plays out this winter will be fundamental to the short-term prosperity of the UK hotel sector. With flexible room rates and free cancellation now widely available, any change in government messaging can rapidly impact upon forward bookings.”
She added: “Critical to the ongoing recovery of the sector, will be the transition from predominantly leisure-based demand, to a mix of leisure and typically higher yielding corporate, meetings and events business.
“The ability to secure room nights from a much broader and balanced segmentation mix is essential if the sector is to resume the year-round high levels of occupancy and ADR performance enjoyed pre-pandemic.”
