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Hotel sector will ‘rebound strongly’, says research

The UK hotel sector could “rebound strongly” following a lift of restrictions and revival of the economy post-pandemic, according to the latest data from Knight Frank.

The property advisory group predicts that if the market reopens by the end of the second quarter, a full market recovery could be possible in London by the fourth quarter of 2021.

Its research analysed the speed at which the UK hotel market has recovered after major global events, such as the 2008 recession, SARS, and Brexit

The group said that many have anticipated the immediate economic impact of coronavirus to be “more severe” than past economic downturns, with hotels likely to be “disproportionately impacted” due to the challenges faced from a nationwide lockdown.

Nonetheless, it is forecasting a V-shaped recovery for the sector, with occupancy growth beginning slowly in Q3 followed by substantially stronger growth in Q4 as travel confidence returns.

In turn, this will reportedly help to drive the average daily rate (ADR) growth, leading to an overall recovery for the UK hotel sector. For this reason, Knight Frank remains “cautiously optimistic” for the recovery of the market.

The group found that hotel markets within cities such as London are likely to recover faster, and predicted that the London market could potentially achieve a full market recovery by the fourth quarter of 2021, dependent on whether the market reopens by the end of the second quarter of 2020. 

It also predicts that the severity of the economic downturn may have a “more lasting impact” on regional UK hotel markets, with the level of unemployment dictating the disposable income available and therefore the propensity to spend on leisure-based experiences.

Shaun Roy, head of hotels and specialist property investment at Knight Frank, said: “The Covid-19 pandemic is an unprecedented event and there is no doubt that this will have an impact on the UK hotel market, which is disproportionately affected in many ways. 

“We are currently in an enforced lock down, where the focus for the hotel market remains one of survival, with cash conservation and liquidity of immediate concern.” 

She added: “Yet as we look beyond this, and at how the UK hotel market has fared following other significant global events, we believe that the UK hotel market will recover and rebound strongly.”

“We predict that the market will bounce back following the relaxing of travel restrictions and the containment of the virus, leading to a potential full recovery in London and a gradual recovery in the regions as well as an uplift in investment volumes nationally.”

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