It's no secret that the pandemic had a massive impact on the hotel sector. Travelodge alone recorded a 60.9% fall in revenue during 2020 as the pandemic forced nearly all of its 586 strong portfolio to close its doors to guests. The hotel group kept only 50 hotels open and these were for NHS workers, key workers and vulnerable groups. As a result, they underwent a CVA (corporate voluntary arrangement) that introduced rent reductions but, in return, introduced a break clause in their leases allowing landlords to terminate leases and to relet hotels. Although most landlords stuck with the brand, nine initially granted new leases to alternative hotel operators. Similarly, Premier Inn owner, Whitbread, reported a £1bn annual loss in 2020 as sales fell by almost three-quarters as a result of lockdowns.

In 2021, however, we saw some parts of the hotel sector start to experience green shoots of recovery as the ‘staycation boom’ got in full swing towards the middle of the year. Many consumers, starved of experiences, sought to have holidays in the UK as overseas travel was then still being restricted. However, these green shoots tended to be for the holiday market only, rather than for business travel, as demand still remained extremely muted during 2021, with fears over the costs of having to cancel conferences and meetings should Government guidance change.

Owners of vacation rentals – holiday houses and apartments - also reported a significant uptick during the ‘stay-cation boom’.

There is a widespread expectation in the market that the hotel sector will largely recover in 2022.  PwC, in its ‘Hotels Forecast 2021–2022’ report, reinforced the nascent recovery as demand continued to return into late 2021 and early 2022. At the end of 2021 they were forecasting that, whilst performance was not expected to return to pre-pandemic levels even by Q4 2022, there were finally some ‘encouraging signs’ for hoteliers.  

Research undertaken by PwC found that 63% of people said they plan to take more or the same number of holidays next year, with occupancy expected to reach between 70% and 90% of pre-pandemic levels in London. In the regions, this forecast is even higher at 87% and 96% by year end.