hotels along a seaside shoreline with sun coming up indicative of recovery in room rates

Recovery is finally underway for the UK hospitality sector.

Despite some bumps along the way, 2021 saw some of the best performance metrics ever, with room prices reaching levels never previously achieved in some markets. While the industry has reaped the various benefits from reopening as demand surged back, it has come with various challenges, including staff shortages, supply chain issues and rising costs.

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The past year has been a year of two halves and two destination types. During the first half of the year, the UK endured strict lockdown measures while in the second half of the year, from summer in particular, restrictions had mostly been lifted and hoteliers could finally reap the benefits of reopening and look forward to their recovery.

Recovery has not been uniform, however. Coastal and rural destinations outperformed while major cities lagged. Pent-up demand flocked to locations like Cornwall, Devon, Dorset, Brighton and the Lake District, during the summer, with revenue per available room reaching record levels, thanks to strong pricing power from hoteliers on the back of robust demand.

For urban centres, like Manchester and Birmingham, things started to improve once children went back to school and many workers returned to the office from September. While much of the resurgence in performance was weekend-led, midweek business started to pick up as some business travel, mostly domestic, returned. Some larger conferences also started to take place, indicating that appetite for gatherings remains as many seek to connect with others in person. Birmingham’s National Exhibition Centre, for example, was able to host major exhibitions, such as the Autumn Fair, while Glasgow saw the much-anticipated COP26 boost Revenue Per Available Room (RevPAR) for the first two weeks of November.

The emergence of omicron affected performance during the latter part of December, the year ended on a high and in a much better position than the prior year, when the UK was in strict lockdown restrictions. The upcoming year is set to be a strong year for recovery as the pandemic, hopefully, recedes.

Labour Shortages

While demand has begun to recover, it has been difficult to accommodate its surge due to staff shortages. As the pandemic took hold, around 1.6 million people were furloughed in the hospitality sector, 25% of total furloughed staff, and since the scheme finished in September, many have not returned to the industry. The theme has dominated the hospitality sector as it continues its battle in re-hiring, retaining existing employees and attracting new talent following the pandemic.

Read rest of the article at CoStar