For hotels in the UK, uncertainty seems to be one of the few things that can be relied on right now.
The pandemic brought the industry to a standstill, with the situation still precarious, albeit with renewed hope following a successful vaccine drive.
We’ve taken a look at PWC’s Hotel Forecast 2021-2022, which assesses the situation right now and looks at what 2022 will hold.
A Positive Outlook
PWC’s 2020-21 report began with the ominous opening line of ‘in the bleakest outlook since benchmarking began’. This year’s edition offers a more optimistic tone – with some early signs of progress in the sector.
The forecast distinguishes between London and other regions, addressing their differing rates of recovery.
London
The capital struggled especially hard in getting heads on pillows during the pandemic. Heavily reliant on tourism as well as business travel, flight restrictions during lockdown, and subsequent travel bans caused huge problems. Luxury hotels suffered especially hard, with reported occupancy levels dipping as low as 18%.
PWC noted that a prevailing factor was the lack of traditionally affluent tourists from the U.S and Middle East. Although restrictions are starting to be lifted, travel remains far from easy. It will need to be seen whether vaccine rollouts suppress Covid to a point where flights can get back to normal.
Despite this there are signs of recovery in the capital after a rocky 18 months. Using the moderate recovery scenario provided by PWC, revenue available per room (RevPar) in London is expected to increase by 110%, compared with 2021. Despite this recovery it is only expected to reach between 43-86% of pre pandemic levels by Q4 2022.
One of the main challenges for London hotels will be adapting to the new world we find ourselves in. Chains reliant on business travel will need to drastically re-think their models as remote working and digital conferencing become the norm.
This combined with environmental concerns related to flying, means that business traffic is unlikely to reach pre-pandemic levels.
The Regions
Being less dependent on the ever changing global travel landscape, areas outside London have seen better fortunes. Staycations – one of the buzzwords of 2021- generated a much needed boost for UK holidays destinations. So much so that August 2021 saw improved occupancy levels compared with August 2020.
The question remains whether international tourism will re-emerge. There is certainly no doubt for appetite, with 63% of those surveyed saying they planned to take more or the usual amount of holidays in 2022.
Even if the jet setters get their way, UK holidays don’t seem at risk, with PWC research showing that 37% of people still want to holiday in the UK next year. Regional hotel operators will also be keeping an eye on the events industry, with large-scale events able to pack out hotels for days on end.
PWC predicts slower growth outside of London compared with last year, but a quicker route to normality. 2022 is expected to see a 32% increase in RevPar, hitting between 64-100% of pre-pandemic levels by the end of 2022.
Cost Increases
PWC highlights the potential impact of the current labour crisis. While the current hiring challenges are not restricted to the world of hospitality, it seems to have been hit especially hard – with one in six jobs sitting vacant at the start of October.
This poses a very real issue. It’s noted in the report that vacancies are pushing wages for these positions up, representing additional financial difficulties in already challenging circumstances.
The ever-increasing price gas and electricity costs are also recognised. As businesses do not benefit from the energy price cap, these spiralling costs are passed directly onto struggling hotels. As if these weren’t enough, these issues fall in line with VAT rates returning to ground zero.
“In what could be described as a perfect storm, this raft of cost increases coincides with the phased changes in the rate of VAT, from the reduced rate of 5%, to 12.5% on 1st October 2021 and to the standard rate of 20% from 1st April 2022.”
PWC Hotel Forecast 21-22
Technology as a Solution
Sadly, neither the labour nor energy crisis shows any sign of abating soon. If you’re a hotel and you’re looking at periods with less staff and potential cash flow problems, what should you do?
PWC recommends you invest in tech.. It’s certainly something we agree with and somewhat unsurprisingly, we see Notlost’s own solution as a great example of this.
“Technology has the power to transform both front and back of house operations. In reference to the pandemic, tactical investment to provide a contactless experience for guests can work for both reassuring guests and also managing staffing levels and costs.” PWC Report
How Notlost Can Help
While lost property management might not be the first type of tech you think to invest in, it should be. Notlost provides a cost effective and simple way to save staff time and improve guest experience. Head of Sales at Notlost, Alistair Blackwell, explains:
“ With occupancy down, it’s more important than ever to do everything possible to win repeat customers. We have all probably had a personal experience where a hotel has provided a fantastic service but as a result of how issues post stay are managed; we judge them solely on that.”
“At the same time we are seeing hotels across the board struggling to hire and retain core staff. Notlost’s software can save hotel housekeeping, security & front of house teams up to 77% of time when managing lost property and in the process vastly improve the chances of returning misplaced items.”
Traditional lost property processes too often rely on outdated tools and systems. The worse the tools are, the larger the margin for error.
How Does It Work?
Notlost’s tailor made lost property platform provides a sleak, digital process that ensures nothing slips through the cracks. When an item is found it is uploaded to our system, and our image recognition software creates a profile for it and opens a ticket.
When a customer calls up regarding a missing item, they are directed to a self service portal where they can enter the relevant details. Our matching tool pairs the two and they are validated by a staff member.
The guest is then emailed with a link to confirm the missing item is theirs. They then select from a range of delivery or pick-up options tailored to your requirements.
The Benefits
Notlost’s solution offers a chance to get one of the many facets of customer experience right. The process ensures that everything is being done to bring back repeat customers instead of scaring them off by taking 3 weeks to return their phone.
You may be able to impress a customer while they’re staying with you, but a negative experience post-visit will stick in their mind a lot more than the chocolate under their pillows.
As well as delighting your guests, you also save time. Without tailor made software, lost property processes involve taking calls, logging enquiries and searching, sometimes fruitlessly, for missing items.
This time can be better spent doing what your staff do best – providing a top notch experience for guests. Our data suggests that hotels spend around £35 per room per year through staff time wasted.
With the path to recovery unsure and finances tight, it’s vital to make sure you have the tools to see you through the storm.
‘The challenges for 2022 are not clear in terms of recovery pace. Saving costs which also supports guest experience will be critical. NotLost has remained agile commercially & the repatriation of lost items allows for some recoup of SaaS fee throughout the year’
Notlost Head of Sales Alistair Blackwell