Hotel occupancy rates in London could reach 70 to 90 per cent by the end of 2022, with a stronger figure of 87 to 96 per cent occupancy predicted for the UK’s regions.

The figures form part of PwC’s UK Hotels Forecast 2021-22, which projects average daily rates of £112.26 in London – an increase of £27.78 on 2021 but still well down from £153.07 in 2019 – and a moderate increase across the regions to £67.05.

Average occupancy for the year in a ‘moderate rebound scenario’ is expected to reach 56 per cent in London and 63 per cent in the regions, rising significantly towards the year’s end.

The report noted that London’s luxury hotel market continues to struggle while the mid and budget range has fared better.

PwC’s forecast also stresses the significance of business travel in hotels’ fortunes over the year ahead.

“The hotel sector recovery has a long way to go,” said Sam Ward, UK hotels leader at PwC. “The speed of recovery in the capital is likely to be dependent on international tourism and the speed at which business travel returns as markets lift their own restrictions on citizens travelling to the UK.

“Many businesses have publicly stated their ambitions to cut business travel even as restrictions are lifted. Hotels that previously focussed on the business market should think about how to capture domestic tourism, looking at this as a real opportunity and, as it returns, the international tourism market.”

The report says the hotel industry faces a “perfect storm” of operational cost increases coinciding with the increase in the rate of VAT in April.

“The ability for hoteliers to endure these costs and preserve profitability will present a challenge in markets where demand is weaker and more hotel rooms are available,” said Ward. “Recovery will not be easy or straightforward, but with the right planning and strategy, hotels across the UK can look forward to significantly better trading over the next 12 months.”