Cost of living hits UK hotel occupancy in January

UK hotel occupancy rates fell again in January 2022 as the Omicron hangover and cost of living crisis hit consumer confidence at the start of the year, according to the RSM Hotels Tracker.

The data, compiled and produced by Hotstats and analysed by RSM, shows a decrease in occupancy across the UK from 45 per cent in December to 33 per cent in January. This is triple last year’s occupancy rate when the UK was in lockdown; but significantly lower than pre-pandemic levels of 65 per cent. London saw the largest fall from 40 per cent in December to 26 percent in January; and Scotland and Wales saw decreases of 13 per cent and 17 per cent, respectively.

Average daily rates (ADR) in UK hotels look positive, only £7 behind pre-pandemic levels at £101, but revenue per available room fell from £58 to £33.

Chris Tate, head of hotels and accommodation at RSM UK, said ‘January is normally a slow month, but the combination of an Omicron hangover, fears around the cost of living crisis, limited international travel and consumer confidence at its lowest level in 12 months has exacerbated the seasonal trend.

‘Despite robust day rates, revenue per available room hit its lowest level since June last year, highlighting the increasing financial burden of opening the doors during a period of lower occupancy; and this pressure looks set to continue as staff costs increase and energy prices soar.

‘Looking ahead, forward bookings through February and into March are much stronger than last year– suggesting that hoteliers should have experienced a February half term boost to take them into Spring.

‘However, due to the repeated blows during the last two years the hotel sector needs extra help to ride out what will be another difficult period. The government needs to respond to calls to extend VAT support in the Spring Budget to help businesses mitigate against inflationary pressures and give hoteliers a chance to recover as trade picks up into the Spring/Summer season when inbound international travel increases.’