According to a webinar hosted by HVS, London's hotel market will return to pre-pandemic performance levels, but is unlikely to return to growth until at least 2024 or 2025.
While the majority (38%) of the 300 webinar attendees said in a poll that they did not expect hotel RevPAR to reach 2019 levels until 2023, 19% were more pessimistic with estimates of recovery later than 2024. Nearly half said a key feature of a successful London hotel post pandemic would be a hybrid space, offering workspace alongside F&B and rooms.
When it comes to business travellers 22% of those polled thought corporate restrictions on travel budgets would be the biggest challenge facing London's hotels with 36% believing the availability of online meeting platforms such as Zoom meant that there was no longer a need to travel to have effective business meetings.
Kicking off the speakers Muniya Barna from London First, the business campaign organization for London, painted a stark picture of the impact the pandemic has had on the capital. The centre of London has seen a much higher drop in footfall than other UK and global cities, she said, largely because of its reliance on visitors and workers. Consumer spending in central London dropped by £7.4bn in 2020 and unemployment and the number of people furloughed was the highest in the UK.
While Barna believed London would bounce back, there was a need to market it as a compelling destination and invest more in its transport system. "The pace and scale of that recovery will depend on decisions the Government makes to support that recovery," she said, adding that while international travel would return it wouldn't be until all travel restrictions are lifted and even then, habits had changed with people packing more into their itinerary and thinking more about environmental concerns.
In a wide-ranging panel discussion chaired by AlixPartners' Graeme Smith experts including HVS chairman Russell Kett, Peter Anscomb of Edwardian Hotels, Michael Izzo of Corinthia Hotels, Jan Tissera of Amadeus and David Orr of Urbanist Hotels debated when the market would start to see RevPAR growth, the crucial return of international travellers, the additional impact of cost inflation and how hotel values had held up in London. "Although there are still challenges, there is every cause for optimism," said Izzo.
David Orr reported a "flight to quality" from leisure guests who while being responsible for maintaining room rates were demanding more out of their hotel stays. "Bookings had to be meaningful for more than one person," he said, rather than the more price-led, single-person bookings typical of corporate clients.
"RevPAR-wise the good hotels will be back in 2023, " concluded Russell Kett. "These are the leaders and others will follow but the majority will see levels return by 2024. Operators need to look and learn for what the leaders are doing and look where the opportunity is - they need to be nimble and be flexible."