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Summary
- UK’s hotel and hospitality sector will not be the same as it was in 2019, at least not before 2021 as per a PwC report
- London-based hotels are the hardest hit by the pandemic, with an average daily room revenue dropping to as low as £29 in 2020, while in 2019 it was close to £129
- Low tourism, business travels and the disruption in the sporting and public events are the prime reason behind the fall in business activities across sectors in the UK
A PricewaterhouseCoopers (PwC) study has suggested that it will take a couple of years for the UK hotel and hospitality industry to recover from the economic shock due to the COVID-19 outbreak.
The pandemic, which has crippled several industries across the globe, has severely impacted the UK’s hotel and hospitality business. The sudden drop in traffic of international business travellers, public, social and sporting events in the UK has impacted the revenue. Besides this, enhanced safety restrictions imposed by the government for the protection of staff and guests led to services being less smooth than before.
The PwC report states that it is unlikely that business activity will be the same as in 2019, not at least before 2024. However, it is hopeful that some parts of the country would be able to achieve satisfactory recovery by 2023, while it would be a little more challenging for cities like London.
Revenue plunge
The PwC report has estimated that the financial and operational situation of the industry would not improve till 2024 even if an effective vaccine is made available. The average daily room revenue, which is an important industry indicator, has fallen to £29 in 2020, whereas in 2019 it was at £129.
While the report states that London will take a longer time than other parts of the UK to recover, it is hopeful that the average daily room rent in the city could go up to £65 in 2021. For the rest of the country, the average daily room rent would go up to £40 in 2021. The pandemic has recorded its worst since the business data were first recorded in the 1970s.
Hospitality industry
The hospitality industry and the associated leisure business are two of the worst-hit sectors because of the coronavirus pandemic. Hospitality and leisure businesses like restaurants, hotels, cafes, and resorts are places where tourists generally flock have seen a massive decline due to cancellation of travel worldwide. Both industries now face the most restrictions in safety protocols and are also among the slowest in the recovery rates.
Now with the increasing instances of new infections in the country, these two industries will be in focus and the stocks will be under pressure.
Here is a quick view of the few hotels stock performance on LSE
Whitbread Plc: Whitbread Plc (LON:WTB) is the United Kingdom domiciled hospitality company that owns and operates hotels and restaurants in the country and overseas.
(Source- Thomson Reuters)
As on 27 October 2020, the share of Whitbread plc was trading at GBX 2,252.00 (12.22 PM GMT+1), gaining 0.31 per cent over previous day’s close.
Compass Group Plc: Compass Group Plc (LON:CPG) is a Chertsey-headquartered consumer support services company. Its areas of operations are divided into segments like North America, Europe, the rest of the world and Central activities.
(Source- Thomson Reuters)
As on 27 October 2020, the share of Compass Group plc was trading at GBX 1078.00 (12.24 PM GMT+1), losing 1.55 per cent over previous day’s close.
SSP Group Plc: SSP Group Plc (LON:SSPG) is a food travel expert company. It has operations in 35 countries. In its portfolio, the company has over 550 brands. It operates stores, lounges, cafes, restaurants, food courts and bars in travel locations such as train stations, motorway service stations, airports, and other locations.
(Source- Thomson Reuters)
As on 27 October 2020, the share of SSP Group plc was trading at GBX 186.50 (12.25 PM GMT+1), gaining 0.54 per cent over previous day’s close.
Greggs Plc: Greggs Plc (LON:GRG) is the United Kingdom-based food producing and retailing company that operates through a network of 2050 stores spread across Britain.
Source- Thomson Reuters
As on 27 October 2020, the share of Greggs plc has been trading at GBX 1,383.00 (12.25 PM GMT+1), losing 0.37 per cent over the previous day’s close.
Pandemic threat on hospitality industry
The resurgence of the pandemic is the major factor that could derail the recovery process for not only the hospitality and leisure industry but the entire economy. It is being anticipated that the virus is making a resurgence in most parts of Europe as the winter season is setting in.
Though the current spike is not as big as the previous one, the government is already taking precautions and might have to reimpose a stricter lockdown and the whole recovery process might just take some more time.
