New visitor figures for Wales showed the tourism sector rebounded strongly in 2021 after the lockdown was lifted. But significant challenges remain as rising costs and recruitment issues impact the industry.
The Housing Occupancy Survey annual report for 2021 has been published by Visit Wales. It provides insight into how the sector has rebounded as pandemic restrictions have eased.
Overall a positive reading with the hotel segment almost back to 2019 occupancy levels and well up on 2020. It also outperformed England, despite longer Covid restrictions, and the rest of Europe for occupancy levels. This is partly due to less reliance on overseas visitors – although the room rate paid remains lower than competing destinations.
Figures for lodges and holiday parks were also very encouraging, but hostels and dormitories – hit hard by Covid rules – remain well down from the pre-pandemic period.
The figures were welcomed by the sector, but warnings were issued about future challenges. These include increased competition as more people in the UK travel overseas as rules ease, as well as soaring costs and a recruitment crisis.
Jim Jones, of North Wales Tourism, said the issues explained why a tourist tax was the “last thing” Wales needed at the moment.
In the hotel sector, Wales showed a strong rebound from 2020, but with closures affecting the start of the year, overall figures were slightly lower than 2019. Room occupancy was 64% in 2021 – down from 45% in 2020 – but down slightly from the 66% in 2019 before the pandemic hit. The country has fared well against England which saw room occupancy at 54% (41% in 2020). The average for Europe in 2021 was 43%.
North Wales was the best performing country in the country with an occupancy rate (May to December 2021) of 79%, compared to 76% in South West Wales and 69% in the South East and Mid Wales.
But the average daily rate paid on a room remains well below that in England at just over £66 (£52 in 2020) – compared to £85 (£73 in 2020) across the border. The rate in Wales remains just below the pre-pandemic period.
Bed and Breakfast/B&B
Annual room and bed occupancy in the B&B/B&B sector was 60% and 50% respectively, nearly double that seen in 2020 – but low sample numbers mean the numbers have to be considered with caution.
This sector was actually above pre-pandemic levels in 2021 with occupancy levels at 61%, up 9 percentage points from the previous year. Across all regions, North Wales achieved the highest occupancy rate at 68%.
Average unit occupancy between May and October was 81% – down from 69% in 2019, perhaps showing pent-up demand for post-closure getaways. They do not show comparisons with other parts of the UK.
Mobile home (May to October)
The static caravan and holiday home sector has seen continuous growth over the past five years. In 2021, the seasonal average (May – October) for static caravans and holiday homes reached 94%, up 5 percentage points from 2020 (89%) and the highest level reached during the period under review dating back to 2017.
Caravans and tourist tents:
Average pitch occupancy for motorhomes and campgrounds in 2021 was 46%, an increase of 14 percentage points from the previous year and the highest since 2018. During the period five years considered, inland locations generally performed better than coastal locations. .
Hostels and dormitories
These establishments have been the hardest hit by Covid restrictions and the average annual bed occupancy in 2021 was 37%. This was an increase in occupancy levels of 12 percentage points compared to 2020. But this is still well before the pre-pandemic period when occupancy was slightly above 50% on average.
Jim Jones, managing director of North Wales Tourism, said: “The results give us some room for optimism.
“Let’s not forget that this industry has been shaken after being hit very hard and it will take a few years to get back to pre-pandemic levels.
“While some areas of the sector have suffered much more than others, many have done everything to stay afloat, such as hostels and dormitories for example.
“We now face a whole new set of challenges, with a major recruitment crisis and soaring day-to-day running costs and cost of living.
“The initial increase in growth we saw last year was largely due to the lifting of restrictions and limited opportunities for overseas travel.
“Now that things are back to normal, we need a concerted effort to recognize that there are still challenges ahead, but now more than ever we need to raise the profile of Wales and of course the North. of Wales on the international market.
“The tourism and hospitality sector is a key part of our economic infrastructure and before Covid hit it was generating £3.6bn a year and providing jobs for 43,000 people.
“The industry has the potential to play a vital role in our economic recovery in North Wales, so the last thing we need is for visitors to be discouraged from coming here with the imposition of a tax of stay.”
The survey authors concluded: “COVID-19 continued to challenge hotels in Wales and elsewhere in the UK and beyond in 2021. Travel restrictions have impacted hotel performance in the first four months of the year and other factors, such as the moderation in international travel and consumer anxiety related to the virus, created a difficult backdrop for hoteliers during the rest of the year.
“However, hotels in Wales rebounded strongly in 2021 as occupancy increased to levels close to, albeit below, pre-pandemic levels.
“This was helped at least in part by strong domestic demand, as many UK holidaymakers chose to explore rural parts of the UK instead of undertaking international trips. This trend also helped support growth. ADR (room rate) as hotels capitalized on strong summer seasonal demand, even though overall ADR and RevPAR performance was below pre-pandemic levels.
“Hotels in South East Wales benefited less from the increase in stays compared to other regions. The region’s performance was affected due to its traditional dependence on business travelers and a shift in consumer behavior as travelers continued to largely shift away from urban destinations during the year.
“Repeating a trend seen last year, large hotels with more than 100 rooms achieved significantly lower occupancy rates than their counterparts with fewer rooms. It will be interesting to watch the performance of hotels of different sizes as well as the regional trends in 2022 and beyond as consumers continue to adapt to life with the virus.”