The latest visitor figures have shown the tourism sector in Wales bounced back strongly in 2021 but significant challenges remain as rising costs and recruitment issues impact the industry.
Visit Wales's Accommodation Occupancy Survey Annual Report for 2021 gives a lowdown on how the sector has rebounded as pandemic restrictions eased.
It is positive reading with the hotel segment nearly back to 2019 occupancy levels and well up on 2020. It also outperformed England and the rest of Europe for occupancy levels - partly due to less reliance to overseas visitors - although the room rate paid remains lower than rival destinations.
Self catering and holiday park figures were also very encouraging but hostels and bunkhouses - badly impacted by Covid rules - remain well down on the pre-pandemic period.
READ MORE: Fears Welsh hotel 'unviable' unless something done about costs tsunami
The overall figures were welcomed by the sector but warnings issued over future challenges. These include the greater competition as more people in the UK travel abroad as rules ease as well as spiralling costs and a recruitment crisis.
Jim Jones, from North Wales Tourism, said these issues were why a tourism tax was the "last thing" Wales needed at the current time.
Survey findings
Hotels:
In the hotel sector Wales showed a strong bounce back on 2020 but with lockdowns affecting the start of the year the overall figures were narrowly down on 2019. Room occupancy was 64% in 2021 - up from 45% in 2020 - but down marginally on the 66% in 2019 before the pandemic hit. The country faired well in comparison to England which saw room occupancy at 54% (41% in 2020). The average for Europe in 2021 was 43%.
North Wales was the top performer in the country with occupancy (May to December 2021) at 79% - compared to 76% in South West Wales and 69% in 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) over the border. The rate in Wales remains just below the pre-pandemic period.
Guesthouses/B&Bs
The annual room and bedspace occupancy across the guesthouse/B&B sector was 60% and 50% respectively, almost double that seen in 2020 - but low sample numbers mean the figures should be viewed with caution.
Self catering:
This sector was actually above pre-pandemic levels in 2021 with occupancy levels at 61%, an upturn of 9 percentage points on the previous year. Across the regions, North Wales achieved the highest unit occupancy at 68%.
The average unit occupancy between May and October was 81% - compared to 69% in 2019, perhaps showing the pent up demand to get away after lockdowns. They don't show comparisons with other parts of the UK.
Static caravan (May to October)
The static caravan and holiday homes sector has seen continued 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 on 2020 (89%) and the highest level achieved in the period under review dating back to 2017.
Touring caravans and tents:
The average pitch occupancy for touring caravan and camping parks in 2021 was 46%, a rise of 14 percentage points on the previous year and the highest since 2018. Across the five year period under review, inland locations have generally performed above those in coastal locations.
Hostels and Bunkhouses
These facilities were the hardest hit by Covid restrictions and annual average bedspace occupancy in 2021 was 37%. This was an increase in occupancy levels of 12 percentage points when compared to 2020. But it remains well before the pre-pandemic period when occupancy was just over 50% on average.
Jim Jones, the chief executive of North Wales Tourism, said: “The results give us some room for optimism.
"Let’s not forget this industry was left reeling 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 suffered a lot more than others, many did everything they could to stay afloat, like the hostels and bunkhouses for examples.
“Now we are facing a whole new set of challenges, with a major recruitment crisis and soaring day to day running costs and living costs.
“The initial increase in growth we witnessed last year was largely due to the lifting of restrictions and the limited opportunities for overseas travel.
“Now things are getting back to normal, we need a concerted effort to recognise there are still difficulties ahead but we need to now more than ever raise the profile of Wales and of course North Wales on the international market.
“The tourism and hospitality sector is a key part of our economic infrastructure and before Covid struck it was generating £3.6 billion a year and provided employment for 43.000 people
“The industry has the potential to play an integral 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 tourism tax.”
The survey authors concluded: "COVID-19 continued to inflict difficulties for hotels in Wales and elsewhere in the UK and beyond in 2021. Travel restrictions impacted performance in the first four months of the year and other factors, such as subdued international travel and consumer anxiety regarding the virus, created a challenging backdrop for hoteliers during the rest of the year.
"However, hotels in Wales rebounded strongly in 2021 as occupancy increased to near, albeit below, pre-pandemic levels.
"This was aided at least in part by strong domestic demand as many UK holidaymakers chose to explore rural regions of the UK instead of undertaking international travel. This trend helped to support ADR(room rate) growth too as hotels capitalized on strong summer seasonal demand, although overall ADR and RevPAR performance was below pre-pandemic levels.
"Hotels in South East Wales benefitted less from increased staycations compared with other regions. Performance in the region was impacted due to its traditional reliance on business travellers and a shift in consumer behaviour as travellers continued to largely shy away from urban destinations during the year.
"Repeating a trend observed last year, larger hotels with more than 100 rooms achieved significantly lower occupancy than their counterparts with fewer rooms. It will be interesting to monitor the performance of different sized hotels along with regional trends in 2022 and beyond as consumers continue to adapt with living with the virus."
