Abstract
About this report
Unlike many of the sectors in the travel market, budget hotels find themselves well placed to face down the recession. Businesses have cut budgets and many commercial travellers have turned to the budget chains in place of the mid-market hotels they had previously been using. Leisure travellers have increasingly considered budget options as a way of making their holiday pounds stretch. And with the number of overseas holidays being taken falling for the first time in over a decade, many have predicted that 2009 will be characterised by more UK residents holidaying at home than ever before.
However, it would be a mistake to say that budget hotels are immune from negative recessionary impact. The number of visitors to the UK has fallen for the first time in many years. Although business travellers have increasingly switched to budget chains, business travel itself has been one of the hardest-hit segments, decreasing the pool of commercial travellers staying in hotels overall. And budget hotels still face an uphill struggle in convincing many people that they are suitable for holidays, with Mintel’s exclusive consumer research revealing that few consider them appropriate for multiple night stays.
This report examines the impact of recession on the budget hotels sector, looking at these key issues alongside consumer trends, an overview of the market, strengths and weaknesses, innovations in the marketplace, and considers the future of budget hotels in the UK.
Key issues
- How are budget hotels performing in the recession? Are the prevailing economic circumstances helping or hurting the sector?
- Who are the key budget hotel users? And what do demographic trends indicate for the future of this section of the hotels market?
- How does holiday-taking affect budget hotels? And how do trends in business travel impact upon them?
- What do people look for in a budget hotel? Are they interested in facilities or do they just want a cheap place to sleep?
- Is trading down occurring? If so, to what extent is it happening?
- How important are brands in the budget hotel market? Is price the key driver of choice?
Table of Contents
- Issues in the Market
- Key issues
- Definitions
- Abbreviations
- Market in Brief
- The recession hurts...
- ... and helps
- Future features
- RevPAR rests on rates
- Leaders and guests
- Internal Market Environment
- Key points
- Domestic holidays
- Figure 1: Domestic holiday volumes and value, 2004-09
- The business
- Figure 2: Domestic business travel market size, by volume and value,
2004-09
- Coming to the UK
- Figure 3: Inbound visits to the UK, by reason for trip, 2004-08
- A UK stay and why
- Figure 4: Adults who have stayed in a UK hotel in the last 12 months,
2004-08
- Figure 5: Frequency of hotel stays, 2004-08
- Figure 6: Key UK hotel market statistics, 2004-08
- Recession boosts roads
- Figure 7: Road traffic statistics, 1998-2007
- Figure 8: Car ownership, 2004-08
- Swine flu and (common) sense
- Broader Market Environment
- Key points
- On a budget
- Figure 9: Trends in personal disposable income and consumer expenditure,
2004-14
- Socio-economic trends bode well
- Figure 10: Forecast adult population trends, by socio-economic group,
2004-14
- Trends in age
- Figure 11: Trends in the age structure of the UK population, by gender,
2004-14
- Figure 12: UK household sizes, 2004-14
- Internet penetration
- Figure 13: British internet penetration at home/work/place of study or
elsewhere, by gender, age, socioeconomic group, region and working status,
Jan 2004-Jan 2009
- Recessionary reductions
- Figure 14: Things the recession has prevented consumers doing or buying
over the next 12 months, February 2009
- Exchange rates
- Figure 15: Sterling exchange rates, 2005-09
- Competitive Context
- Key points
- Figure 16: The total hotel market, by revenue, 2004-09
- Budget boost
- Leisure use -- pros and cons
- Strengths and Weaknesses
- Strengths
- Weaknesses
- Market Size and Forecast
- Key points
- Figure 17: The branded budget hotel market, by value, 2004-14
- Past
- Present
- Future
- Factors used in the forecast
- Segment Performance
- Key points
- Expansive expansion
- Figure 18: The number of branded budget hotels, 2004-09
- Figure 19: The number of branded budget hotel rooms, 2004-09
- Occupancy falls, but ARR and RevPAR rise
- Figure 20: Average room occupancy in budget hotels, 2007-08
- Figure 21: Average room rate in budget hotels, 2007-08
- Figure 22: Average RevPAR (revenue per available room) in budget hotels,
2007-08
- Market Share
- Key points
- The big two get bigger
- Figure 23: Number of UK budget hotels, number of rooms and average rooms
per hotel, March 2008-09
- Companies and Products
- Key points
- Accor (Ibis, Etap, Formule 1)
- Campanile
- Comfort Inn
- Express by Holiday Inn
- Innkeeper' s Lodge
- Jurys Inn
- Premier Inn
- Travelodge
- Who Has Stayed Where?
- Key points
- Figure 34: Budget hotel chains ever stayed in, UK or abroad, April 2009
- The stayers
- Non-stayers -- but not never-stayers
- The comfortable and the workers
- Targeting Opportunities
- Key points
- Target groups
- Figure 39: Budget hotels target groups, April 2009
- Fans
- One Night Only
- The Price is Wrong
- Wherever
- Appendix -- Who Has Stayed Where?
- Figure 40: Most popular budget hotel chains ever stayed in, UK or
abroad, by demographics, April 2009
- Figure 41: Next most popular budget hotel chains ever stayed in, UK or
abroad, by demographics, April 2009
- Figure 42: Least popular budget hotel chains ever stayed in, UK or
abroad, by demographics, April 2009
- Appendix -- Targeting Opportunities
- Figure 51: Budget chains ever stayed in the UK or abroad, by target
groups, April 2009
- Figure 52: Target groups, by demographics, April 2009
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