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Budget Hotels - UK - August 2009

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?

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Table of contents

  1. Issues in the Market

      • Key issues
        • Definitions
          • Abbreviations
          • Future Opportunities

            • Non-Standard Society
              • Budget ideas take off
                • Stripped down…
                  • … or upgraded
                    • Boom comes to an end
                      • Austerity chic
                        • And business buyers
                          • Brand loyalty and retail rewards
                          • 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
                                                    • Who’s Innovating

                                                      • Key points
                                                        • Booking…
                                                          • Building…
                                                            • Promoting…
                                                              • Launching…
                                                                • … and checking-in
                                                                • 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
                                                                                              • Brand Elements

                                                                                                • Key points
                                                                                                  • Brand map
                                                                                                      • Figure 24: Attitudes towards and usage of budget hotel brands, July 2009
                                                                                                    • Brand qualities of budget hotel brands
                                                                                                      • Travelodge and Premier Inn most welcoming
                                                                                                        • Figure 25: Personalities of various budget hotel brands, July 2009
                                                                                                      • Experience of budget hotel brands
                                                                                                        • Travelodge most popular
                                                                                                          • Figure 26: Consumer usage of various budget hotel brands, July 2009
                                                                                                        • Brand intentions for budget hotel brands
                                                                                                          • High consideration suggests low brand loyalty
                                                                                                            • Figure 27: Consideration of various budget hotel brands, July 2009
                                                                                                          • Brand satisfaction for budget hotel brands
                                                                                                            • Excellence at standard
                                                                                                              • Figure 28: Satisfaction with various budget hotel brands, July 2009
                                                                                                            • Brand commitment to budget hotel brands
                                                                                                              • Recommendation high, but loyalty lacking
                                                                                                                • Figure 29: Commitment to various budget hotel brands, July 2009
                                                                                                              • Travelodge
                                                                                                                • What the consumer thinks
                                                                                                                  • Figure 30: Attitudes towards the Travelodge brand, July 2009
                                                                                                                • Days Inn
                                                                                                                  • What the consumer thinks
                                                                                                                    • Figure 31: Attitudes towards the Days Inn brand, July 2009
                                                                                                                  • Ibis
                                                                                                                    • What the consumer thinks
                                                                                                                      • Figure 32: Attitudes towards the Ibis brand, July 2009
                                                                                                                    • Premier Inn
                                                                                                                      • What the consumer thinks
                                                                                                                        • Figure 33: Attitudes towards the Premier Inn brand, July 2009
                                                                                                                    • 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
                                                                                                                          • Influential Factors When Choosing a Budget Hotel

                                                                                                                            • Key points
                                                                                                                              • Figure 35: Factors that most influenced decision to stay at a particular budget hotel, 2007 and 2009
                                                                                                                            • Price, the young and recommendations
                                                                                                                              • Improvements at a cost
                                                                                                                                • Brand factors
                                                                                                                                  • Figure 36: Factors that most influenced decision to stay at a particular budget hotel, by most popular brands ever stayed in (UK or abroad), April 2009
                                                                                                                                  • Figure 37: Factors that most influenced decision to stay at a particular budget hotel, by second-most popular brands ever stayed in (UK or abroad), April 2009
                                                                                                                              • Attitudes Towards Budget Hotels

                                                                                                                                • Key points
                                                                                                                                  • Figure 38: Attitudes towards budget hotels, 2007 and 2009
                                                                                                                                • Price priority increases
                                                                                                                                  • The short-break barrier
                                                                                                                                    • Who thinks what
                                                                                                                                    • 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 – Influencing Factors in Choosing a Budget Hotel

                                                                                                                                                  • Figure 43: Most important factors that most influenced decision to stay at a budget hotel, by demographics, April 2009
                                                                                                                                                  • Figure 44: Next most important factors that most influenced decision to stay at a budget hotel, by demographics, April 2009
                                                                                                                                              • Appendix – Attitudes Towards Budget Hotels

                                                                                                                                                  • Figure 45: Attitudes towards budget hotels, by most popular budget chains ever stayed in (UK or abroad), April 2009
                                                                                                                                                  • Figure 46: Attitudes towards budget hotels, by second most popular budget chains ever stayed in (UK or abroad), April 2009
                                                                                                                                                  • Figure 47: Attitudes towards budget hotels, by least popular budget chains ever stayed in (UK or abroad), April 2009
                                                                                                                                                  • Figure 48: Most popular attitudes towards budget hotels, by demographics, April 2009
                                                                                                                                                  • Figure 49: Next most popular attitudes towards budget hotels, by demographics, April 2009
                                                                                                                                                  • Figure 50: Least popular attitudes towards budget hotels, 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

                                                                                                                                              Companies Covered

                                                                                                                                              • Accor
                                                                                                                                              • Aldi Stores Ltd (UK & Ireland)
                                                                                                                                              • Asda Group Ltd
                                                                                                                                              • British Chamber of Commerce
                                                                                                                                              • British Hospitality Association
                                                                                                                                              • British Market Research Bureau (BMRB)
                                                                                                                                              • British Sky Broadcasting Group plc (BSkyB)
                                                                                                                                              • Choice Hotels Europe PLC
                                                                                                                                              • Choice Hotels International
                                                                                                                                              • Co-operative Group
                                                                                                                                              • Confederation of British Industry
                                                                                                                                              • Daily Mail
                                                                                                                                              • Department for Transport
                                                                                                                                              • Dubai International Capital
                                                                                                                                              • Gfk NOP
                                                                                                                                              • Government Actuary's Department (GAD)
                                                                                                                                              • InterContinental Hotels Group PLC
                                                                                                                                              • J. Sainsbury
                                                                                                                                              • Lidl (UK)
                                                                                                                                              • Louvre Hotels
                                                                                                                                              • Marks & Spencer
                                                                                                                                              • Mitchells & Butlers Plc
                                                                                                                                              • Office for National Statistics
                                                                                                                                              • Premier Lodge
                                                                                                                                              • Ryanair Holdings plc
                                                                                                                                              • Spirit Pub Company
                                                                                                                                              • T-Mobile (UK) Ltd
                                                                                                                                              • Tesco Plc
                                                                                                                                              • Travelodge
                                                                                                                                              • TRI Hospitality Consulting
                                                                                                                                              • Virgin Media Ltd
                                                                                                                                              • Virgin Mobile
                                                                                                                                              • VisitBritain
                                                                                                                                              • Waitrose
                                                                                                                                              • Welcome Break Group Ltd
                                                                                                                                              • Wm Morrison Supermarkets
                                                                                                                                              • Wyndham Worldwide Corporation

                                                                                                                                              Budget Hotels - UK - August 2009

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