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Hotels - UK - November 2010

This report examines hotel use in the UK, considering business, leisure and VFR (visiting friends and relatives) purposes. It considers both full-service and budget hotels, looking at the impact of recession, the state of the market in 2010 and the prospects for the future. It examines who the key customers are, what they look for in a hotel and how operators can increase custom and maximise revenue. The report also considers consumer trends, what the strengths and weaknesses of the market are, and the performance of the regions of the UK.

  • More than one in two consumers report having stayed in a hotel for holiday/leisure purposes in the 12 months to September 2010. This represents a significant rise from 2008 and has been driven by an increase in short breaks – the recession meaning that consumers were more likely to opt for trips in the UK but, on-average, spent less on their holidays.
  • In total, hotel market revenue fell 7% in 2009 as occupancy, average room rate and RevPAR (revenue per available room) all fell. 2010 however has seen a return to revenue growth, in part driven by expansion. An estimated 10,000-plus rooms have been added year on year.
  • Approximately one in eight people used a hotel for business in the 12 months to September 2010, the same proportion that reported doing so in 2008 – reflecting 2009’s fall in domestic business travel and this year’s subsequent return to growth. Budget hotels have been beneficiaries of a ‘trading down’ shift, thanks to many companies tightening travel regulations/budgets. In addition, as hoteliers – especially in London – have reported an increase in corporate usage, so a positive impact on non-weekend usage has followed.
  • London has outperformed the regions of the UK in 2010, recording year on year increases in occupancy and RevPAR for seven of the first eight months of the year. In the full service (non-budget) hotel segment, London average room rate is almost double that of England, Scotland and Wales, while RevPAR is more than twice that of the England and Wales averages.
  • Since 2008, attitudes have shifted away from believing that “a hotel is just a base from which to explore nearby attractions” towards “a hotel and its facilities are part of the holiday experience”. Gender is the clearest demographic differential here; men are more likely than women to believe the former and women are more likely than men to believe the latter.
  • Of all the UK adults who stayed in a British hotel in 2009, over 30% used a budget option at some point across the 12-month period. This represents almost 15% growth from 2008, with the recession-driven ‘flight to value’ by domestic holidaymakers and trading down by corporate customers increasingly benefiting the sector.

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Table of contents

  1. Issues in the Market

      • Key issues
        • Definitions
          • Abbreviations
          • Future Opportunities

              • Trend: Slow It All Down
                • Trend: Switch Off
                • Market in Brief

                  • Recession reduces revenue
                    • London leads the way
                      • Holidays and ‘staycations’
                        • Business and budget
                          • Exchange rate boost
                            • Paying a premium dwindles
                            • Internal Market Environment

                              • Key points
                                • Domestic holiday surge
                                  • Figure 1: Domestic holidays, 2005-10
                                  • Figure 2: Domestic holidays expenditure, 2005-10
                                • How many holidays?
                                  • Figure 3: Holidays/short breaks away from home in the last 12 months, 2010
                                  • Figure 4: Total number of trips taken in Britain, 2010
                                  • Figure 5: Holidays and short break away from home in the last 12 months, British Isles vs abroad, 2010
                                • The business of business travel
                                  • Figure 6: UK business travel, by volume, 2005-10
                                  • Figure 7: UK business travel, by value, 2005-10
                                • Coming to the UK
                                  • Figure 8: Inbound visitors to the UK, by reason for trip, 2005-09
                                  • Figure 9: Expenditure of inbound visitors to the UK, by reason for trip, 2005-09
                                  • Figure 10: Exchange rates for Sterling, 2005-10
                                • Olympics – challenge vs opportunity
                                  • UGC controversy
                                  • Broader Market Environment

                                    • Key points
                                      • UK exits recession, enters age of austerity
                                        • Figure 11: GDP, PDI, consumer expenditure and savings, at current prices, 2005-15
                                      • AB growth in future
                                        • Figure 12: Forecast adult population trends, by socio-economic group, 2005-15
                                      • Changing needs
                                        • Figure 13: Forecast adult population trends, by lifestage, 2005-15
                                      • Get away from it all
                                        • Figure 14: UK households, by size, 2005-15
                                      • Online opportunities
                                        • Figure 15: Broadband penetration, by demographics, 2004-10
                                    • Competitive Context

                                      • Key points
                                        • European occupancy down, but bright spots in the UK
                                          • Figure 16: Room occupancy of hotels in selected key European destinations, 2008-09
                                        • Room rate and RevPAR suffer all over
                                          • Figure 17: Average room rate of hotels in selected key European destinations, 2008-09
                                          • Figure 18: RevPAR of hotels in selected key European destinations, 2008-09
                                        • No return yet to pre-recession average
                                          • Figure 19: Hotel price comparison across the 50 most popular European cities, 2008-10
                                      • Strengths and Weaknesses in the Market

                                          • Strengths
                                            • Domestic tourism
                                              • Euro rate and inbound holidays
                                                • AB increase
                                                  • Business travel
                                                    • Expansion
                                                      • Weaknesses
                                                        • Regional/London imbalance
                                                          • Price pressure
                                                            • Olympic question marks
                                                              • Corporate restrictions
                                                                • Purse strings tighten
                                                                • Who's Innovating?

                                                                  • Key points
                                                                    • Pay per extra
                                                                      • Serving senses
                                                                        • Safeguarding sleep
                                                                          • Technology – beds and packages
                                                                            • Virgin Hotels is on the way
                                                                              • Online and on phones
                                                                                • Baking, racing and popping-up
                                                                                • Market Size and Forecast

                                                                                  • Key points
                                                                                    • Revenue growth returns
                                                                                      • Figure 20: The hotel market, by revenue, 2005-15
                                                                                      • Figure 21: Performance indicators for full-service hotels, 2005-09
                                                                                      • Figure 22: Performance indicators for UK budget hotels, 2007-09
                                                                                    • 2011 and beyond
                                                                                      • Forecast
                                                                                        • Figure 23: Value forecast of the hotel market, by revenue, 2010-15
                                                                                      • Forecast methodology
                                                                                      • Segment Performance

                                                                                        • Key points
                                                                                          • Recession rebalances business/leisure mix
                                                                                            • Figure 24: hotel market mix analysis for UK, London, England, Scotland and Wales, by stays, 2007-09
                                                                                          • London calling
                                                                                            • Figure 25: Full service hotel performance indicators for UK, London, England, Scotland and Wales, 2009
                                                                                            • Figure 26: Budget hotel performance indicators for UK, London, England, Scotland and Wales, 2009
                                                                                          • ‘Staycation’ outdoes vacation
                                                                                            • Figure 27: Percentage of GB population staying at hotels, UK and overseas, 2009
                                                                                            • Figure 28: Frequency of stay abroad and in Britain over the past 12 months, 2009
                                                                                          • Budget gets bigger
                                                                                            • Figure 29: Budget hotels users in Britain, 2009
                                                                                          • Hotels stay top of the tree
                                                                                            • Figure 30: Type of holiday accommodation used for last holiday in the British Isles, 2009
                                                                                          • Holiday trends
                                                                                            • Figure 31: Hotel visitors holiday trends, 2005-09
                                                                                        • Market Share

                                                                                          • Key points
                                                                                            • Premier Inn holds top spot
                                                                                              • Figure 32: Top 30 hotel operating companies in the UK, by number of rooms, 2009
                                                                                          • Companies and Products

                                                                                            • Accor
                                                                                              • Best Western
                                                                                                • Britannia Hotels
                                                                                                  • De Vere Group
                                                                                                    • Hilton Worldwide
                                                                                                      • InterContinental Hotels Group
                                                                                                        • Thistle Hotels
                                                                                                          • Travelodge
                                                                                                            • Whitbread (Premier Inn)
                                                                                                              • Wyndham Worldwide
                                                                                                              • Brand Elements

                                                                                                                • Key points
                                                                                                                  • Brand map
                                                                                                                      • Figure 33: Attitudes towards and usage of various hotel brands, August 2010
                                                                                                                    • Brand qualities of hotel brands
                                                                                                                      • A place to rest the head – budget brands top performers
                                                                                                                        • Figure 34: Personalities of various hotel brands, August 2010
                                                                                                                      • Experience of hotel brands
                                                                                                                        • Budget brands most used
                                                                                                                          • Figure 35: Consumer usage of various hotel brands, August 2010
                                                                                                                        • Brand consideration for hotel brands
                                                                                                                          • Budget brands most considered, Hilton has aspirational appeal
                                                                                                                            • Figure 36: Consideration of various hotel brands, August 2010
                                                                                                                          • Brand satisfaction for hotel brands
                                                                                                                            • Full-service brands have highest satisfaction
                                                                                                                              • Figure 37: Satisfaction with various hotel brands, August 2010
                                                                                                                            • Brand commitment to hotel brands
                                                                                                                              • Budget brands maintain custom
                                                                                                                                • Figure 38: Commitment to various hotel brands, August 2010
                                                                                                                              • Brand intentions for hotel brands
                                                                                                                                • Premier service means top retention
                                                                                                                                  • Figure 39: Future usage intentions for various hotel brands, August 2010
                                                                                                                                • Brand recommendation for hotel brands
                                                                                                                                  • Prestige and budget – horses for courses
                                                                                                                                    • Figure 40: Recommendation of various hotel brands, August 2010
                                                                                                                                  • Premier Inn
                                                                                                                                    • What the consumer thinks
                                                                                                                                      • Figure 41: Attitudes towards the Premier Inn brand, August 2010
                                                                                                                                    • Strengths
                                                                                                                                      • Room for improvement
                                                                                                                                        • Marriott
                                                                                                                                          • What the consumer thinks
                                                                                                                                            • Figure 42: Attitudes towards the Marriott brand, August 2010
                                                                                                                                          • Strengths
                                                                                                                                            • Room for improvement
                                                                                                                                              • Travelodge
                                                                                                                                                • What the consumer thinks
                                                                                                                                                  • Figure 43: Attitudes towards the Travelodge brand, August 2010
                                                                                                                                                • Strengths
                                                                                                                                                  • Room for improvement
                                                                                                                                                    • Hilton
                                                                                                                                                      • What the consumer thinks
                                                                                                                                                        • Figure 44: attitudes towards the Hilton brand, August 2010
                                                                                                                                                      • Strengths
                                                                                                                                                        • Room for improvement
                                                                                                                                                        • Hotel Stays

                                                                                                                                                          • Key points
                                                                                                                                                            • Short break boost
                                                                                                                                                              • Figure 45: Reasons for stays in UK hotels in past 12 months, 2008-10
                                                                                                                                                            • Holidays and hotels
                                                                                                                                                              • Long and the short of it
                                                                                                                                                                • Business back to 2008
                                                                                                                                                                  • Stay-aways
                                                                                                                                                                  • Influential Factors When Choosing a Hotel

                                                                                                                                                                    • Key points
                                                                                                                                                                      • Price is main influence
                                                                                                                                                                        • Figure 46: Factors that most influenced decision to stay at a particular hotel, September 2010
                                                                                                                                                                      • In room, out of room
                                                                                                                                                                        • Reviews and recommendations
                                                                                                                                                                          • Influencing factors vs usage
                                                                                                                                                                            • Figure 47: Factors that most influenced decision to stay at a particular hotel, by reasons for stays in UK hotels in past 12 months, September 2010
                                                                                                                                                                        • Hotel Facilities

                                                                                                                                                                          • Key points
                                                                                                                                                                            • Purse strings tighten
                                                                                                                                                                              • Figure 48: Hotel facilities worth paying a premium for, 2008-10
                                                                                                                                                                            • Top two – who will pay?
                                                                                                                                                                              • Young go for tech
                                                                                                                                                                                • Business travellers want options
                                                                                                                                                                                  • Figure 49: Hotel facilities worth paying a premium for, by reasons for stays in UK hotels in past 12 months, September 2010
                                                                                                                                                                                • Offering opportunities
                                                                                                                                                                                  • Figure 50: Hotel facilities worth paying a premium for, by most popular factors influencing decisions to stay at a particular hotel, September 2010
                                                                                                                                                                              • Attitudes Towards Hotels

                                                                                                                                                                                • Key points
                                                                                                                                                                                  • Hotel holidays
                                                                                                                                                                                    • Figure 51: Attitudes towards UK hotels, 2008-2010
                                                                                                                                                                                  • A base or a holiday?
                                                                                                                                                                                    • Women log on
                                                                                                                                                                                      • Chain versus independent
                                                                                                                                                                                        • Who thinks what?
                                                                                                                                                                                          • Figure 52: Attitudes towards UK hotels, by reasons for stays in past 12 months, September 2010
                                                                                                                                                                                        • Influence and attitudes
                                                                                                                                                                                          • Figure 53: Attitudes towards UK hotels, by most popular factors that most influenced decision to stay, September 2010
                                                                                                                                                                                        • Premiums and opinion
                                                                                                                                                                                          • Figure 54: Attitudes towards UK hotels, by most popular hotel facilities worth paying a premium for, September 2010
                                                                                                                                                                                      • Targeting Opportunities

                                                                                                                                                                                        • Key points
                                                                                                                                                                                          • Target groups
                                                                                                                                                                                            • Figure 55: UK hotel target groups, September 2010
                                                                                                                                                                                          • Hotels for Holiday (24% of internet users aged 16+ or 9.5 million adults)
                                                                                                                                                                                            • Demographic profile
                                                                                                                                                                                              • Marketing message
                                                                                                                                                                                                • Hotels for City Holiday (11% of internet users aged 16+ or 4.4 million adults)
                                                                                                                                                                                                  • Demographic profile
                                                                                                                                                                                                    • Marketing message
                                                                                                                                                                                                      • Basehunters (8% of internet users aged 16+ or 3.2 million adults)
                                                                                                                                                                                                        • Demographic profile
                                                                                                                                                                                                          • Marketing message
                                                                                                                                                                                                            • Price is Paramount (17% of internet users aged 16+ or 6.7 million adults)
                                                                                                                                                                                                              • Demographic profile
                                                                                                                                                                                                                • Marketing message
                                                                                                                                                                                                                  • Not Bothered (40% of internet users aged 16+ or 15.8 million adults)
                                                                                                                                                                                                                    • Demographic profile
                                                                                                                                                                                                                      • Marketing message
                                                                                                                                                                                                                      • Appendix – Hotel Stays

                                                                                                                                                                                                                          • Figure 56: Reasons for stays in UK hotels in past 12 months, by usage, September 2010
                                                                                                                                                                                                                          • Figure 57: Most popular reasons for stays in UK hotels in past 12 months, by demographics, September 2010
                                                                                                                                                                                                                          • Figure 58: Next most popular reasons for stays in UK hotels in past 12 months, by demographics, September 2010
                                                                                                                                                                                                                          • Figure 59: Other reasons for stays in UK hotels in past 12 months, by demographics, September 2010
                                                                                                                                                                                                                      • Appendix – Influential Factors When Choosing a Hotel

                                                                                                                                                                                                                          • Figure 60: Most popular factors that influenced decision to stay at a particular hotel, by demographics, September 2010
                                                                                                                                                                                                                          • Figure 61: Next most popular factors that influenced decision to stay at a particular hotel, by demographics, September 2010
                                                                                                                                                                                                                          • Figure 62: Other factors that influenced decision to stay at a particular hotel, by demographics, September 2010
                                                                                                                                                                                                                          • Figure 63: Least popular factors that influenced decision to stay at a particular hotel, by demographics, September 2010
                                                                                                                                                                                                                      • Appendix – Hotel Facilities

                                                                                                                                                                                                                          • Figure 64: Hotel facilities worth paying a premium for, by next most popular factors influencing decision to stay at a particular hotel, September 2010
                                                                                                                                                                                                                          • Figure 65: Hotel facilities worth paying a premium for, by other factors influencing decision to stay at a particular hotel, September 2010
                                                                                                                                                                                                                          • Figure 66: Most popular hotel facilities worth paying a premium for, by demographics, September 2010
                                                                                                                                                                                                                          • Figure 67: Next most popular hotel facilities worth paying a premium for, by demographics, September 2010
                                                                                                                                                                                                                          • Figure 68: Other hotel facilities worth paying a premium for, by demographics, September 2010
                                                                                                                                                                                                                          • Figure 69: Least popular hotel facilities worth paying a premium for, by demographics, September 2010
                                                                                                                                                                                                                      • Appendix – Attitudes Towards Hotels

                                                                                                                                                                                                                          • Figure 70: Attitudes towards UK hotels, by next most popular factors influencing decision to stay at a particular hotel, September 2010
                                                                                                                                                                                                                          • Figure 71: Attitudes towards UK hotels, by other factors influencing decision to stay at a particular hotel, September 2010
                                                                                                                                                                                                                          • Figure 72: Attitudes towards UK hotels, by least popular factors influencing decision to stay at a particular hotel, September 2010
                                                                                                                                                                                                                          • Figure 73: Attitudes towards UK hotels, by next most popular hotel facilities worth paying a premium for, September 2010
                                                                                                                                                                                                                          • Figure 74: Attitudes towards UK hotels, by other hotel facilities worth paying a premium for, September 2010
                                                                                                                                                                                                                          • Figure 75: Attitudes towards UK hotels, by least popular hotel facilities worth paying a premium for, September 2010
                                                                                                                                                                                                                          • Figure 76: Most popular attitudes towards UK hotels, by demographics, September 2010
                                                                                                                                                                                                                          • Figure 77: Next most popular attitudes towards UK hotels, by demographics, September 2010
                                                                                                                                                                                                                          • Figure 78: Other attitudes towards UK hotels, by demographics, September 2010
                                                                                                                                                                                                                      • Appendix – Targeting Opportunities

                                                                                                                                                                                                                          • Figure 79: Attitudes towards UK hotels, by target groups, September 2010
                                                                                                                                                                                                                          • Figure 80: Reasons for stays in UK hotels in past 12 months, by target groups, September 2010
                                                                                                                                                                                                                          • Figure 81: Reasons for stays in UK hotels in past 12 months, by target groups, September 2010
                                                                                                                                                                                                                          • Figure 82: Hotel facilities worth paying a premium for, by target groups, September 2010
                                                                                                                                                                                                                          • Figure 83: Target groups, by demographics, September 2010

                                                                                                                                                                                                                      Companies Covered

                                                                                                                                                                                                                      • Accor North America
                                                                                                                                                                                                                      • Advertising Standards Authority
                                                                                                                                                                                                                      • Bank of England
                                                                                                                                                                                                                      • Barcelo Hotels & Resorts
                                                                                                                                                                                                                      • Baymont Inns & Suites
                                                                                                                                                                                                                      • Blackstone Group (The)
                                                                                                                                                                                                                      • Britannia Hotels Ltd
                                                                                                                                                                                                                      • British Airways Plc
                                                                                                                                                                                                                      • British Hospitality Association
                                                                                                                                                                                                                      • British Market Research Bureau (BMRB)
                                                                                                                                                                                                                      • Carlson Hotels Worldwide
                                                                                                                                                                                                                      • Choice Hotels International
                                                                                                                                                                                                                      • Council of Mortgage Lenders
                                                                                                                                                                                                                      • Days Inns Worldwide Inc.
                                                                                                                                                                                                                      • Dubai International Capital
                                                                                                                                                                                                                      • European Tour Operators Association
                                                                                                                                                                                                                      • Facebook, Inc.
                                                                                                                                                                                                                      • Hilton Group plc
                                                                                                                                                                                                                      • Hilton Hotels Corporation
                                                                                                                                                                                                                      • Hotel Du Vin Group
                                                                                                                                                                                                                      • InterContinental Hotels Group PLC
                                                                                                                                                                                                                      • Jurys Doyle Hotel Group
                                                                                                                                                                                                                      • Kantar Media
                                                                                                                                                                                                                      • LinkedIn
                                                                                                                                                                                                                      • Lloyds Banking Group
                                                                                                                                                                                                                      • Macdonald Hotels and Resorts
                                                                                                                                                                                                                      • Mitchells & Butlers Plc
                                                                                                                                                                                                                      • Novotel
                                                                                                                                                                                                                      • Premier Lodge
                                                                                                                                                                                                                      • PricewaterhouseCoopers
                                                                                                                                                                                                                      • Prudential plc
                                                                                                                                                                                                                      • Radisson Hotels & Resorts
                                                                                                                                                                                                                      • Rezidor Hotel Group
                                                                                                                                                                                                                      • Royal Bank of Scotland Group plc
                                                                                                                                                                                                                      • Spirit Pub Company
                                                                                                                                                                                                                      • The London Organising Committee of the Olympic Games and Paralympic Games Limited
                                                                                                                                                                                                                      • Thistle Hotels Limited
                                                                                                                                                                                                                      • Travelodge
                                                                                                                                                                                                                      • TRI Hospitality Consulting
                                                                                                                                                                                                                      • TripAdvisor LLC
                                                                                                                                                                                                                      • Village Hotels
                                                                                                                                                                                                                      • Waitrose

                                                                                                                                                                                                                      Hotels - UK - November 2010

                                                                                                                                                                                                                      US $2,570.96 (Excl.Tax)