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UK Hotels market report

"The growing likelihood of rising inflation in the coming months could impact on how much UK consumers are willing to spend on their short break habit. There may well be an accelerated 'flight to value' which is likely to increase still further growing the market share of the rapidly expanding budget hotel sector (including so-called super-budget offerings) as well as increasing the attractiveness of cheaper alternatives such as Airbnb."

- John Worthington, Senior Analyst

This report will cover the following areas:

  • How hotels can respond to competition from Airbnb
  • Older guests are under-represented in luxury segment
  • Hotels can be either a laboratory for new technology or an oasis of human contact in a world of automation
  • Well-being and the Hygge Hotel
  • Offering incentives for direct booking

For many consumers, staying in a hotel is no longer a once in a blue moon, special occasion indulgence, but - like eating out - has now become a far more affordable, regular and casual experience. The hotel market is benefiting, in particular, from the regular short break habit adopted by UK consumers as a way of life. While the budget chain sector is increasingly dominant that also creates opportunities for other tiers and branded concepts as well as unique, independent establishments. The threat from 'industry disruptors' like Airbnb is growing but this should be welcomed by hoteliers as an incentive to raise their game, competing not only on price but on the services and experiences that make a hotel stay different. The economic uncertainty of Brexit and threat of terrorism are problems ahead, and the outlook for business travel is particularly challenging, but the Pound's weakness is a key plus-factor for UK domestic and inbound travel and should benefit hotels.

The market section of this Report examines hotels, motels and guesthouses in the UK used by both domestic and foreign tourists for any leisure, business and visiting friends and relatives (VFR) purposes. The consumer section examines a range of issues related to the UK consumer when staying in commercial accommodation including:

  • Accommodation types stayed in over the last year
  • Types of hotel stayed in, purpose and frequency of stay
  • The hotel booking process
  • Usage of and attitudes towards online customer reviews
  • Attitudes towards technology in hotels
  • Preferences for types and styles of hotel

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Table of contents

  1. Overview

    • What you need to know
      • Covered in this Report
      • Executive Summary

          • Climate of uncertainty
            • Figure 1: Total volume forecast of hotel/motel/guesthouse trips (domestic and inbound), 2011-21
          • Market of two halves
            • Figure 2: Volume of nights staying in UK hotels by domestic and inbound visitors, 2011-16
          • Made for China
            • Figure 3: Inbound tourism (all purposes), top ten source markets by value, 2015
          • Weak Pound likely to bolster demand for UK trips
            • Figure 4: Sterling annual average exchange rate against euro and US$, 2011-15 and spot rate as at 31 October 2016
          • Market becoming more branded
            • Figure 5: Top 10 hotels in the UK, by site numbers, October 2016
          • Boutique/lifestyle leads innovation
            • Budget dominates but half of guests still use mid-market hotels
              • Figure 6: Types of hotel stayed in over the past 12 months, September 2016
            • Hotels lose share of booking
              • Guests demand flexible approach
                • Hotel Millennial
                  • Figure 7: Hotel preferences (factors rated as either very important or somewhat important), September 2016
                • What we think
                • Issues and Insights

                  • How hotels can respond to competition from Airbnb
                    • The facts
                      • The implications
                        • Older guests are under-represented in luxury segment
                          • The facts
                            • The implications
                              • Hotels can be either a laboratory for new technology or an oasis of human contact in a world of automation
                                • The facts
                                  • The implications
                                    • Well-being and the Hygge Hotel
                                      • The facts
                                        • The implications
                                          • Offering incentives for direct booking
                                            • The facts
                                              • The implications
                                              • The Market – What You Need to Know

                                                • Flattish growth in 2016 following rise in 2015
                                                  • Short leisure breaks robust
                                                    • But inbound rise has provided biggest boost
                                                      • Terrorism fears are a problem but weak Pound is a plus
                                                        • Inflationary pressures could dampen willingness to spend
                                                          • Annual hotel trip growth of 2% expected
                                                          • Market Size, Segment Performance and Forecast

                                                            • Inbound tourism has been key growth driver for hotels
                                                              • Figure 8: Total volume of trips and nights staying in UK hotels/motels/guesthouses, 2011-21
                                                              • Figure 9: Volume of trips and nights staying in UK hotels/motels/guesthouses, by domestic and inbound visits, 2011-16
                                                            • Brexit and beyond
                                                              • Consumers set to become even more budget-conscious
                                                                • Business travel looks challenging
                                                                  • Forecast
                                                                    • Figure 10: Total volume forecast of hotel/motel/guesthouse trips (domestic and inbound), 20011-21
                                                                    • Figure 11: Volume forecast of hotel/motel/guesthouse nights (domestic and inbound), 20011-21
                                                                  • The impact of the EU referendum vote
                                                                      • Figure 12: Alternative market scenarios for the post-Brexit Hotels market, by volume of trips, 2016-21
                                                                      • Figure 13: Detailed Post-Brexit scenarios for the post-Brexit Hotels market, by volume of trips, 2016-21
                                                                    • Staycation mark #2 could boost hotel sector
                                                                    • Market Background

                                                                      • The macro-economic context
                                                                        • Domestic tourism performance up and down
                                                                          • Figure 14: Domestic tourism market (UK) (all tourism), 2011-16
                                                                        • Robust short break segment
                                                                          • Figure 15: Domestic tourism by trip volume and purpose, 2011-15
                                                                        • Inbound going from strength to strength
                                                                          • Figure 16: Total inbound tourism markets (all tourism), 2011-16
                                                                        • But concerns over terrorism are a threat
                                                                          • Figure 17: Inbound tourism by trip volume and purpose, 2011-15
                                                                        • Chinese visitor growth an opportunity for hotels
                                                                          • Figure 18: Inbound tourism (all purposes), top ten source markets by value, 2015
                                                                        • Cost of a UK hotel break drops 13%
                                                                          • Figure 19: Sterling annual average exchange rate against euro and US$, 2011-15 and spot rate as at 31 October 2016
                                                                          • Figure 20: City break holiday living costs, 2016
                                                                      • Key Players – What You Need To Know

                                                                        • Budget sector drives majority of supply growth
                                                                          • Supply surges after post-Olympic lull
                                                                            • Premier Inn has most positive brand perceptions
                                                                              • Proliferation of boutique brands
                                                                                • New ways to wellness
                                                                                  • New hotel themes
                                                                                    • Room service by AI
                                                                                    • Market Share

                                                                                      • Dramatic growth of branded budget sector
                                                                                        • Figure 21: Estimated number of UK hotels and rooms by type of hotel, 2015
                                                                                        • Figure 22: Estimated growth in number of UK hotel rooms by type of hotel, 2007-15
                                                                                      • Rapid growth has continued in 2016
                                                                                        • Risk of over-supply
                                                                                          • Market leaders
                                                                                              • Figure 23: Top 20 hotels in the UK, by site numbers, October 2016
                                                                                          • Launch Activity and Innovation

                                                                                            • Boutique boom
                                                                                              • Down with the kids
                                                                                                  • Themed hotels: kids TV, gaming and gin
                                                                                                    • Cultural content and events
                                                                                                      • Convenience shopping
                                                                                                        • Wellness
                                                                                                          • Humans
                                                                                                            • The purple pound
                                                                                                            • Hotel Brand Research

                                                                                                                • Brand map
                                                                                                                  • Figure 24: Attitudes towards and usage of selected brands, September 2016
                                                                                                                • Key brand metrics
                                                                                                                  • Figure 25: Key metrics for selected brands, September 2016
                                                                                                                • Brand attitudes: Hilton scores highest on quality
                                                                                                                  • Figure 26: Attitudes, by brand, September 2016
                                                                                                                • Brand personality: Best Western suffers jaded image
                                                                                                                  • Figure 27: Brand personality – macro image, September 2016
                                                                                                                • Premier Inn – honest and reliable
                                                                                                                  • Figure 28: Brand personality – micro image, September 2016
                                                                                                                • Brand analysis
                                                                                                                  • Premier Inn seen as best value brand
                                                                                                                    • Figure 29: User profile of Premier Inn, September 2016
                                                                                                                  • Brand analysis
                                                                                                                    • Marriott needs to convince the uninitiated
                                                                                                                      • Figure 30: User profile of Marriott, September 2016
                                                                                                                    • Brand analysis
                                                                                                                      • Hilton exclusive but worth it
                                                                                                                        • Figure 31: User profile of Hilton, September 2016
                                                                                                                      • Brand analysis
                                                                                                                        • Holiday Inn seen as friendlier than upscale brands
                                                                                                                          • Figure 32: User profile of Holiday Inn, September 2016
                                                                                                                        • Brand analysis
                                                                                                                          • Mercure less well known but high “excellence” rating
                                                                                                                            • Figure 33: User profile of Mercure, September 2016
                                                                                                                          • Brand analysis
                                                                                                                            • Best Western tackling problems with major re-brand
                                                                                                                              • Figure 34: User profile of Best Western, September 2016
                                                                                                                            • Brand analysis
                                                                                                                              • ‘Basic’ Travelodge struggles to shrug off past image
                                                                                                                                • Figure 35: User profile of Travelodge, September 2016
                                                                                                                              • Brand analysis
                                                                                                                              • The Consumer – What You Need To Know

                                                                                                                                • Independent opportunity
                                                                                                                                  • Over-45s the most drawn to mid-market hotels
                                                                                                                                    • Third party booking grows
                                                                                                                                      • Older guests most likely to post reviews
                                                                                                                                        • High-tech versus low-tech
                                                                                                                                          • Consumers expect greater flexibility
                                                                                                                                            • Local knowledge
                                                                                                                                              • Networking hotels
                                                                                                                                              • Overall Accommodation Use

                                                                                                                                                • Opportunity for independents in heavily branded industry
                                                                                                                                                  • Figure 36: Types of accommodation stayed in over the past 12 months, September 2016
                                                                                                                                                • P2P threat
                                                                                                                                                • Hotel Use – Type, Frequency and Purpose

                                                                                                                                                  • Ageing population offers opportunities for mid-market hotels
                                                                                                                                                    • Figure 37: Types of hotel stayed in over the past 12 months, September 2016
                                                                                                                                                    • Figure 38: Types of hotel stayed in over the past 12 months, by age group, September 2016
                                                                                                                                                  • But older guests less likely to choose luxury
                                                                                                                                                    • Mix and match hotel guests
                                                                                                                                                      • One in five is a ‘Frequent Guest’
                                                                                                                                                        • Figure 39: Number of hotel stays over the past 12 months, September 2016
                                                                                                                                                        • Figure 40: demographic profile of frequent hotel guests (4+ stays)
                                                                                                                                                      • Shorter holiday patterns good for hotels
                                                                                                                                                        • Figure 41: Purpose of last hotel stay, September 2016
                                                                                                                                                      • Business and leisure combinations
                                                                                                                                                      • Hotel Booking Process

                                                                                                                                                        • Downward drift of direct booking
                                                                                                                                                          • Figure 42: Method of booking last hotel stay, September 2016
                                                                                                                                                        • The battle for the customer
                                                                                                                                                          • Who are the influencers?
                                                                                                                                                            • Figure 43: Use of hotel customer review sites, September 2016
                                                                                                                                                            • Figure 44: Use of hotel customer review sites, by type of hotel stayed in, September 2016
                                                                                                                                                          • Interest in more personalised reviews
                                                                                                                                                            • Figure 45: Opinions on customer review sites, September 2016
                                                                                                                                                        • Attitudes, Preferences & Opportunities

                                                                                                                                                          • Hotel tech-lovers vs Tech-escapers
                                                                                                                                                              • Figure 46: Attitudes towards hotel technology, September 2016
                                                                                                                                                            • Most guests are highly budget-minded
                                                                                                                                                              • Greater flexibility demanded
                                                                                                                                                                • Figure 47: Hotel preferences, September 2016
                                                                                                                                                                • Figure 48: Hotel preferences (factors rated as either very important or somewhat important), September 2016
                                                                                                                                                              • Insider dealing
                                                                                                                                                                • Hotel Hygge
                                                                                                                                                                  • Millennial matters
                                                                                                                                                                  • Appendix

                                                                                                                                                                    • Definition
                                                                                                                                                                      • Abbreviations

                                                                                                                                                                      Companies Covered

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