Hotel Sector: An Analysis and Review By: James Algate, Debbie Cooper, Vicky Elsworth and Lauren Reading

Definition Hotels form a sector of the hospitality industry consisting of commercial establishments, offering varied facilities and services based on the provision of short stay accommodation.

Introduction  The UK hotel market is the strongest in Europe  The hotel sector turnover is approximately £11 billion in the UK alone  In the UK there are approximately 60,000 properties operating as hotels  The key areas of a hotels turnover are: - Bedrooms - Food and beverage - Rentals - Minor operated departments

Emerging Trends  Increase in spending due to an increase in prices, thus indicating an elastic market  Higher demand for ‘no frills’ accommodation  Increase in short breaks (less than 4 nights)  Decrease in business travel  Decline in restaurant sales within hotels  A general increase in eating out

Factors Affecting the Industry  War against terrorism  Risk of recession  Constantly changing trends  Increases in the minimum wage  Disposable income  Technology  The Euro

Key Factors for Success  Quality of service  Branding  ‘Perceived Added Value’  Market Responsiveness

Fig 10.2 "Forces Influencing Competition in the Hospitality Industry" Knowles, 1999 The Marketplace JOCKEYING FOR POSITION > Fierce competition for market share > Large brand investments > Large technological investments > High fixed costs / low returns > Difficult to ‘lock in’ customers NEW ENTRANTS > Budget sector growing > Low returns inhibit 4/5 star growth > Some brands will get stronger SUBSTITUTE PRODUCTS > Budget sector can be a substitute > More in house training centers > Video conferencing telephony SUPPLIERS > Largely Neutral CUSTOMERS > More Bargaining power > Better knowledge – distribution channels > Increasingly demanding Fig 10.2 “Forces Influencing Competition in the Hospitality Industry” Knowles, 1999

Competitive Analysis Polarisation – Boston Consulting Group Matrix STARPROBLEM CHILD CASH COWDOG GLOBAL e.g. Holiday Inn UK e.g. Forte EUROPEAN / LARGER UK COMPANIES e.g. Thistle HOTEL INDEPENDANTS e.g. Guest houses Relative Market Share Potential for Worldwide Expansion Low High Low

Top 10 UK Hotel Chains 1)Granada 2)Whitbread 3)Hilton 4)Bass 5)Thistle 6)Jarvis 7)Accor 8)Friendly Hotels 9)Queens Moat Houses 10) Millennium and Copthorne

Competitors Accommodation  Guest houses  Bed and breakfasts  Campsites  Youth hostels  Holiday centres  Friends and family  Camper vans  Corporate lodgings  Time share  House swaps Food and Beverage  Restaurants  Take away  Fast food  Mobile canteens  Self catering  Cafes  Pubs  Snack bars  Local shops  Convenience foods

Market Segmentation

Predictions  UK hotel market  Key areas of hotel turnover  Factors affecting industry  Technology  Euro  Branding

Thank You Any Questions?