Budget Hotels - UK - August 2009

Abstract

About this report

Unlike many of the sectors in the travel market, budget hotels find themselves well placed to face down the recession. Businesses have cut budgets and many commercial travellers have turned to the budget chains in place of the mid-market hotels they had previously been using. Leisure travellers have increasingly considered budget options as a way of making their holiday pounds stretch. And with the number of overseas holidays being taken falling for the first time in over a decade, many have predicted that 2009 will be characterised by more UK residents holidaying at home than ever before.

However, it would be a mistake to say that budget hotels are immune from negative recessionary impact. The number of visitors to the UK has fallen for the first time in many years. Although business travellers have increasingly switched to budget chains, business travel itself has been one of the hardest-hit segments, decreasing the pool of commercial travellers staying in hotels overall. And budget hotels still face an uphill struggle in convincing many people that they are suitable for holidays, with Mintel’s exclusive consumer research revealing that few consider them appropriate for multiple night stays.

This report examines the impact of recession on the budget hotels sector, looking at these key issues alongside consumer trends, an overview of the market, strengths and weaknesses, innovations in the marketplace, and considers the future of budget hotels in the UK.

Key issues

• How are budget hotels performing in the recession? Are the prevailing economic circumstances helping or hurting the sector?
• Who are the key budget hotel users? And what do demographic trends indicate for the future of this section of the hotels market?
• How does holiday-taking affect budget hotels? And how do trends in business travel impact upon them?
• What do people look for in a budget hotel? Are they interested in facilities or do they just want a cheap place to sleep?
• Is trading down occurring? If so, to what extent is it happening?
• How important are brands in the budget hotel market? Is price the key driver of choice?