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ISBN: 1-84168-099-0

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EXECUTIVE SUMMARY

The hotels market operates as part of the wider service sector and generated sales of £7.66bn in 1999, an increase of 2.4 percent on 1998. Occupancy rates fell slightly in the late 1990s, but demand was strong enough to boost room rates, leading to an overall rise in room yields. The market is broadly classified into three hotel groups, with four- and five-star hotels at the top end of the market, three-star hotels in the middle market, and budget hotels, which form the fastest-growing segment. Four- and five-star establishments have been at the forefront of improvements in both accommodation standards and levels of customer care, as these establishments have attempted to better differentiate themselves from the other segments of the market, as well as each other. Mid-market hotels have begun to pursue corporate clients more actively by adding better communication and other facilities, and offering clients the option to upgrade within a hotel. Budget hotels offering frills-free hotel rooms and limited, if any, food and beverage facilities have been building sales on the basis of low charges to clients. The major chains are all building up their stocks of this type of room and revenue per available room in this segment is likely to fall as a result. In terms of client types, the market is segemented into corporate and consumer sectors, with the corporate sector continuing to account for the bulk of sales. The global nature of many businesses has benefited hotels, particularly the multinationals, which can offer branded hotels and incentive schemes. The conferences and meetings market is also gaining importance, as it brings opportunities for hotels to optimise facilities, including food and beverages. A minority of consumers in the UK use hotels, and weekend breaks account for the majority of stays. Many hotel groups offer packages targeted at this market. Facilities such as health clubs and beauty clinics are also promoted to local residents. There has been a high level of activity among the major hotel operators. A number of the larger groups have decided to narrow their focus on the leisure sector. Whitbread PLC and Bass PLC both sold off their brewing interests in order to concentrate on hotels and hospitality. Greenalls PLC sold its pubs division and, taking the name of its hotel chain, was renamed De Vere Group PLC. Acquisition activity has also been a feature, with the major chains Swallow and Stakis both being taken over in 1999/2000. Turnover at hotels will continue to grow in the short to medium term. Brand building will be a strong and growing feature of the market, as the major operators continue to differentiate their products, as a means of maintaining or increasing sales. Key Note forecasts that market value will rise by 3.9 percent to £7.96bn in 2000. Between 2000 and 2004, annual sales growth will raise the market’s value to £9.16bn.

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Last updated by Jacob van Eldik 24th September 2000