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MS55051

MSI BUDGET HOTELS: UK: SEPTEMBER 2001

Overview

This report covers: Budget hotels, rooms, room occupancy, UK, family visits, business travellers, number of trips taken, tourism expenditure, type of customer, average occupancy rate, market shares, hotel brands

Companies covered include: Travel Inn, Travelodge, Comfort Inn, Premier Lodge, Express, Holiday Inn, Accor, Compass, Friendly Hotels, Scottish & Newcastle, Six Continents, Bass Hotels and Resorts, Whitbread

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Executive Summary
Table of Contents
List of Tables
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EXECUTIVE SUMMARY

MSI believe that the UK market for budget hotels increased significantly between 1997 and 2001 in value terms to reach £819 million (€1 335 million). Moreover, MSI estimate that there were 897 budget hotels in the UK as at August 2001 with a total number of 54 093 rooms.

MSI believe that the growth of the UK budget hotels market between 1997 and 2001 was largely attributable to a number of factors, including:

· the buoyancy of the UK economy
· customer demands for greater value for money
· changing social attitudes
· an increase in tourism levels

MSI believe that family visits accounted for the largest proportion of the budget hotels market in 2001, representing some 50 percent. However, the proportion of business generated by business travellers increased in terms of proportional importance during the review period to account for 46 percent of the total UK budget hotels market in 2001. Business generated by business travellers increased during the review period, predominately as a result of an increasing number of features targeted specifically at this type of customer.

The demand for budget hotels in the UK is affected by a number of factors. These include:

· UK economy and international economies
· technological advances
· social and demographic trends
· price
· national celebrations
· environmental problems
· visiting friends and relatives

Demand for budget hotels in the UK is forecast to increase by some 50 percent in real value terms between 2002 and 2006. The increase in the size of the market is expected to reflect the continued requirement for quality accommodation at a low cost, an increase in advertising expenditure by budget hotel operators to promote their brands and national celebrations and events which will attract custom, particularly to city centre locations.

MSI believe that there are a number of factors critical to the success of budget hotel operators, including:

· offering value for money
· marketing and branding excellence
· synergies with parent company interests
· acquisitional activity and joint ventures
· central reservation systems
· multi-skilled staff
· investment

The budget hotels market is the fastest growing segment of the UK hotels market. The market is characterised by national, branded chains. The UK budget hotel industry is led by five leading brands which are Travel Inn, Travelodge, Comfort Inn, Premier Lodge and Express by Holiday Inn. However, it is forecast that other operators will increase their share of the market. It is also expected that there will be new entrants to the market during the forecast period.

TABLE OF CONTENTS

1	EXECUTIVE SUMMARY	1
2	INTRODUCTION	3
2.1	Definitions	3
2.2	Methodology	7
2.3	UK Economy	7
2.3.1	Overview	7
2.3.2	Interest Rates	9
2.3.3	Inflation	9
2.3.4	Household Income And Expenditure	9
2.3.5	Services And Manufacturing Output	10
2.3.6	The Budget 2001	11
2.3.7	Forecasts	11
2.4	Exchange Rates	12
2.5	Abbreviations	12
3	MARKET OVERVIEW	14
3.1	Market Size And Trends, 1997-2001	14
3.2	Market Segmentation	21
3.3	Factors Affecting Demand	24
3.4	Markets Forecasts, 2002-2006	27
3.4.1	Overview	27
3.4.2	Forecast Market Segmentation	31
4	GEOGRAPHICAL ANALYSIS	33
5	OCCUPANCY RATES	36
6	PURCHASING STRATEGIES	38
7	OPPORTUNITIES FOR SUPPLIERS	40
8	CRITICAL SUCCESS FACTORS	44
9	INDUSTRY STRUCTURE	48
9.1	Market Shares Of Budget Hotel Chains	50
9.2	Company Profiles	51
9.2.1	Accor	51
9.2.2	Compass Group	54
9.2.3	Friendly Hotels	56
9.2.4	Scottish & Newcastle	57
9.2.5	Six Continents (formerly Bass Hotels & Resorts)	58
9.2.6	Whitbread	60
10	TRADE ASSOCIATIONS	64
11	MAGAZINES	65
12	TOURIST BOARDS	67

LIST OF TABLES

1. Economic Indicators On The UK Economy, 1996-2003	8
2. The UK Budget Hotels Market, 1997-2001	14
3. Number Of Trips Taken In The UK, 1996-2000	16
4. Tourism Expenditure In The UK, 1996-2000	18
5. Number Of Budget Hotels And Bedrooms In Budget Hotels In the UK, 1997-2001	19
6. The Number Of Budget Hotels In The UK, By Company, 1997-2001	20
7. The Number Of Budget Hotel Rooms In The UK, By Company, 1997-2001	21
8. UK Market For Budget Hotels, By Type Of Customer, 1997-2001	22
9. Proportional Importance Of The UK Market For Budget Hotels, By Type Of Customer, 1997-2001	22
10. Forecast UK Budget Hotels Market, 2002-2006	28
11. Forecast Number Of Budget Hotels And Bedrooms In Budget Hotels In The UK, 2002-2006	30
12. Forecast UK Market For Budget Hotels, By Type Of Customer, 2002-2006	31
13. UK Budget Hotel Stock, By Country, 2001	33
14. Average Occupancy Rates Of Budget Hotels In The UK, By Country, 1997-2001	37
15. Market Shares In The UK Budget Hotels Market, By Company, 2001	51
16. Financial Summary Of Accor, 1996-2000	52
17. Turnover Of Accor, By Activity, 2000	53
18. Financial Summary Of Compass Group, 1996-2000	55
19. Financial Summary Of Friendly Hotels, 1996-2000	56
20. Financial Summary Of Scottish & Newcastle, 1997-2001	58
21. Financial Summary Of Bass, 1996-2000	59
22. Portfolio Of Bass Hotels & Resorts, By Hotel Brand, 2000	60
23. Financial Summary Of Whitbread, 1997-2001	61

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Last updated by Jacob van Eldik 10th September 2001