It is really of import that in today ‘s competitory environment, ( both in footings of concern and employability ) 1 has a clear apprehension and sufficient cognition of the sector or industry in which they would be runing.
This study will be looking at, and analyzing the Hotel industry in the United Kingdom, analyzing industry ‘s micro and macro environment. Its intent is to analyze the industry with purpose to garner market intelligence that would back up prospective managerial development, calling aspirations and fix them for sufficiently informed engagement at interviews. Findingss from the study should therefore, heighten their concern cognition and employability chances in the industry.
The study will concentrate on the last five old ages which have in fact seen the industry at its best and at its worst in merely a few old ages. A figure of different informations beginnings would be utilized such as industry studies, intelligence paper articles and assorted web sites related to the industry.
The hotel industry and touristry in general is one of the universe ‘s chief growing industries deserving millions of pools globally. Harmonizing to a cardinal note study ( 2009 ) the hotel industry in the United Kingdome grew by 29.1 % in four old ages to 2008, making a astonishing ?15.87 billion. This growing was attributed to a figure of factors, such as the high disposable income available to people, debut of low cost air hoses and the rapid enlargement of budget hotel sector.
With hotels that opened up to a broad scope of clients combined with inexpensive flights and high disposable income people could hold more than one vacation a twelvemonth. This in bend benefited the hotel industry as a whole from both foreign and domestic tourers.
This vivacious growing, nevertheless, has seen a alteration in its lucks in the last two old ages, due to a figure of factors but chiefly the economical downswing. In 2008 planetary economic system took a bend for the worst and the job deepened in 2009, taking to recession in most developed economic systems and UK was no exclusion. This had an immediate impact on vacation buying with research proposing that a important proportion of grownups believing of salvaging money by holding a domestic vacation in 2009, while 25 % of them were worried they could non afford a vacation at all ( KeyNote 10 ) . This has led to many hotels accommodating to the state of affairs by cut downing monetary values or offering moneymaking promotional trades to run into the market outlooks and better gross revenues.
The hotel industry could be divided into two sectors, corporate and consumer both supplying services to run into their peculiar clients demands. The first one includes adjustments paid by concerns, for concern travel intents and the latter is paid by consumers for non-business grounds.
A rating graduated table based on a star system is used to sort the quality and scope of service provided by the company. The scaling is comprised of 1-5 stars, where one star represents simple adjustment with no bangs attached and five stars represent exceeding quality of service with some grade of luxury. In some state of affairss Silver or Gold may be added to Hotels that exceed the demands under the star system.
It is estimated that 1 one in every 10 people in the UK is employed in the Hospitality industry, in other words over 1.96 million ( 2007 ) people working in around 300,000 constitutions across the state. Overall employment in this industry grew by 5 % in 2007 but the Hotel sector had the lowest growing with merely 2.7 % adding another 6,500 occupations to the bing 238,500 occupations that existed in the old twelvemonth ( Table 1.2 ) .
Major metropoliss histories for the highest concentration of hotels in the UK and are thought to pull the highest degree of touristry activity with London taking the manner.
Market size & A ; tendencies
During the economic roar of the late 90 ‘s and early portion of this decennary the Hotel Industry has expanded quickly profiting from a figure of factors chiefly related to economic growing an improved engineering. The increasing globalization of a batch of companies necessitated more corporate travel and adjustment. Bing the fiscal Centre of Europe and to some extent the universe, London benefited a great trade from this rich consumer beginning. A batch of hotel groups responded to this by puting on their trade names, positioning their portfolios to more upscale four/five star belongingss. In add-on, the budget hotel sector was developed to accommodate a wider scope of consumers every bit good as concerns. All was made even easier for consumers by the development of the cyberspace. This allowed easy comparing in footings of monetary value and invitee installations on offer, every bit good as a more convenient manner to book them. Internet is now booming with 34,104,175 or 57.2 % of population holding entree to it in the UK disbursement an norm of 10 hours a month online ( www.theanswerbank ) .
In malice of the healthy growing experienced in the last two decennaries and the exhilaration of the coming Olympic Games London 2012, the industry has in 2009 suffered a reverse. This was due to the recession that affected about every developed or developing economic system in the universe. In the first one-fourth of 2009, the UK saw a autumn in visits by one million, although statistics show that disbursement remained comparatively the same as the corresponding clip of the predating twelvemonth ( table1.1 ) . This could be accredited to the weaker lb which slummed at record lows both against the Euro and American Dollar at 75.86p to the Euro and $ 1.375 ( bbc.co.uk ) .
In 2008 there were 31.9 million visits in the UK bring forthing on mean ?512 of disbursement each, bring forthing over ?16.3 billion of gross for the economic system. This nevertheless is well smaller than the disbursement generated by the internal visits of UK occupants which marked ?21.1 billion for the same period, though somewhat down from the old twelvemonth. The entire disbursement generated by both UK and Overseas visits for 2008 was merely above ?37.4 billion, 0.4 % higher than 2007 ( table 1.1 ) . Hotel industry takes merely supra 42 % of this wealth, in other words ?15.87 billion.
During the extremum of recession there was a important addition on short-run vacations taken domestically. Though, as the economic system comes out of recession domestic vacations are predicted to fall by 7.7 % with a similar diminution on value between 2009 and 2013. Vacations abroad on the other manus are forecasted to increase by over 16 % between those old ages. ( KeyNote )
Harmonizing to authorities informations turnover in the hotel market bit by bit increased on norm by 6.6 % between 2004 and 2008. Key Note forecasted a 6.8 % ( appendix 4 ) lessening in entire gross for the undermentioned twelvemonth but expects an upward tendency from 2010, top outing in 2013 to 4.8 % or 16.99 billion in entire. Room tenancy which is a cardinal index to mensurate the sum of concern carried out by hotels was at 76 % in 2007 harmonizing to VisitBritain but decreased in the undermentioned two old ages to 68 % in 2009.
In the last five old ages the UK economic system has seen some of its best and worst yearss. After the healthy growing that the economic system had enjoyed in the early portion of the decennary came the downswing that succeeded in the 2nd half of it. As a consequence of the planetary recognition squeezing, 2007-09 proved to be a rough drive for the economic system, implementing Bankss to take a tougher line on loaning. This caused a crisp autumn in consumer disbursement, with unpleasant effects for most industries. In 2005 research showed that productiveness growing had slumped and concern investing was at a record depression, accordingly the British economic system was turning at a rate slower than the mean growing for other developed economic systems, falling good abruptly of Chancellor of the Exchequer ‘s budget anticipation.
Table 1.4 shows the GDP public presentation in the last five old ages to 2008. It is apparent that GDP plunged in 2008 to merely 0.7 and executing at its worse in the 3rd one-fourth of 2008 when the economic system fell into a recession registering a -6 % bead ( nationalstatistics.co.uk ) . GDP started to retrieve tardily in the fourth one-fourth of 2009 when it was merely under stagnancy point and first marks of acquiring out of recession looking in the first one-fourth of 2010. Harmonizing to national statistics growing in the first one-fourth of this twelvemonth registry a 0.2 % addition. The same beginning suggests that during the same one-fourth distribution, hotels and eating houses fell by 0.7 % compared with an addition of 1.9 per cent in the old one-fourth. Appendix 1 shows how this recession compares to the old two in the 80 ‘s and 90 ‘s. It appears that last recession was the hardest of the three but seems to be the shortest of the three.
High energy monetary values in the universe markets ( highest being $ 136.24 a barrel, 2008, appendix 2 ) , forced rising prices rates rise to enter highs in September 2008 to 5.2 % good above the Bank of England ‘s mark of 2 % . This addition forced the Bank to raise involvement rates three times since summer 2006 with highest being in July 07 at 5.75 % ( BBC, 29/11/07 ) . Although, this spike in rising prices became less of vitamin E concern for the Governor as recession was deemed the major menace to the economic system. This so led the Bank England to repeatedly lower involvement rates making its lowest point at 0.5 % in March 09 and trusting for the rising prices to run away. In fact that is precisely what happened with rising prices rates falling to 1.1 % in September 2009, the lowest since 2004. ( thisismoney.co.uk )
Increase in fuel monetary values is bound to raise travel costs for 1000000s of people. High fuel monetary values, rise in involvement rates and rising prices followed with the recognition squeezing effects are besides go forthing people with less disposable income. This is holding a negative consequence on consumer disbursement as it is acquiring hard for consumers to maintain up with recognition payments ( recognition cards/mortgages/loans ) . Therefore, loss in consumer assurance may ensue in less disbursement on vacations accordingly impacting on industry profitableness.
Harmonizing to National Statistics there are 10,195 hotels in the state and the bulk of those constitutions generate less than ?1 million one-year turnover ( appendix 5 ) . This has non stopped competition in the industry intensifying in recent old ages, contracting the spread between budget and midmarket hotels. However, it ‘s still the big chains/midmarket hotels that win the selling conflict by passing big amounts on trade name edifice. This has become a really of import characteristic and most hotels are now seeking to develop stronger individuality that would aim both consumer and corporate sectors more efficaciously.
Among others, Premier in was one of the largest Spenders on media publicizing in 2009, passing over ?5.5 1000000s on promotional activities followed by Travel Lodge who spent merely under ?3 million. In add-on to this the big ironss have focused on seasonal offers and take downing their monetary values. For illustration, in fall 2009 Travel Lodge lunched room gross revenues for the following spring, offering suites for every bit low as ?12 a dark.
Besides these midmarket constitutions have more flexibleness to offer bundles or repasts to pull a larger, more monetary value witting market. Low budget hotels on the other manus have responded to this by supplying more installations and services than earlier every bit good as including more offers on their web sites.
Table 1.8 shows some of the major participants in the United Kingdome and their comparative one-year turnover. Intercontinental Hotels Group PLC seems to take the manner with close to ?2 billion one-year turnover from which ?302 million were pre-tax net income. The company has a figure of trade names under its umbrella such as Crowne Plaza, Hotel Indigo, Holiday Inn, Express by Holiday Inn, Staybridge Suites and Candlewood Suites runing in around 100 states offering 630,000 suites.
Second in this list follows, Millennium & A ; Copthorne Hotels PLC with an one-year turnover of ?703 million and pre-tax net incomes of ?103 1000000s. The company fosters four different trade names including Millennium and Grand millenary Hotels, Capthorn Hotels and Kingsgate Hotels. Recently it has late expanded with seven new hotels in China and Middle East.
Accor UK Business & A ; Leisure Hotels Ltd is owned by Accor a Gallic based group which has 15 different trade names under its umbrella varying from luxury to economic system adjustment. The UK based subordinate generates an one-year turnover of ?198 million of which ?37.5 million pre-tax net income.
Travelodge which is owned by Dubai International Capital is the following in line bring forthing an one-year turnover of ?287 million and a pre-tax net income of ?16.5 million. The company is quickly spread outing both in UK and chief land Europe, with 29 hotels planed to be built in UK in 2009 and 100 in Spain by 2020.
De Vere Hotels & A ; Leisure Ltd operates two hotel ironss bring forthing a entire one-year turnover of ?248 million by uniting a 100 sleeping room hotels and fittingness nines. The company is owned by Alternate Hotel Group which is taking to rebrand the De Vere portfolio under Deluxe, Heritage and Venue options, distinguishing the adjustment offer.
There was a little bead in the figure of abroad occupants sing Britain for concern grounds in 2007/8 as a batch of companies tightened their budgets on travel outgo. This has resulted in low room and bedspace tenancy degrees which dropped to a 4 twelvemonth depression ( 426.2 million bed darks ) with serious effects for the hotel market. The undermentioned twelvemonth was a really hard twelvemonth for touristry, sing a important bead in visit Numberss. 2010 is besides expected to be slightly hard for the industry, with significant betterment expected to get down merely in 2011.
However, harmonizing to a keynote study on travel and touristry, research suggests that 1/3 grownups in the Britain has taken at least one vacation in the last 12 months and 1/5 of them holding taken three or more for the same period. Still, the economic downswing forced a batch of providers, including the bundle circuit operators, to respond by cut downing their capacity and cutting the figure of vacations on offer.
UK continues to be an attractive topographic point in the international vacation market and this is really of import for the long term chances of the hotel industry. The coming decennary which has been described by many observers as the “ aureate decennary of athletics ” because of the many different international events due to take topographic point in UK ( table 1.7 ) is go outing times for the industry. Overseas witness Numberss to these events will supply a necessary encouragement for the hotel market. Records based on old similar events staged by other states in recent old ages show that hotel profitableness increased as a direct consequence.
BigHospitality mentioning to VisitEngland research suggests that touristry industry in the United Kingdome could be worth a astonishing ?147 billion by 2020 with the potency of making over 225,000 new occupations in the industry. This would be a 52 % addition from the current estimated value of ?97 billion.
Though smaller than the domestic disbursement in hotel sector, the international touristry is a important subscriber to entire gross. Merely London, which earns over ?8bn from abroad visitants, depends more on the abroad visitant than on the place market.
Employment and Demographics
Harmonizing to BBC unemployment in UK continued with its downward tendency until August 2007, falling by 5000 in the 2nd one-fourth of 07 to 1.65 million where it maintained one of the lowest unemployment rates in Europe at 5.5 % but somewhat higher than that of USA. ONS figures besides showed that mean net incomes rose by 3.7 % during the same one-fourth, crushing outlooks of a 3.6 % rise. However, theses comfortable old ages were shortly over and low unemployment was history.
Harmonizing to the national statistics, employment has seen a dramatic autumn in the last three old ages making its lowest point since 1996 when it hit 72.1 % or 28.82 million in February 2010 ( appendix 3 ) . In the last one-fourth to February there was a lessening in both parttime and full clip employment numbering 89.000.
The figure of people working merely part-time because they could non happen full clip employment increased during the same one-fourth to make 1.05 million, the highest figure since 1992. The overall unemployment rate recorded 8.0 % , in other words 2.5 million, higher than any clip since September 1996.
The inaction rate in the first one-fourth of 2010 was at 21.5 % , the highest since 2004. This added another 110,000 to the entire figure, making a record high of 8.16 million people considered inactive in UK. Though, this could be as a consequence of a comparatively big figure of immature people taking to travel into instruction after completing their secondary school instead than travel consecutive to the labor market.
Population in the United Kingdome has continuously increased in recent old ages making 61.4 million in 2008, an addition this of over 9 % in merely five old ages ( KeyNote ) . This was due to the high inflow of migrators from the freshly joined EU member provinces from Eastern Europe. This tendency of population growing is forecasted to go on to the terminal of the century. Britain ‘s population is predicted to make 71 million within 25 old ages, 78 million within 50 old ages and 85 million by 2081 ( The Guardian, 28/11/07 ) . This 39.6 % growing ( from 59,834,300 in 2004 ) represents an chance for steady market growing in UK in the following 78 old ages. The hotel industry is likely to profit well from this if the lifestyle people have grown to bask in the last 20 old ages continue to be the norm.
UK is seen as a major tourer finish and has in topographic point a good promotional and support system for tourers such as VisitBritain.
The UK market incorporates a figure of internationally well-known hotel trade names and ironss.
Short term leisure interruptions have risen due to high disposable income over the last decennary.
The development of the budget hotel sector opened the hotel market to a wider scope of clients.
The Internet has facilitated easier pick and engagement of installations.
The industry ‘s public presentation is extremely reliable on the public presentation of the wider economic system.
The market seems to be over supplied in term of room Numberss and this seems to maintain room tenancy degrees instead low at 60 % norm.
Budget and upscale hotels seems to be seting the midmarket constitutions under force per unit area.
Continuing investing is necessary to keep belongingss at a high criterion.
A figure of international athleticss event planned to be staged in UK between now and 2019
Western Balkans expected to fall in the European Union shortly which would let for more tourers from that part visit Britain.
Forecasted growing of inward visits boulder clay 2014
Steady population growing good into the century which would hike demand for travel and touristry and accordingly Hotel installations.
Some EU economic systems enduring from high shortages may be forced to stop dead or lower rewards all together in their public sectors. This could impact the Numberss of abroad visits to UK which would adversely impact the bend over and accordingly net incomes in the hotel industry
It may acquire harder to raise enlargement capital due to falling belongings values.
High unemployment rates in UK could intend that people may non be able to afford vacations.
The success of the industry is reliable on a batch of external factors and this was most clearly apparent during the last economic downswing. However, in today ‘s universe globalization plays an of import function both in leisure and commercialism. Therefore, hotel industry which is now good established will be a sector that would commend high demand for its services in the hereafter. History shows that hotel industry has bounced back in the yesteryear after enduring similar reverses. This will surely be the instance this clip unit of ammunition with the first marks of recovery already in sight. At glimpse it appears that the industry has learned from old downswings reacting to it by seting monetary values and offers to look more attractive.
Sing that the largest portion of gross comes from internal visits and many EU economic systems put on the lining Bankruptcy, it would be wise to seek and promote more British people spend their holidaies in the UK. In the interim the coming decennary with its athleticss events to be held here presents a great chance for the industry. Therefore, companies should take advantage of this by be aftering in front so they would hold sufficient bed/room infinite to run into the demand. Although trading at the minute is instead low in comparing to pre-recession clip and raising capital for farther development has become harder. It is deserving retrieving that hotel undertakings take a comparatively long clip to happen and now may be the clip to get down believing for the hereafter.
As the economic system recovers the hotelkeepers should besides seek to construct tenancy back, possibly through farther competitory pricing and promotional trades with the purpose to reinstate RevPar growing.
APPENDICIES AND TABLES
Table 1.1. Abroad occupants ‘ visits to the UK and the outgo in the UK ( Million, ?million and ? ) 2004-09
Number of abroad visitants ( million )
Outgo ( ?m )
Average outgo per visit ( ? )
UK occupants Expenditure ( ?m )
Q1- first qarter
aˆ – Seasonally adjusted
Note: outgo figures refer to entire disbursement by visitants non entirely accommodation/hotel costs
Beginning. International Passenger study ( MQ6, Quarter 1 2009 ) National Statistics
Table 1.2: Employment IN THE UK HOSPITALITY INDUSTRY 2004-2007
A A A A A A A A A A A
Contract nutrient serviceA suppliers
Pubs, bars and cabarets
Beginning: Labour Force Survey www.caterersearch.com
Table 1.3: UK resident population estimations 2004-08
Population ( 000 )
% alteration twelvemonth on twelvemonth
Beginning: Monthly Digest of Statistics, August 2009, statistics.gov.uk
Table1.4: UK GDP at Current and Annual Chain-Link Prices ( ?m ) , 2004-08
Current Monetary values
Beginning: Economic and Labour reappraisal, August 09, statistics.gov.uk
Table 1.5. UK rate of rising prices ( % ) 2004-2008
Inflation ( % )
Change twelvemonth on twelvemonth
Beginning: Monthly Digest of Statistics August 2009, National Statistics web site
Table 1.6: Proportion of darks spent and outgo on hotels, motels or invitee houses and other adjustment in the UK by UK and Overseas occupants ( % ) 2007 & A ; 2008
Nights ( % )
Outgo ( % )
United kingdom Residents
Hotel, motel or invitee house
Hotel, motel or invitee house
Beginning: UK Tourism study 2007 and 2008, VisitBritain/International Passenger study 2007 and 2008, National Statistics.
Table 1.7: Golden decennary of athleticss
Rugby World Cup
World Cup? ? ?
Cricket World Cup
Table 1.8: Major Players in UK Hotel Industry
Gross per twelvemonth ( ?m )
Accor UK Business & A ; Leisure Hotels Ltd
De Vere Hotels & A ; Leisure Ltd
Guoman Hotels Ltd
Hilton International Hotels ( UK ) Ltd
Intercontinental Hotels Group PLC
Macdonald Hotels Ltd
Marriott Hotels Ltd
Millennium & A ; Copthorne Hotels PLC
Premier Inn Hotels Ltd
Travelodge Hotels Ltd
Appendix 1: The Economy in three recessions ( bbc.co.uk )
Appendix 2: Oil monetary value rise 2000-07 ( bbc.co.uk )
Appendix 3: Employment ( statistics.gov.uk )
Appendix 4: UK Hotel Market Forecast.
Appendix 5: Number of constitutions