(last updated September 2024)
What has been happening in the hotel industry
The opening years of the 2020's have been tumultuous to say the least. Rocked by the COVID-19 restrictions, cost-of-living crisis and soaring costs on the back of the pandemic and war in the Ukraine, the industry has faced an unprecedented crisis. The headline trends are:
- the size of the UK market more than halved in 2021 thanks to the pandemic
- as the economy improved and inflation eased, growth accelerated throughout 2023 to reach £24.7 billion (more than £1bn higher than pre-pandemic levels)
- occupancy rates have also recovered to reach a four-year high in May 2024
- the cost-of-living crisis means many consumers are still prioritising competitive pricing over brand loyalty and they are shopping around for the best deals
- budget chains like Travelodge and Premier Inn hold the largest market share and rank as the most popular brands
- budget brand hotels have become very widespread and are highly competitive - they can offer significant discounts which independent hotels cannot match and their presence in a locality can adversely affect the position of the independents
- the pandemic travel restrictions did provide an opportunity for some hoteliers to pick up business from domestic tourists and some modern country house hotel, 'boutique' or 'designer' hotels and some English resorts have continued to benefit
- there has been a significant improvement in the facilities offered by British hotels although there has been criticism of the rates charged
- the average nightly room rate in London as of April 2024 was £158 night while the average rate in Edinburgh was £152
- the average nightly room rate in most other cities in April 2024 was nearer £80
- anti-discrimination legislation requires hotels to make 'reasonable adjustments' to their premises to make them accessible to disabled people
- technological developments - the rise of online travel agencies and booking services like Laterooms.com hotel room finder websites such as Trivago and integrated online booking software systems. Some online booking services charge fees amounting to 20% of the room rate
- the huge success of the TripAdvisor consumer ratings website - a good rating on TripAdvisor is now more or less essential
- the emergence and growth of 'peer-to-peer' accommodation websites like Airbnb and One Fine Stay which enable private householders to let out rooms and which are becoming popular with travellers looking to save money on overnight accommodation
Unfortunately there have been many casualties in the hotel trade as a result of the spread of the large hotel chains and the explosion of private rentals through sites such as AirB&B. Small independent hotels in particular often find it hard to compete with these twin pressures. However, this is not entirely bad news for the hotel industry as guests who are looking to cut back their expenditure choose to stay in smaller budget hotels. As well as value for money, guests value the personal involvement of the proprietor which often leads to repeat bookings.
The outlook in the short to medium term is looking reasonably good. The industry has shown resilience in it's bounce back from the pandemic and cost-of-living crisis. However, the cost-of-living crisis still has the potential to leave a shadow over people's willingness and ability to find the disposable income to spend on leisure activities. For the best chance of success it's essential to make sure you offer guests what's important to them. Topping the polls are efficient check-in and check-out a comfortable bed and free efficient Wi-Fi in all rooms.
The challenges faced by smaller hotels include skills shortages, the increases in wages costs and the high cost of refurbishment to maintain a standard to compete with the hotel chains.
Keeping up to date with developments
Joining a trade association is an excellent way of keeping up with developments. There are a number of trade associations representing the hotel industry including UKHospitality. Other organisations representing the hospitality sector include the Institute of Hospitality the British Beer and Pub Association and the British Institute of Innkeeping (BII). You can find out more about these organisations on their websites.
The weekly trade journal The Caterer includes many topical articles and features of interest to businesses in the hospitality industry. You can find out more on their website.
Trade shows
You can get a lot of useful information by visiting a trade show or exhibition for the hospitality sector. The Independent Hotel Show for example is held every year and attracts a range of hospitality industry suppliers and other related businesses. You can find out more on their website.