The Hotel market
A Sector Review
Robert Berrisford
Tom Cherry
Sally Wetherall
Ailsa Gentles
UK hotel market
– past five years
– current standing
Hotel market In 1990’s
Future of hotel market?
Relevant Analytical tools
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Boston Matrix
Porters 5 Forces
PEST
SWOT
Stakeholder analysis
Directional Policy Matrix
UK Hotel market
UK hotel Industry 1996-2000
12,000.00
10,000.00
8,000.00
6,000.00
1996-2000
4,000.00
2,000.00
0.00
1
2
3
4
5
Market Overview
60 Public and Private
Expand through acquisitions
Growing International brands
Franchised brands and budget hotels
Major investment by big chains
UK Hotel market
UK hotel Market 2000
Granada Group plc
Whitbread plc
Hilton Group
Bass plc
Thistle Hotels plc
Queens Moat Houses
Ltd
other
Share of market
Granada (9%)
• Forte, UK’s largest Hotel chain
• Posthouse, Travelodge
Whitbread Hotel company (6%)
• Marriott uk
• Travel Inn
Six Continents (5%)
• Holiday Inn
• Intercontinental
Boston Matrix
MARKET SHARE
HIGH
Granada Group plc
9% share, 3.9%
growth
LOW
Thistle Hotels plc
4.5% share, 0.1%
growth
Whitbread plc
6.6% share,-0.7%
growth
Hilton Group
6.0% share,-8.1%
growth
Porters 5 Forces
Potential entrants.
Expensive to compete against the main
players.
Long time needed to establish a
respectable name and build up customer
loyalty
Suppliers
Many suppliers for hotels so
quality and price are key
factors for hotels to consider
when purchasing.
Supplier power is low in the
hotel industry as the hotels
are able to pick and choose
from a large number of
suppliers
Competitive rivalry:
4 main players
Granada Group
Whitbread plc
Hilton Group
Thistle Hotels
Substitutes
Many hotels so there can be a lot of
product-for-product substitution.
Doing without also a form of
substitution.
Invest in video conferencing saving
on air fares and time
Buyers
Large amount of buyers so
price and quality has to be
competitive to be attractive
Changes
Increased demand for Budget hotels
• Increased small hotels
Middle sized (51-199 rooms) Maintained
Large increase in over 200 rooms
• Overseas
• Conference
Whitbread PLC
Whitbread plc profit 1996-2000
450
400
350
300
250
200
150
100
50
0
Whitbread plc
 Y2000 Turnover £3.0 Billion
+ 0.3% on 1999
profit £256 Million
- 15%
Bought Swallow £578 Million
Granada
Granada Group Profits 1996-2000
1200
1000
800
600
Series1
400
200
0
1
2
3
4
5
Granada
1999 turnover £4.3 Billion
• +6% on 1998
Profit £881 million
• +14% on 1998
Largest branded chain Under Forte
• Le Meridien, Posthouse, travelodge and Heritage.
Interests In UK TV among others
Hotels + Restaurants 2/3 of revenue
PEST Analysis for hotels
Political/Legal
• Monopolies
Employment law
Economic Factors
• Life cycles
Recession
Disposable income
Sociocultural Factors
• Lifestyle changes
Population demographics Attitudes
Technological
• New developments
Rates of obsolescence
Stakeholder analysis
Infrequent Customers
Casual/seasonal staff
Career staff
Suppliers
Contractors
Regular Customers
Government
Shareholders (PLC)
Board of Directors
Business Customers (airlines)
Directional policy matrix
Strong
Average
Weak
Strengths
The current UK market size is worth £10.3
billion.
Huge growth in large hotels doubling in
Value between 1996 and 2000 (now worth
£289.2 million)
Small hotels with less than 50 rooms form
92% of the market in terms of value.
Weaknesses
Future market uncertain after the events
of September the 11th.
Business restricting travel expenses to cut
costs
Technology advances in video
conferencing
Opportunities
Population uncertainty about air travel
encourages more UK holiday makers to
holiday internally.
Increasing demand for budget style
hotels.
Increasing demand for short break offers.
Threats
Numbers of foreign visitors have fallen
dramatically causing severe financial
worries particularly for London business
orientated hotels.
Uncertain future
Global economic slowdown will hit
hospitality hardest.
Business travelers all but disappeared.
Forecast
Forecast to grow by 16% to £12 Billion by
2005
Economic slowdown
• little conferencing
• more short breaks
Reduced International Travel
• affect large hotels
1996-2000 V 2000-2004
UK hotel Industry 1996-2000 V 2000-2004
14,000.00
12,000.00
10,000.00
8,000.00
1996-2000
6,000.00
2000-2004
4,000.00
2,000.00
0.00
1
2
3
4
5
Competitive Strategies In
90’s
Frequent Flier Programs
Cost containment, price discounting, niche
marketing
revenue maximization
databases for customer tracking
Future of UK Hotel
Industry
Economic slowdown
• large hotels
• conferencing
Decreased air travel
• Large hotels
Foot and Mouth
• Small rural hotels
Really That Peachy?
Hotel forecast 2000-2013
70,000.00
60,000.00
50,000.00
40,000.00
Series2
30,000.00
20,000.00
10,000.00
0.00
Future of UK Hotel
Industry
End Of hotel Industry?
Consolidate for next three years
Specialized conferencing
Not a good time to enter market