A CRITICAL ANALYSIS OF THE
HOTEL SECTOR
BUSINESS STRATEGY GROUP 4
BY ANDREA FIUMANA,
CASSANDRA BRAHAMS,
FELICITY STRAWSON,
HANNAH MAXWELL,
ZOE SWAIN
DEFINITION
‘Ho-tel [ho tél] (plural ho-tels) noun
Place for an overnight stay: A building
or commercial establishment where
people pay for lodging, and where
meals and other facilities such as
conference rooms are often available’.
PRESENTATION OUTLINE
 Description of the hotel sector
 The UK hotel market in context
 How the market is segmented
 External Influences
 Key Players / The Competitive Environment
 Customer/ Market trends
 SWOT analysis
 Conclusion
 References
10
9
8
7
6
£Bn 5
4
3
2
1
0
Sector
Hotels
Gambling
(inc
lottery)
Theatre,
Sports
Admission
Books &
Magazines
CD's &
Video
Games
UK HOTEL MARKET IN CONTEXT
2000
ONS Data/Mintel
Turnover of the UK Hotel Market
£Bn Current Prices
Actual Turnover of Hotel Sector
14
12
8
actual
turnover
6
Predicted
Turnover
4
2
A Year on Year Percentage Growth Analysis
0
18
Y1994 Y1996 Y1998 Y1999 Y2000 Y2001 Y2002 Y2003 Y2004
16
Year
14
12
Year
£Bn
10
Actual
Growth
10
Predicted
Growth
8
6
4
2
0
Y1996
Y1998
Y1999
Y2000
Y2001
Y2002
Y2003
Y2004
BRANDS
THREE TYPES:
Four / Five Star: High Quality, Excellent Service,
Premium Price
Mid-Market: Good Quality, Wide Range of
Facilities, More Accessible price
Budget hotels: Functional / Basic Facilities,
Lower Price Point
PEST ANALYSIS
Political
 Legislation
Economic
 Recession
Social
 Social Changes
 Inbound tourism
Technological
 New influences
 Internet
M
Th
ist
Hi
lto
n
or
ro
ac
up
do
na
ld
Ho
te
ls
Ja
rv
is
ho
te
ls
Ac
c
Ho
te
lG
Ch
oi
ce
Re
ga
l
Martin information Ltd Dec 2000
hit
br
ea
d
400
le
Co
m
pa
ss
W
Ba
ss
NO OF HOTELS
O
ld
IB
IS
En
gl
ish
In
ns
Da
ys
In
n
Ca
m
pa
nil
e
cit
y
In
n
Fo
rm
ule
1
Tr
av
el
In
n
Tr
av
el
od
Pr
ge
em
ie
Ho
rL
lid
od
ay
ge
In
n
Ex
pr
es
s
No of Hotels
300
Top Ten Budget Hotel Groups in the UK
250
200
150
Number of Hotels
100
50
0
Top ten hotel groups in the UK
350
300
250
200
No of hotels
150
100
50
0
Percentage of Market Share for Top Ten UK
Hotel Groups
Bass
Whitbread
Hilton
Thistle
Compass
Accor
Choice hotels
Jarvis
Regal
Macdonald
Percentage of market sector for Budget Hotel
Groups
Travel Inn
Travelodge
Premier Lodge
Holiday Inn Express
IBIS
Old English Inns
Days Inn
Campanile
City Inn
Formule 1
Howard Johnson Hotels
The Competitive Environment
LOW COST
DIFFERENTIATION
 Broad Target
Travel Lodge
Holiday Inn Express
Marriott Courtyard
Posthouse
Mariott
De Vere
Hilton
Heritage
Guest Houses
Bed & Breakfasts
Youth Hostels
The Savoy
The Lanesborough
The Ritz
 COMPETITIVE SCOPE
 Narrow Target
Porters five forces model
Potential Entrants
Threat of
Entrants
Suppliers
Bargaining
Power
Buyers
Competitive
Rivalry
Threat of
substitutes
Substitutes
Bargaining
Power
Industry Sector Stakeholder
Mapping
Low
Low
LEVEL OF INTEREST
Suppliers
Employees
Community
Auditors of Key Players
Competitors Lenders
Government
P
O
W
E
R
High
Customers/ Potential
A
B
C
D
New Entrants Lenders
Competitors shareholders
Chairmen of Competitors
Board of Directors
High
CUSTOMER TRENDS
Future customer trends
Customer Demand
MARKET TRENDS
Industry Life cycle
number of UK Hotels
Number of UK Hotel Operators
16000
14000
Number of Hotels
12000
10000
8000
6000
4000
2000
0
Y 1991 Y1992
Y1993
Y1994
Y1995
Y1996
Year
Y1997
Y1998
Y1999
Y2000
Y2005
% Growth According to Turnover Year on Year
Hotel Industry Life Cycle
9
8
7
6
5
4
3
2
1
0
Y
199495
Y
199596
Y
199697
Y
199798
Y
Y
1998- 199999
00
Time
Y
200001
Y
200102
Y
200203
Y
200304
SWOT ANALYSIS
 Strengths




Well established brands
UK is a leading tourist destination
Major brands are offering specific products
Internet
 Weaknesses
 Major brands are less flexible
 Hotel Industry is linked with the wider Economy leaving the sector
vulnerable in times of the recession
 High costs
 Hotel classifications
 VAT
 Strength of the pound
SWOT ANALYSIS












Opportunities
Internet
Increase revenue from non-residents
Scope for further growth
Budget hotel sector
Euro
Ageing Population
Threats
Alternative accommodation
Hotel groups V Independent
Corporate spending
Competitive prices on overseas travel
CONCLUSION
 The UK hotel sector in the future
 Fewer hotels but more rooms
 Major investing from large Hotel groups, i.e. buy outs
and mergers
 Analytical tools which a new entrant should use to
determine success and position
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REFERENCES
Tim Knowles, Corporate Strategy For Hospitality, 1996
Johnson, Scholes, Exploring Corporate Strategy, Fifth edition
Mintel
Market Research.com
Joan Marsan, Hotels, July 1999
Geoff Tyler, Hotel & Restaurant, January 2001
Jay Kandampully, Dwi Suhartanto, International Journal Of Contemporary Hospitality Management, Vol 12 issue 6
Gaby Huddart, Caterer & Hotelkeeper, December 1999
Paul A Philips, International Journal of Contemporary Hospitality Management, Vol 9 issue 4
Trevor Ward, International Journal of Contemporary Hospitality Management, vol 9 issue 7
Gavin Eccles, Philip Durand, Managing Service Quality, Vol 7 issue 5
Vinitia Mathews, International Journal of Contemporary Hospitality Management, Vol 12, issue 2
Encarta, world English dictionary
BDO Hospitality Consulting, International Journal of Contemporary Hospitality Management, Vol 8 issue 7
Marty Whitford, Hotel & Motel Management, November 1998
Sarah Toyne, BBC News “What now for Tourism?”, 18th September 2001
TRI Hospitality consulting- United Kingdom Hotel Industry 2001
International Journal of Contemporary Hospitality Management vol 11 issue 7 and vol 12 issue 2.
Norma Cohen, FT.com, “Regus expects more tough times ahead” July 31st 2001.
Margaret Brown, International journal of contemporary Hospitality Management vol 8 issue 3. “Environmental policy in the
Hotel sector: “green strategy or strategem?”
Peter McGunnigle and Stephanie M. Jameson “HRM in UK Hotels: a focus on commitment”, Employee Relations, vol 22,
issue 4.
Mark Poustie,Jenifer Ross, Norman Geddes and William Stewart, Hospitality and Tourism Law, 1999.
Office of National Staistics
Martin Informantion Limited, “Guide to Hotel Brands in the Uk” December 2001.
Bob Brotherton, “An Introduction to the UK Hospitality Industry, 2000.
The Business Enviroment