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

UK HOTEL MARKET IN CONTEXT 2000

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tels

Sector ONS Data/Mintel

Turnover of the UK Hotel Market £Bn Current Prices

Actual Turnover of Hotel Sector

0

2

4

6

8

10

12

14

Y1994 Y1996 Y1998 Y1999 Y2000 Y2001 Y2002 Y2003 Y2004

Year

£Bn actual

turnover

PredictedTurnover

A Year on Year Percentage Growth Analysis

0

2

4

6

8

10

12

14

16

18

Y1996 Y1998 Y1999 Y2000 Y2001 Y2002 Y2003 Y2004

%

Ye

ar

ActualGrowth

PredictedGrowth

BRANDS

THREE TYPES:Four / Five Star: High Quality, Excellent

Service, Premium PriceMid-Market: Good Quality, Wide Range of

Facilities, More Accessible priceBudget hotels: Functional / Basic Facilities,

Lower Price Point

PEST ANALYSISPolitical LegislationEconomic RecessionSocial Social Changes Inbound tourismTechnological New influences Internet

0

50

100

150

200

250

300

350

400

Bass

Whit

brea

dHilto

n

Thistle

Compa

ss

Accor

Choice

hot

els

Jarv

is

Regal

Hotel

Gro

up

Mac

dona

ld Hot

els

HOTEL

NO

OF

HO

TE

LS

No of hotels

Top Ten Budget Hotel Groups in the UK

0

50

100

150

200

250

300

Trave

l Inn

Trave

lodge

Prem

ier L

odge

Holida

y In

n Exp

ress

IBIS

Old

Englis

h In

ns

Days

Inn

Campa

nile

city

Inn

Form

ule 1

No

of H

otel

s

Number of Hotels

Top ten hotel groups in the UK

Martin information Ltd Dec 2000

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

Percentage of Market Share for Top Ten UK Hotel Groups

Bass

Whitbread

Hilton

Thistle

Compass

Accor

Choice hotels

Jarvis

Regal

Macdonald

The Competitive Environment

Broad Target

COMPETITIVE SCOPE

Narrow Target

LOW COST DIFFERENTIATION

Travel LodgeHoliday Inn ExpressMarriott CourtyardPosthouse

MariottDe VereHiltonHeritage

Guest HousesBed & BreakfastsYouth Hostels

The SavoyThe LanesboroughThe Ritz

Porters five forces model

Potential Entrants

Threat of Entrants

Suppliers Buyers

Bargaining Bargaining Power Power

Threat of substitutes

Substitutes

CompetitiveRivalry

Industry Sector Stakeholder Mapping

Low LEVEL OF INTEREST High

D New Entrants Lenders Competitors shareholders Chairmen of Competitors Board of Directors

Government

A

Suppliers Employees Community Auditors of Key Players Competitors Lenders

B

C Customers/ Potential

Low

High

D New Entrants Lenders Competitors shareholders Chairmen of Competitors Board of Directors

Government

A

Suppliers Employees Community Auditors of Key Players Competitors Lenders

B

C Customers/ Potential

Low P O W E R

High

CUSTOMER TRENDS

Future customer trendsCustomer Demand

MARKET TRENDSIndustry Life cyclenumber of UK Hotels

Number of UK Hotel Operators

0

2000

4000

6000

8000

10000

12000

14000

16000

Y 1991 Y1992 Y1993 Y1994 Y1995 Y1996 Y1997 Y1998 Y1999 Y2000 Y2005

Year

Num

be

r o

f H

ote

ls

Hotel Industry Life Cycle

0

1

2

3

4

5

6

7

8

9

Y1994-

95

Y1995-

96

Y1996-

97

Y1997-

98

Y1998-

99

Y1999-

00

Y2000-

01

Y2001-

02

Y2002-

03

Y2003-

04Time

% G

row

th A

cco

rdin

g to

Tur

nove

r Y

ea

r o

n Y

ea

r

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

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