Free Hospitality Industry in the UK Essay Sample
The hospitality industry or sector includes a wide field of businesses within the service industry which comprises of restaurants, transportation, lodging, cruise line, event planning, and theme parks, as well as businesses within the wider field of tourism industry. The hospitality industry in the UK is considered a multibillion dollar industry that has been one of the key drivers of the UK’s economy. The industry is dependable on availability of disposable income and leisure time. Business units within the wider hospitality sector such as hotels, parks, restaurants, and bars, among others, consist of a number of different groups that are concerned with daily management and operations. These groups take account of those in charge of direct operation (bartenders, housekeepers, servers, kitchen workers, and porters, among others), facility management, marketing, human resources, and management. The hospitality sector includes a wide variety of organizations which provide accommodation and food service. The UK’s hospitality industry is divided into various sectors which are based on required skill-sets for a particular work involved. These sectors range from accommodation, meeting and events, tourism services, entertainment and recreation, food and beverage, and gaming (Page & Connell, 2006).
Overview of the Hospitality Industry in UK
The UK hospitality industry has tremendously grown over the past few years. The growth is particularly evident in the increasing availability of opportunities in the labour market designed for both local and international graduates. According to a report documented by the British Hospitality Association (2010), the UK catering and hospitality industry comprises of more than 263,000 outlets and has more than 1.7 million employees. More than 270,500 people are found in other sectors including gambling, travel and tourist services, youth hostels, holiday parks, and attractions. While it is hard to find the official registry of UK’s hotel rooms, in 2000, it was estimated that there were approximately 101, 268 hotel rooms within and around the Greater London (PriceWaterHouseCoopers, 2009).
In addition, according to figures released to support London Olympics bid, it was reported that within a 10 km radius of Central London there were over 70,000 hotel rooms found in both three and five stars hotels. The growth in the hospitality industry has been particularly boosted by the expected huge demand for leisure during the upcoming 2012 London Olympic Games. Due to this, there has been an increase in the number of hotels rooms in and around the City of London. According to PriceWaterHouseCoopers (2009), the West End of London (for example in Mayfair) is particularly concentrated with luxury hotels, resorts, and other leisure and holiday facilities. However, despite this huge growth in recent times, in the hospitality industry especially in the hotel sector, it was noted that the majority five star hotels in London are small in size according to the international standards. For instance, most five star hotels in London have rooms ranging from 50 and 500 hotels (PriceWaterHouseCoopers, 2009). Some of these hotels include London Hilton, St. Martins Lane Hotel, the Savoy, and the Four Season London, among others.
According to the British Hospitality Association (2010), the most profitable hotels and facilities in UK are found in London around the five major airports. Gatwick and Heathrow Hotels have particularly been successful in registering high and consistent room occupancies besides providing conference facilities. However, the major players in the UK’s hospitality industry in the recent times have been spotted in the branded budget hotel segment. It was noted that the growth of the branded hotels began in 2002 and reached its peak in 2007, when more than 70 percent of available hotel rooms (more than 71,000 rooms) were provided by the branded budget hotels in the UK. It is the rise and high demand for branded hotels that has greatly transformed the UK’s hospitality industry in terms of growth and market share. The notable player in the branded hotel segment has been the Intercontinental Hotel through a number of its subsidiaries in UK. Through acquisition of UK’s Holiday Inn Express, Intercontinental Hotel has been a constant player in the hospitality industry of UK; however, it has faced competition from other players in this industry.
The competition for the market share in the UK hospitality industry is quite dynamic and interesting; especially as the 2012 London Olympics are fast approaching. The growth in the market share has particularly been witnessed in the branded budget hotel sector of the wider hospitality industry. The leading branded budget hotels in the UK are Travelodge, Premium Inn, and Holiday Inn Express. According to a report released pertaining to the current growth of budget hotels in UK, it was estimated that about 54 new branded budget hotels were opened in 2010 , this created more than 5,440 new rooms last year alone (HotStats and Hotel Analyst, 2011). Travelodge was ranked as the fastest expanding budget hotel chain in the year 2010. This was followed by an addition of more than 3,830 new rooms to the hotel’s portfolio, making it to be the one of the largest operator of budget hotel in London and also across the UK. However, despite this enormous growth in the year 2010, Travelodge could only manage a second position in terms of market share. The leading player in the budget hotel segment is Premier Inn which has about 37 percent of the market share in UK compared to Travelodge which has only 27 percent share of the UK’s market. Premier Inn continues to lead in market share despite of having added only 1,043 rooms in the year 2010. Holiday Inn Express which was ranked third as the UK’s largest operator with a market share of 11 per cent could only manage to add 540 new rooms during 2010 (British Hospitality Association, 2010).
According to Delloite (n.d), UK still ranks behind the world major economies in terms of growth in the branded budget hotels. For instance, UK’s branded budget hotel has only 16 percent of the market share compared to USA and France which have 33 percent and 25 percent of market share respectively. Nevertheless, the UK’s hospitality industry and hotel sector in particular, has been rapidly growing and shifting towards branded budget accommodation supply. For example, for the last four years, the branded budget hotel in UK gained more than 35 percent in market share, making it to be one of the fastest growing sectors of the hospitality industry in the UK in recent times. Going by its current growth rate, it is projected that branded budget hotels will squeeze out all independent and mid-market brands in the UK by 2030. It is also worth to note that the exponential growth emerged despite of the economic meltdown of 2008 and its aftermaths. As noted above, Travelodge has been particularly dominant in driving up this change. However, the entry of Intercontinental Hotel through Holiday Inn Express has also soared up the growth in branded budget market share within the wider hospitality industry.
Travelodge alongside Premier Inn and Holiday Inn Express have been the key players in the changes witnessed in the UK hospitality industry. For instance, the growth in the branded budget hotels in the UK has been realized through the opening of more and more new hotels across Britain. These major industry players not only rely on building or developing new facilities but also on acquiring and converting run-down independent as well as mid-market hotels. For instance, more than 9,520 hotels rooms have been created through the 131 hotels that have been opened by Travelodge alone since 2008. However, Delloite (n.d.)., notes that 40 percent of these new branded budget facilities consisted of run-down independent and mid-market brand hotels that were acquired and directly converted.
The emergence of the brand budget hotel within the wider hospitality industry has been a game changer in UK’s hospitality market. Traditionally, the hospitality industry was known to particularly focus on the provision of physical products. However, the players have soon realized that consumers are demanding more and more consistency in the delivery of a specific brand promise. Moreover, with the upscale to leisure and luxury segments, players in the hospitality industry will soon discover that experiential dimension will be a key determinant in gauging the success of a brand and designing the finer details of a product. On the other hand, consumers were traditionally believed to have negative connotations towards small size hotels or budget hotels; however, this is rapidly changing as there is increased perception of this segment in terms of efficiency, good experience, and affordability (Delloite, n.d.). This change in consumer perception as well as market dynamics has not only changed business operations in the UK’s hospitality industry but also has continued to particularly transform the hospitality industry and hotel sector.
The growth of the branded budget hotel segment in terms of market share in the recent years has prompted increased activities within the hotel sector in the UK. Both local and international operators in the hospitality industry are increasingly changing their game plans to compete for the huge potential in the branded budget accommodation market share. In other words, the growth of branded budget hotels as a new segment within the broader hospitality industry has not only overwhelmed the operators in the hospitality industry, but also the market behaviour of major players both locally and internationally. This is evident in how the leading players, Premier Inn and Travelodge, have been aggressive towards the market share and the entry of international hospitality operations into the UK market (notably Intercontinental Hotel).
The hospitality industry is being redefined with not only new innovations and concepts but also with strategies that ensure players remain competitive and profitable in the market. The changing perceptions of the consumers, the market dynamics and operators’ innovativeness, and the modern business units in the UK’s hospitality industry (particularly those in the hotel sectors) are being forced to take a different turn that is completely different to the earlier practices. For instance, it is common these days to find mini full- service hotels operating and providing business class products and services to a wide range of customers. These hotels have basic facilities targeting business travellers who may be looking for a particular market segment that caters for the needs of mid-rank business executives as well as price-sensitive corporate bodies. The hospitality industry has been influenced by the increased growth of the branded budget hotel segment which has enhanced competition coupled with good service, increased professionalism, ambience, and style. With the current trends and growth rate of branded budget hotels in UK, it is projected that business units within the hospitality industry will be required to align their products and services with the new market dynamics for their continued success and profitability.
The hospitality industry is one of the key drivers of the UK’s economy that has grown in the past few decades. However, one of the key sectors in this industry has been the hotel sector which has contributed immensely to the growth of the hospitality industry in the UK. Within the hotel sector, the branded budget hotel segment, is continuously transforming the hospitality industry as a whole and the hotel sector in particular. Going by the rate of growth in branded budget hotel segment in the UK (in terms of market share estimated at 16 percent), operators in the hospitality industry will particularly be forced to redefine their business practices and operations in order to remain competitive and successful in the UK’s market. This will call for embracing of new concepts, strategies, and innovations that are efficient, affordable, and able to provide first-class experience to their customers.