Budget
Hotels - UK -
Companies
and Products
Key points
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Expansion continues by
many chains, including the market leaders.
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2009 has seen some
impressive discounts, with Intercontinental’s free nights giveaway (which
included its budget brand Express by Holiday Inn) particularly notable.
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Competition drives
innovative marketing strategies; Breakfast Express and a pyjama-based video
contest are recent examples.
The following section profiles a selection of
budget hotels chains in the UK. It is not intended to represent an exhaustive
or graded list, rather an overview of the industry.
Accor (Ibis, Etap, Formule 1)
www.accor.com
http://www.ibishotel.com
http://www.etaphotel.com
http://www.hotelformule1.com
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The France-based Accor operates hotels in all
segments, from luxury to budget. Its brands of relevance are Ibis (in what it
terms the ‘economy’ segment), Etap and Formule 1 (in its ‘budget’ segment).
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Accor also owns hotel chains in the luxury,
upscale and midscale segments – Sofitel, Pullman, and Novotel, among others.
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Etap Hotels are mostly spread across Europe.
Outside Europe, Etap goes under the Formule 1 brand.
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In July 2009, the company revealed its first-half
2009 results. It saw a fall in overall revenue to €2,534 million, down 9.6%
from last time. Worldwide hotels revenue continued to decline, contracting
11.4% on a like-for-like basis.
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In the UK, first-half hotel like-for-like revenue
fell 10.2% year-on-year (8.9% in the first quarter and 11.4% in the second).
The decline in RevPAR was 7.2% in London compared to 19.2% for the rest of the
country, with the company attributing London’s smaller drop to overseas
visitors taking advantage of the weak pound.
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For 2008, the entire company’s reported revenue
fell 4.7% year-on-year to €7,739 million. The revenue generated by the group’s
hospitality (hotels) segment, which saw a like-for-like growth of 2.1%,
accounted for 75% of the total. The group’s net profit in 2008 was €613
million, down from €912 million in 2007.
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There are over 50 Ibis Hotels across the UK and
Ireland, including 14 in London, seven in Birmingham, five in Cardiff and two
each in Bristol and Manchester. In June 2009, Accor opened a new Ibis hotel in
the UK – Ibis Belfast University Street.
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The company plans to open four more ibis hotels
in the UK in December 2009 – one at Basingstoke, one in Brighton, one in
Belfast City and one in Belfast King Street.
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So far in 2009 the group has unveiled the opening
of nine Etap hotels – in Beaconsfield, Derby, Leicester, Portsmouth, Birmingham
(airport), London (Hounslow) Manchester (Salford), Ipswich and London (Sutton).
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A new Etap Hotel is expected to be opened in
Cobham in May 2010.
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In 2006, Accor adopted a new development strategy
– it announced that it would, henceforth, run its hotels through management
contracts, franchise agreements or variable-rent leases based on the property’s
location and profitability. At the end of 2008, 56% of the group’s hotels were
run according to this strategy.
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In January 2009, Ibis began a new worldwide
campaign called ‘I care, Ibis cares’ to promote the chain’s drive for “greater
and greener customer comfort”. In the first part of the campaign, Ibis
delivered two new products to customers – a new bed designed by Simmons
Company, and toiletries from Ecolabel.
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In June 2009, Ibis launched a worldwide contest
for the most “unusual, funny and creative” video on the theme “Show us what you
do – or what you dream of doing – in pyjamas!”. The contest promoted its room
rate reductions of €10-€15 per night for bookings between 3 July and 6
September and was open until 15 July. The winner – to be announced before
September 2009 – gets €5,000, with a further €2,000 shared between the
runners-up.
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Accor is focusing on “maintain[ing] a competitive
advantage” in comfort, new technologies and “connectivity solutions in hotel
living areas” in brands including Ibis and Etap (with the latter also getting
new room concepts).
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Starting 2010, the company’s plans are to open
290 hotels (40,000 rooms) every year. Annual investment will be €3,950 million
for this expansion, with €400 million coming from Accor and the rest from
external investors.
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The group’s growth strategy includes plans to
grow its budget and economy segments in Western Europe and to gain market share
through franchises in mature markets.
Campanile
www.campanile.com
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Campanile is a budget hotel brand owned by the
European hotel operator Louvre Hotels, a subsidiary of Groupe du Louvre which
in turn is owned by the US-based investment company Starwood Capital Group.
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In addition to the Campanile brand, Louvre Hotels
also owns the Kyriad Prestige, Kyriad and Premiére Classe brands, making up
over 800 hotels and almost 63,000 rooms across Europe.
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There are approximately 380 Campanile hotels and
restaurants in nine European countries of which 19 are in the UK.
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In January 2009, Louvre Hotels said that it was
looking at opportunities to open new hotels throughout the UK. To this end, it
appointed a new UK development manager.
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In the same month, the company announced that it
was planning to revamp the Campanile brand in the UK, with the Northampton
Hotel receiving the refurbishment first. The company stated that this overhaul
was in response to consumer demands and expectations that were highlighted in a
survey it had conducted.
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As a result of the survey, Campanile consulted
both interior designer Patrick Jouin and chef Pierre Gagnaire during the revamp
of its hotels and menu.
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The company officially unveiled its refurbished
Swindon hotel in May 2009. Campanile spent £1.5 million on the makeover, which
included a new look and design.
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Special offers and discounts include free
breakfast for children under 10 at restaurants (subject to certain conditions)
and special rates/facilities for athletes and accompanying staff (managers, doctors,
etc), alone or as part of a team.
Comfort Inn
www.comfortinn.com
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Comfort Inn is a brand of budget hotels belonging
to Choice Hotels International, a global hotel franchisor. Choice Hotels
currently franchises more than 5,800 hotels globally, with over 450,000 rooms.
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European franchises are controlled by Choice
Hotels Europe, the trading name of Quality Hotels Ltd and a subsidiary of the
International company.
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As of March 2009, there were 15 Comfort Inns in
the UK, with a total of 794 rooms – a drop of two hotels year-on-year.
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Choice Hotels also franchises the brands Quality
Hotels (of which there are 19 in the UK) and Comfort Inn’s sister chain Comfort
Hotels (13) in this country.
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In February 2009, Choice Hotels ended its
franchise agreement with The Real Hotel Group (RHG) as the latter’s trading arm
(The Real Hotel Company) had gone into administration. As a result, 22 of the
hotels that RHG franchised ceased trading under the Choice brands Comfort,
Quality and Clarion.
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At the time, Choice Hotels stated that although
in the short term this would bring down the number of its franchised hotels in
the UK, it was still looking at expanding in the UK (as well as globally).
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In September 2008, Choice Hotels and American
Express together launched a campaign for guests staying at Comfort, Quality and
Clarion hotels in Europe. Customers using American Express cards in advance to
register would earn 10 bonus points for every dollar they spent in addition to
10 base points for Choice Privilege stays in Europe. This offer was valid from
1 September to 30 November that year.
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The offer tied in with Choice Privilege (which
was introduced in May 2008) – Choice Hotels’ reward programme that offers
points that can be used for free nights, airline rewards or gift cards when
staying at group hotels worldwide (with some countries not included).
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The company offers a ‘Best Internet Rate
Guarantee’, stating that if customers book a room through the company then find
a lower rate for the same hotel and room type on the same date at any other
online source, they will receive that lower rate and an extra 10% off.
Express by Holiday Inn
www.holidayinnexpress.com
Company performance
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Express by Holiday Inn is a budget chain of over
100 hotels across the UK and Ireland. It is a brand owned by US company
Intercontinental Hotels Group.
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The Express by Holiday Inn chain’s total revenue
increased 11.4% to $3.9 billion (£2.15 billion) in 2008 from $3.5 billion
(£1.75 billion) in 2007.
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In 2008, the group’s revenue from the EMEA region
was $518 million (£284.90 million) and operating profit from the region was
$171 million (£94.05 million).
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As at the end of 2008, there were 1,932 Holiday
Inn Express hotels worldwide, and in the EMEA region, there were a total of 186
including four net new across the year.
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Parent company Intercontinental’s overall
strategy is focused on increasing the profitability of its core business in its
strongest markets and seeking out opportunities for growth in new markets.
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Across all brands, UK RevPAR rose 1.2% year on
year in 2008.
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During the period June to December 2008, the
Express chain opened hotels in six locations across the UK: Aberdeen Exhibition
Centre, Burnley, Dundee, Lincoln City Centre, London Epsom Downs and London
Watford Junction.
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In June 2009 a franchise agreement was signed
with Crimson Hotels Group that will see the largest Express by Holiday Inn in
Europe (at 300 rooms) open at Heathrow Airport’s Terminal 5 by 2011. The first
phase (125 rooms) is on course to complete in May 2010, with the project being
redeveloped from an existing near-130 room hotel.
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The move forms part of Intercontinental’s wider
redevelopment and relaunch of its Holiday Inn and Express by Holiday Inn brands
– over 3,200 worldwide have been/will be relaunched by 2011.
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The company currently has four hotels in
development in the UK; Holiday Inn Express Colchester, Holiday Inn Express
Manchester City Centre, Holiday Inn Express Tamworth and Holiday Inn Express
Windsor.
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In April 2009, Express by Holiday Inn launched a
‘Breakfast Express’ bus in London and Birmingham offering 1,000 free breakfasts
to the public. The campaign pushed the importance of breakfast, highlighted the
fact that the chain provides the meal to all its guests and pointed out that
market leaders Travelodge and Premier Inn do not offer breakfast as part of
their overnight rate.
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Also in April 2009, Intercontinental launched
what it called the “World’s Biggest Free Nights Offer”, allowing customers to
earn a free night at any of its branded hotels by registering at
www.getafreenight.com then staying two nights (not necessarily consecutive) in
any of its hotels between 4 May and 3 July 2009. Each guest could earn up to
four nights.
Innkeeper’s Lodge
www.innkeeperslodge.com
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Innkeeper’s Lodge is owned and operated by the
Mitchells & Butlers Retail Group, best known for its pub and restaurant
businesses (with brands including Harvester, Sizzling Pub Co., Toby Carvery,
Vintage Inns, Crown Carveries, All Bar One and O’Neill’s).
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Mitchells & Butlers currently owns and
operates around 2,000 pubs, which it estimates is approximately 3% of the UK’s
total.
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All Innkeeper’s Lodges, of which there were 90 in
the UK as of March 2009, are located with an M&B “pub and restaurant
located only a few steps away.”
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In 2008, M&B and Whitbread agreed an asset
swap which saw 21 lodges swapped for 44 Whitbread Pub Restaurants (giving
Premier Inn’s parent company 1,245 rooms). Both sets of assets were valued at
£78 million.
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The deal prompted speculation that further swaps
could occur, and as part of M&B’s full-year 2008 financial results, the
company stated that it would “continue to review value creative options in
relation to remaining certain other assets, including Innkeeper’s Lodges”.
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The company became the first budget hotel in the
UK to offer all non-smoking rooms in 2004, acting in response to a customer
survey.
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Innkeeper’s Lodge is currently offering a
three-night stay for the price of a two-night stay deal across its hotels in
the UK. Bookings made for Friday and Saturday night receive a free night’s stay
on the Sunday, subject to availability. The promotional offer is available
until November 2009.
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The company is also offering a free Toby’s
Carvery meal with a two-consecutive nights stay at one of ten selected Lodges.
The deal applies to new bookings made after 4 August 2009 and is available for
stays until 3 October.
Jurys Inn
www.jurysinns.com
Company performance
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Jurys Inn is a chain of 25 hotels of which 19 are
located in the UK and six are in the Republic of Ireland.
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The company has been owned by Irish venture
capital company Quinlan Private since 2007. In April 2009, the Oman Investment
Fund invested €200 million for a 50% equity stake in the company.
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The brand’s proposition is three-star level
accommodation in city centre locations (hence the strapline “Inn the heart of
it all”), with “value for money” room rates.
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Rooms offer duvets, air-conditioning, a multi-channel
26-inch TV and high-speed internet access.
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Jurys Inn hotels also feature a restaurant, pub
and coffee bar called Innfusion, Inntro and Il Barista, respectively.
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During March-June 2009, the company opened new
hotels in Watford, Exeter, Swindon and Derby.
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In the UK, Jurys Inns plans to expand by opening
in Aberdeen and Portsmouth in 2009 and in Bradford, Gateshead and Glasgow
during 2010. A Prague hotel will also open in September 2009.
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The company is promoting the latter hotel with a
prize draw for the first 100 customers to book; five will receive their stay
(for up to two people for two nights) for free.
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In June 2009, the company offered a number of £20
rooms to promote its new locations (Sheffield, Watford, Exeter, Swindon and
Derby) throughout June and July.
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The company offers a lowest rates guarantee
online, and says that if customers who have made a booking on jurysinns.com
find a lower available price elsewhere on the internet (within 24 hours), that
lower price will be honoured.
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In June 2009, Jurys Inn opened a new £20 million,
213-bedroom hotel in Derby and announced that it would sponsor Derby County
Football Club for one season. June was also the month in which Derby County
celebrated its 125-year anniversary.
Premier Inn
www.premierinn.com
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Premier Inn is the largest budget hotel chain in
the UK. It is owned by the Whitbread Group and currently has 571 hotels spread
across the country. All Premier Inns include a restaurant and bar.
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In the financial year ended 26 February 2009, the
Premier Inn chain’s revenue was £601.5 million, a 14% increase over the
previous year.
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Like-for-like sales in the 2008-09 full year
increased 6.0%. However, they declined by 7.9% during the 13 weeks ending 28
May 2009. Like-for-like sales of revenue per available room grew by 2.8% in the
12-month period.
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In the financial year ended 26 February 2009, the
Whitbread Group opened 55 new hotels – with a total of 4,553 new rooms – and
revamped 7,000 rooms.
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During the 13 weeks ending 28 May 2009, the group
opened six new hotels and added 838 new rooms to its portfolio.
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For 2009/10, Whitbread plans to open 1,700
Premier Inn rooms across the UK. In August the company secured five sites
across England for hotels which will, in total, add 535 bedrooms to its
portfolio. The largest is a Medway Leisure Park deal to build a 121-bedroom
Premier Inn.
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In the full year 2008/09, the number of Premier
Inn Business Account Cards users increased 14% over the previous year to
61,000. Business Account sales rose 24% to £171 million; the number of accounts
reached 14,000.
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Whitbread is attempting to increase its share of
the leisure market. It plans to do this by building on its market position and
providing its customers with cost-effective packages. It also plans to expand
its existing reservation network, increase sales and put into place the next
phase of its revenue management system.
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The company is planning to deliver cost savings
of £25 million by 2011. In June 2009 it stated that it was on target to do so.
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Also in June 2009, the hotel chain launched its
‘Premier Offers’ promotion. Under the terms of the deal, rooms can be booked
for £29 at selected hotels (minimum two night stays between 9 July and 6
September 2009). Rooms must be booked online at least 21 days before the stay
to qualify.
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The company also offers a ‘Great Days Out’
scheme, with a range of two for one and kids go free deals on “800 top family
attractions”.
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In March 2009, the company launched a
multimillion pound ad campaign to target business travellers. The print ads ran
for 12 weeks in newspapers such as The Times, Daily Mail, The
Sun and Metro and highlighted the advantages the chain holds over
mid-market hotels.
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In February 2009, the hotel chain put £50,000
worth of business travel accommodation up for grabs to business customers,
offering the prize draw to all who successfully applied online for a Premier
Inn Business Account.
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In January 2009, Premier Inn launched its first
self-check-in hotel at St Mary’s Gate, Sheffield, aiming to bring down check-in
time to less than a minute. The hotel stated that the new service would give
its staff more time to focus on customer service.
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In December 2008, Premier Inn announced plans to
open a floating hotel in Hartlepool Marina. The ‘floatel’ is expected to open
before 2010 and will be attached to an existing Premier Inn on the quayside.
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Also that month, the company opened a new hotel
at Tamworth (Staffordshire), positioning it as Britain’s greenest hotel. The
hotel is said to use eco-friendly systems for heating, cooling, lighting,
ventilation and water sources, which the company claims will reduce energy
usage by 80%.
Travelodge
www.travelodge.co.uk
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Travelodge launched in 1985 and has grown to a
chain of 380 hotels in the UK, Ireland and Spain.
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The company is owned by Dubai International
Capital, which acquired Travelodge from Permira in 2006.
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For the fiscal year ending December 2008,
Travelodge’s revenues increased 19% to £289.7 million compared to £243.8
million in 2007. EBITDA in 2008 grew 11% to £57.9 million compared to £52.3
million in 2007.
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Travelodge aims to become the largest hotel
operator in London by the 2012 Olympics. It plans to expand its portfolio to
approximately 1,000 hotels by 2020.
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As part of this expansion, the company announced
that it had plans to grow by 120 hotels in and around London at a cost of £750
million by 2020. To promote this growth, the company offered cash prizes to
people recommending sites for hotels, provided one is subsequently opened at
that site. £500 per room was offered (up to a maximum of £150,000).
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Prior to this announcement (in March 2009)
Travelodge invested £77 million for the addition of 12 new hotels (1,443 rooms)
to its portfolio. The new locations were Cambridge, Edinburgh, Egham, Epsom,
Liverpool, London Penge, London Twickenham, London Waterloo, London Whetstone,
Northampton, Rugby and Salford Quays.
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In addition, Travelodge and Meghraj Properties
announced in June 2009 the launch of a £100 million fund in order to purchase
hotels from owners/administrators that are looking to sell in the current
financial climate.
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One month later, the company revealed a deal
worth £84 million resulting in six more properties in London: Drury Lane,
Covent Garden; Ealing; Stratford; Harrow Lyon Road; Harrow Sheridan House; and
Bromley.
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In March 2009, Travelodge launched a free iPhone
application called iBooker, allowing users to find out prices, availability and
location of Travelodges, and to book rooms.
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In February 2009, the company sought to
capitalise on businesses needing to reduce their travel expenses, launching a
business account card with the aim of increasing its number of corporate
clients by 100% in the full year 2009. The card includes an eight-week credit
facility, the first time that Travelodge has offered credit to business
customers.
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In January 2009, Travelodge introduced a
retailer-style programme that compares the prices of hotel chains in the UK in
January 2009 in order to “ensure that it remains that number one on price”.
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In December 2008 Travelodge and discount retailer
Lidl revealed that they were building a combined supermarket and hotel site in
Newcastle-Under-Lyme. The supermarket will be on the ground floor, while the
hotel will occupy the remaining five floors. The company said that it would
invest £3 million in the 82-room hotel, and the deal followed a similar venture
with Lidl’s rival Aldi, announced in October 2008.
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The company launched its most recent sale in June
2009, offering over 150,000 rooms at £9 and £19 for stays at hotels between 1
November 2009 and 31 January 2010.
Also Read How to Make Questionnaire for Choosing Budget Hotel in UK. Contact Research Writers at Mahasagar Publications.
