Analyse The Hotel Industry In Uk Tourism Essay

Analyse The Hotel effort In Uk Tourism strainIt is very(prenominal) crucial that in todays competitive environment, (both in terms of clientele and employability) maven has a clear slumpstanding and fit k instanterledge of the vault of heaven or assiduity in which they would be operating.This brood go away be looking at, and analysing the Hotel intentness in the United Kingdom, examining painss micro and macro environment. Its role is to examine the industriousness with intention to gather market intelligence that would uphold prospective managerial educatement, c beer aspirations and prepare them for sufficiently informed alliance at interviews. Findings from the report should therefore, enhance their business knowledge and employability prospects in the perseverance.The report will focus on the rifle five twelvemonths which puzzle in fact seen the industry at its best and at its wipe up in adept a few categorys. A design of contrasting data computer addr esss would be utilised such as industry reports, watchword paper articles and various websites related to the industry.INDUSTRY ANALYSISIndustry oerviewThe hotel industry and tourism in general is one of the populaces main increase industries worth(predicate) trillions of ponds globally. According to a key note report (2009) the hotel industry in the United Kingdome grew by 29.1% in four familys to 2008, reaching a staggering 15.87 billion. This growth was attributed to a go of factors, such as the richly disposable income available to state, introduction of low cost air marges and the rapid elaborateness of figure hotel vault of heaven.With hotels that opened up to a wide range of customers unite with cheap flights and noble disposable income volume could guard much than one holiday a year. This in turn benefited the hotel industry as a whole from both foreign and domestic tourists.This vibrant growth, however, has seen a transform in its fortunes in the last dic kens years, imputable to a come in of factors but mainly the sparingal garbage downturn. In 2008 global saving took a turn for the worst and the problem deepened in 2009, leading to recession in approximately true economies and UK was no exception. This had an immediate impact on holiday purchasing with research suggesting that a portentous proportion of adults thinking of parsimoniousness money by having a domestic holiday in 2009, plot of land 25% of them were worried they could not afford a holiday at all (Key advert 10). This has led to umteen hotels adapting to the situation by reducing prices or offering lucrative promotional deals to figure the market expectations and improve sales.The hotel industry could be divided into two heavenss, corporate and consumer both providing services to meet their particular clients needs. The first one includes registrations paid by businesses, for business break purposes and the latter is paid by consumers for non-business reas ons.A grading scale ground on a star system is used to classify the pure tone and range of service provided by the company. The grading is comp plagia come upd of 1-5 stars, where one star represents wide-eyed adjustment with no thrills attached and five stars represent exceptional timber of service with whatever degree of lavishness. In some situations Silver or Gold may be added to Hotels that exceed the requirements down the stairs the star system.It is estimated that 1 one in every 10 people in the UK is employ in the Hospitality industry, in different words oer 1.96 cardinal (2007) people working in around 300,000 establishments across the country. Overall interlocking in this industry grew by 5% in 2007 but the Hotel sector had the last(a) growth with completely 2.7% adding another(prenominal) 6,500 jobs to the existing 238,500 jobs that existed in the forward year ( tabularize 1.2).Major cities accounts for the extravagantlyest concentration of hotels in the U K and are thought to retract the highest level of tourism activity with London leading the way.Market coat classsDuring the economic boom of the late 90s and early part of this decade the Hotel Industry has expanded apace benefiting from a derive of factors mainly related to economic growth an im be technology. The increasing globalisation of a lot of companies necessitated more(prenominal) than corporate trigger off and try-on. Being the financial centre of Europe and to some extent the world, London benefited a great deal from this rich consumer source. A lot of hotel groups responded to this by investing on their brands, positioning their portfolios to more upscale four/five star properties. In addition, the budget hotel sector was unquestionable to suit a wider range of consumers as closely as businesses. all(a) was made even easier for consumers by the schooling of the internet. This allowed easy comparison in terms of price and guest facilities on offer, as well a s a more convenient way to book them. net income is now thriving with 34,104,175 or 57.2% of population having access to it in the UK spending an just of ten hours a month on withdraw (www.theanswerbank).In spite of the healthy growth experienced in the last two decades and the excitement of the glide path surpassing Games London 2012, the industry has in 2009 suffered a setback. This was due to the recession that affected almost every developed or developing deliverance in the world. In the first delineate of 2009, the UK saw a fall in visits by one one billion billion, although statistics show that spending remained sex actly the same as the corresponding time of the preceding year (table1.1). This could be accredited to the weaker belabor which slummed at record lows both against the Euro and American Dollar at 75.86p to the Euro and $ 1.375 (bbc.co.uk).In 2008 there were 31.9 million visits in the UK producing on average 512 of spending each, generating all over 16.3 billion of revenue for the economy. This however is considerably smaller than the spending generated by the innate visits of UK residents which marked 21.1 billion for the same period, though slightly down from the foregoing year. The total spending generated by both UK and Overseas visits for 2008 was just above 37.4 billion, 0.4% higher than 2007 (table 1.1). Hotel industry shams just above 42% of this wealth, in other words 15.87 billion.During the peak of recession there was a significant increase on short-term holidays taken domestically. Though, as the economy comes come out of the closet of recession domestic holidays are predicted to fall by 7.7% with a identical decline on value betwixt 2009 and 2013. Holidays abroad on the other hand are forecasted to increase by over 16% amongst those years. (KeyNote)According to government data turnover in the hotel market little by little compound magnitude on average by 6.6% between 2004 and 2008. Key Note forecasted a 6.8% (appendix 4) decrease in total revenue for the following year but expects an upward elan from 2010, peaking in 2013 to 4.8% or 16.99 billion in total. Room moving in which is a key indicator to measure the fare of business carried out by hotels was at 76% in 2007 accord to VisitBritain but decreased in the following two years to 68% in 2009.Economic trendsIn the last five years the UK economy has seen some of its best and worst days. After the healthy growth that the economy had enjoyed in the early part of the decade came the downturn that succeeded in the sulphur half of it. As a result of the global credit squeeze, 2007-09 proved to be a bumpy ride for the economy, enforcing banks to take a tougher line on lending. This caused a sharp fall in consumer spending, with unpleasant consequences for most industries. In 2005 research showed that productivity growth had slumped and business investment funds was at a record low, accordingly the British economy was growing at a rate slower than the average growth for other developed economies, falling well short of chancellors budget prediction.Table 1.4 shows the gross domestic product feat in the last five years to 2008. It is evident that GDP plunged in 2008 to that 0.7 and performing at its worse in the 3rd quarter of 2008 when the economy fell into a recession registering a -6% drop (nationalstatistics.co.uk). GDP started to recover late in the 4th quarter of 2009 when it was just under stagnation point and first signs of getting out of recession be in the first quarter of 2010. According to national statistics growth in the first quarter of this year register a 0.2% increase. The same source suggests that during the same quarter distribution, hotels and restaurants fell by 0.7% compared with an increase of 1.9 per cent in the previous quarter. appendix 1 shows how this recession compares to the previous two in the 80s and 90s. It appears that last recession was the hardest of the three but seems to be the shortest of the three.High zip fastener prices in the world markets (highest creation $136.24 a barrel, 2008, appendix 2), forced rising prices evaluate rise to record heights in folk 2008 to 5.2% well above the intrust of Englands target of 2%. This increase forced the Bank to raise delight rates three times since summer 2006 with highest being in July 07 at 5.75% (BBC, 29/11/07). Although, this spike in puffiness became less of e concern for the Governor as recession was deemed the major threat to the economy. This then led the Bank England to repeatedly lower interest rates reaching its lowest point at 0.5% in defect 09 and hoping for the inflation to melt away. In fact that is exactly what happened with inflation rates falling to 1.1% in September 2009, the lowest since 2004. (thisismoney.co.uk)Increase in burn down prices is bound to raise travel costs for millions of people. High fuel prices, rise in interest rates and inflation followed with the credit squeeze do are also leaving people with less disposable income. This is having a negative effect on consumer spending as it is getting baffling for consumers to keep up with credit payments (credit cards/mortgages/loans). Therefore, loss in consumer confidence may result in less spending on holidays consequently impacting on industry profitability.CompetitionAccording to depicted object Statistics there are 10,195 hotels in the country and the majority of those establishments generate less than 1 million annual turnover (appendix 5). This has not stopped competition in the industry intensifying in recent years, narrowing the gap between budget and midmarket hotels. However, its sboulder clay the large chains/midmarket hotels that win the marketing battle by spending large sums on brand building. This has become a very important feature and most hotels are now attempting to develop stronger identity that would target both consumer and corporate sectors more effectively.Among others, Pre mier in was one of the largest spenders on media advertising in 2009, spending over 5.5 millions on promotional activities followed by Travel suit who spent just under 3 million. In addition to this the large chains have focus on seasonal offers and lowering their prices. For example, in autumn 2009 Travel Lodge lunched room sales for the next spring, offering rooms for as low as 12 a night.Also these midmarket establishments have more flexibility to offer packages or meals to attract a larger, more price sure market. Low budget hotels on the other hand have responded to this by providing more facilities and services than before as well as including more offers on their websites.Table 1.8 shows some of the major players in the United Kingdome and their relative annual turnover. InterContinental Hotels Group PLC seems to lead the way with close to 2 billion annual turnover from which 302 million were pre-tax profit. The company has a number of brands under its umbrella such as Cr owne Plaza, Hotel Indigo, Holiday Inn, Express by Holiday Inn, Staybridge Suites and Candlewood Suites operating in around 100 countries offering 630,000 rooms. bit in this list follows, millennium Copthorne Hotels PLC with an annual turnover of 703 million and pre-tax profits of 103 millions. The company fosters four different brands including Millennium and Grand millennium Hotels, Capthorn Hotels and Kingsgate Hotels. recently it has recently expanded with seven new hotels in China and in-between East.Accor UK Business Leisure Hotels Ltd is own by Accor a French base group which has 15 different brands under its umbrella varying from luxury to economy accommodation. The UK found subsidiary generates an annual turnover of 198 million of which 37.5 million pre-tax profit.Travelodge which is owned by Dubai world(prenominal) Capital is the next in line generating an annual turnover of 287 million and a pre-tax profit of 16.5 million. The company is rapidly expanding both in UK and main land Europe, with 29 hotels planed to be make in UK in 2009 and 100 in Spain by 2020.De Vere Hotels Leisure Ltd operates two hotel chains generating a total annual turnover of 248 million by combining a 100 bedroom hotels and fitness clubs. The company is owned by Alternative Hotel Group which is aiming to rebrand the De Vere portfolio under Deluxe, Heritage and Venue options, differentiating the accommodation offer.TourismThere was a slight drop in the number of abroad residents visiting Britain for business reasons in 2007/8 as a lot of companies tightened their budgets on travel outlay. This has resulted in low room and bedspace occupancy levels which dropped to a 4 year low (426.2 million bed nights) with in force(p) consequences for the hotel market. The following year was a very difficult year for tourism, experiencing a significant drop in visit song. 2010 is also expected to be somewhat difficult for the industry, with substantial improvement expected to st art only in 2011.However, according to a keynote report on travel and tourism, research suggests that 1/3 adults in the Britain has taken at least(prenominal) one holiday in the last 12 months and 1/5 of them having taken three or more for the same period. Still, the economic downturn forced a lot of suppliers, including the package tour operators, to react by reducing their capacity and cutting the number of holidays on offer.UK continues to be an amiable place in the international holiday market and this is very important for the long term prospects of the hotel industry. The coming decade which has been described by many commentators as the golden decade of sport because of the many different international events due to take place in UK (table 1.7) is exiting times for the industry. Overseas witnesser numbers to these events will provide a necessary boost for the hotel market. Records based on previous similar events staged by other countries in recent years show that hotel p rofitability increased as a direct result.BigHospitality referring to VisitEngland research suggests that tourism industry in the United Kingdome could be worth a staggering 147 billion by 2020 with the potential of creating over 225,000 new jobs in the industry. This would be a 52% increase from the new estimated value of 97 billion.Though smaller than the domestic spending in hotel sector, the international tourism is a significant contributor to total revenue. simply London, which earns over 8bn from overseas visitors, depends more on the overseas visitor than on the home market.Employment and DemographicsAccording to BBC unemployment in UK continued with its downward trend until August 2007, falling by 5000 in the second quarter of 07 to 1.65 million where it maintained one of the lowest unemployment rates in Europe at 5.5% but slightly higher than that of USA. ONS figures also showed that average earnings pink wine by 3.7% during the same quarter, beating expectations of a 3 .6% rise. However, theses prosperous years were in brief over and low unemployment was history.According to the national statistics, employment has seen a prominent fall in the last three years reaching its lowest point since 1996 when it hit 72.1% or 28.82 million in February 2010 (appendix 3). In the last quarter to February there was a decrease in both temporary and full time employment totalling 89.000.The number of people working only part-time because they could not find full time employment increased during the same quarter to reach 1.05 million, the highest figure since 1992. The overall unemployment rate enter 8.0%, in other words 2.5 million, higher than any time since September 1996.The inactivity rate in the first quarter of 2010 was at 21.5%, the highest since 2004. This added another 110,000 to the total figure, reaching a record high of 8.16 million people considered inactive in UK. Though, this could be as a result of a relatively large number of young people cho osing to go into culture after finishing their secondary school rather than go slap-up to the labour market. people in the United Kingdome has continuously increased in recent years reaching 61.4 million in 2008, an increase this of over 9% in just five years (KeyNote). This was due to the high influx of migrants from the newly joined EU member states from Eastern Europe. This trend of population growth is forecasted to continue to the end of the century. Britains population is predicted to reach 71 million within 25 years, 78 million within 50 years and 85 million by 2081 (The Guardian, 28/11/07). This 39.6% growth (from 59,834,300 in 2004) represents an opportunity for steady market growth in UK in the next 78 years. The hotel industry is likely to benefit substantially from this if the modus vivendi people have grown to enjoy in the last 20 years continue to be the norm.SWOTStrengthUK is seen as a major tourist destination and has in place a sizeable promotional and support sy stem for tourists such as VisitBritain.The UK market incorporates a number of internationally well-known hotel brands and chains.Short term leisure breaks have risen due to high disposable income over the last decade.The development of the budget hotel sector opened the hotel market to a wider range of clients.The Internet has facilitated easier choice and booking of facilities.WeaknessesThe industrys performance is highly dependable on the performance of the wider economy.The market seems to be over supplied in term of room numbers and this seems to keep room occupancy levels rather low at 60% average.Budget and upscale hotels seems to be putting the midmarket establishments under pressure.Continuing investment is necessary to maintain properties at a high standard.OpportunitiesA number of international sports event planned to be staged in UK between now and 2019Western Balkans expected to join the European Union briefly which would allow for more tourists from that region visit B ritain.Forecasted growth of inbound visits till 2014Steady population growth well into the century which would boost contend for travel and tourism and consequently Hotel facilities.ThreatsSome EU economies suffering from high deficits may be forced to freeze or lower wage all together in their public sectors. This could impact the numbers of overseas visits to UK which would adversely affect the turn over and consequently profits in the hotel industryIt may get harder to raise expansion not bad(p) due to falling property values.High unemployment rates in UK could mean that people may not be able to afford holidays.CONCLUSION/ tributeThe success of the industry is dependable on a lot of outside(a) factors and this was most clearly evident during the last economic downturn. However, in todays world globalisation plays an important role both in leisure and commerce. Therefore, hotel industry which is now well established will be a sector that would commend high demand for its serv ices in the future. History shows that hotel industry has bounced back in the past after suffering similar setbacks. This will certainly be the case this time round with the first signs of recovery already in sight. At glance it appears that the industry has learned from previous downturns responding to it by adjusting prices and offers to look more attractive.Seeing that the largest share of revenue comes from internal visits and many EU economies risking Bankruptcy, it would be wise to try and encourage more British people spend their vacations in the UK. In the meantime the coming decade with its sports events to be held here presents a great opportunity for the industry. Therefore, companies should take advantage of this by planning ahead so they would have sufficient bed/room space to meet the demand. Although trading at the second gear is rather low in comparison to pre-recession time and raising capital for further development has become harder. It is worth remembering that hotel projects take a relatively long time to materialise and now may be the time to start thinking for the future.As the economy recovers the hoteliers should also seek to build occupancy back, perhaps through further competitive price and promotional deals with the aim to reinstate RevPar growth.APPENDICIES AND TABLESTable 1.1. Overseas residents visits to the UK and the outlay in the UK (Million, million and ) 2004-09200420052006200720082008 Q12009 Q1Number of overseas visitors (million)27.83032.732.831.97.26.2Expenditure (m)13.04714.24816.00215.96016.3233.1293.128Average expenditure per visit ()469475489487512435505UK residents Expenditure (m)21,23821,107Q1- first qarter Seasonally adjustedNote expenditure figures refer to total spending by visitors not solely accommodation/hotel costs inauguration. International Passenger survey (MQ6, Quarter 1 2009) National StatisticsTable 1.2 EMPLOYMENT IN THE UK HOSPITALITY INDUSTRY 2004-20072004*2005*20062007Contract nourishment servic eproviders179,600178,300182,600181,600Hotels247,100238,400238,500245,000Pubs, bars and nightclubs368,400333,900297,700319,600Restaurants518,700514,700499,700526,700Hospitality services402,100379,900390,300417,400TOTAL WORKFORCE1,917,3001,843,0001,866,3001,960,700Source Labour Force Survey www.caterersearch.comTable 1.3 UK resident population estimates 2004-0820042005200620072008Population (000)59,84660,23860,58760,97561,412% change year on year0.70.60.60.7Source Monthly subscribe of Statistics, August 2009, statistics.gov.ukTable1.4 UK GDP at Current and Annual Chain-Link Prices (m), 2004-0820042005200620072008Current Prices1,202,9561,254,0581,325,7951,398,8821,446,113% change4.25.75.53.4Annual Chain-Link1,227,3871,254,0581,289,8331,322,8421,332,652% change2.22.92.60.7Source Economic and Labour review, August 09, statistics.gov.ukTable 1.5. UK rate of inflation (%) 2004-200820042005200620072008Inflation (%)3.02.83.24.34.0Change year on year-0.20.41.1-0.3Source Monthly Digest of Sta tistics August 2009, National Statistics websiteTable 1.6 affinity of nights spent and expenditure on hotels, motels or guest cans and other accommodation in the UK by UK and Overseas residents (%) 2007 2008Nights (%)Expenditure (%)2007200820072008UK ResidentsHotel, motel or guest signaling23234648Other accommodation77775452Overseas residentsHotel, motel or guest house23225050Other accommodation77785050Source UK Tourism survey 2007 and 2008, VisitBritain/International Passenger survey 2007 and 2008, National Statistics.Table 1.7 Golden decade of sports upshotSportYearLocationRyder CupGolf2010WalesOlympic Games various(a)2012LondonCommonwealth GamesVarious2014Glasgowrugby football World CupRugby2015EnglandWorld CupFootball2018UK play World CupCricket2019EnglandTable 1.8 Major Players in UK Hotel IndustryCompanyRevenue per year (m)Accor UK Business Leisure Hotels Ltd198.3De Vere Hotels Leisure Ltd248.2Guoman Hotels Ltd220.4Hilton International Hotels (UK) Ltd58.10InterContinenta l Hotels Group PLC1,850.00Macdonald Hotels Ltd135.4Marriott Hotels Ltd149.5Millennium Copthorne Hotels PLC702.9Premier Inn Hotels Ltd159.5Travelodge Hotels Ltd287Source KeyNoteAppendix 1 The saving in three recessions (bbc.co.uk)Appendix 2 Oil price rise 2000-07 (bbc.co.uk)Appendix 3 Employment (statistics.gov.uk)Appendix 4 UK Hotel Market Forecast.Appendix 5 Number of establishments