The rapid growth and gains in market share of the budget hotel sector can be explained by thefact that budget hotels give the customer what he/she really wants and needs and nothing more, thussaving on expenses, which allows the operator to charge a reasonable, competitive price.

The budget hotels performance has been under pressure over the last two years. In spite ofrising disposable income and consumer expenditure, the average rates charged by budget hoteloperators declined in 2004 for all types of location.

The penetration rate of budget hotels in the overall UK hotel market is set to rise over the nextfew years. Expansion is encouraged by the fact that budget hotels generally provide higher returnsthan conventional full-service hotels. However, the availability of suitable sites is slowing downgrowth in capacity, particularly near London, where budget hotels must compete with residentialdevelopment projects.

• Introduction and Abbreviations
• Definition
• Consumer research
• ACORN
• Abbreviations
• Summary of Key Report Findings
• The budget hotel market is worth ｣914 million...
• ...but performance is under pressure
• Premier Travel Inn leads the market
• The core clientele is men aged 25-44
• Should breakfast be included?
• An industry dilemma
• Market Factors
• Economic factors
  • Figure 1: Trends in GDP personaldisposable income and consumer expenditure, at constant prices,2000-10
• Demographic factors
  • Figure 2: Forecast adult populationtrends, by socio-economic group, 2000-10
  • Figure 3: Forecast adult populationtrends, by lifestage group, 2000-10
• The domestic holiday market
  • Figure 4: Domestic holidays andexpenditure by UK residents, 2000-05
• Business travellers
  • Figure 5: All business trips taken in theUK, 2000-04
• Inbound visitors
  • Figure 6: Inbound visitors to the UK byreason for trip, 2000-04
• The UK hotel market
  • Figure 7: Key UK hotel market statistics,2000-05
• Increasing Internet usage and other technologies
  • Figure 8: Internet penetration in the UK,2000-05
• Increase in motorway travel
  • Figure 9: Road traffic statistics,1993-2004
• Market Size, Segmentation and Trends
• Value of branded budget hotels
  • Figure 10: The branded budget hotelmarket, by value, 2000-04
• Number of branded budget hotels
  • Figure 11: The branded budget hotelmarket, by number of units, 2000-05
• Number of budget hotel rooms
  • Figure 12: Size of the branded budgethotel market, by number of bedrooms, 2000-04
• Average room prices
  • Figure 13: Average net room prices inbudget hotels, 2002-04*
• Average room occupancy
  • Figure 14: Average room occupancy inbudget hotels, 2002-03*
• Average daily rate
  • Figure 15: Average daily rate in budgethotels, 2002-03*
• RevPAR
  • Figure 16: Average RevPAR in budgethotels, 2002-03*
• Travel motivation
  • Figure 17: Travel motivation for UK budgethotels, 2001-04
• The Supply Structure
  • Figure 18: UK budget hotel operators, 2004
  • Figure 19: Market share by number ofbudget hotels, 2004
• Premier Travel Inn (Whitbread plc)
• Travelodge (Permira)
• Express by Holiday Inn (InterContinental Hotel Group (IHG))
• Days Inn (Cendant Corporation)
• Comfort Inn & Sleep Inn (CHE Hotels Group)
• Innkeepers Lodge (Mitchells & Butlers plc)
• Campanile, Kyriad (Louvre Hotels)
• The Consumer
• Budget hotels visited
  • Figure 20: Budget hotel chains evervisited, May 2005
• Visitors of budget hotels by demographic analysis
  • Figure 21: Visitors to budget hotels, bygender, age and socio-demographic group, May 2005
  • Figure 22: Visitors to budget hotels, byregion and ACORN category, May 2005
  • Figure 23: Visitors to budget hotels, bydetailed lifestage groups, May 2005
  • Figure 24: Visitors to budget hotels, bymedia, supermarket usage and commercial TV viewing, May2005
• Consumer Attitudes and Targeting Opportunities
• Enticing factors to stay in budget hotels
  • Figure 25: Enticing factors for visitingbudget hotels in the future, May 2005
• Enticing factors by budget hotel visitors vs non-visitors
  • Figure 26: Enticing factors for visitingbudget hotels in the future, budget hotel visitorsversus non-visitors,May 2005
• Main single enticing factor chosen
  • Figure 27: Consumer target groupsbudget hotels visited, May 2005
• Attitudes towards budget hotels
  • Figure 28: Attitudes towards budgethotels, May 2005
• Consumer target groups for budget hotels
  • Figure 29: Consumer target groups forbudget hotels
• Budget-boarders (20% of respondents or 9.8 million adults)
• Stop-overs (23% of respondents or 11.3 million adults)
• Unconcerned (57% of the sample or 28.0 million adults)
• Consumer target groups for budget hotels by demographics
  • Figure 30: Consumer target groups forbudget hotels, by gender, age and socio-economic groups,May 2005
  • Figure 31: Consumer target groups forbudget hotels, by region and ACORN category, May 2005
  • Figure 32: Consumer target groups forbudget hotels, by detailed lifestage groups, May 2005
  • Figure 33: Consumer target groups forbudget hotels, by media, supermarket usage and commercialTV viewing,May 2005
• Consumer target groups and budget hotels visited in the past
  • Figure 34: Consumer target groups andbudget hotels visited in the past, May 2005
• Consumer target groups and enticing factors to stay in budget hotels
  • Figure 35: Consumer target groups andenticing factors to stay in budget hotels, May 2005
• The Future
• The penetration rate of budget hotels in the UK should catch up withthat in France and the US
• UK budget hotel capacity should rise by 50% to reach 100,000 roomsby 2010
• However the availability of suitable sites may impede expansion
• Micro or capsule hotels allow for cost-effective development indesirable, expensive locations
• Budget hotels need to step up efforts to attract leisure travellers
• Forecast
  • Figure 52: Forecast of the UK brandedbudget hotel market, by value, 2005-10
• Market growth is encouraging
  • Figure 53: Forecast of the UK brandedbudget hotel market, by volume, 2005-10
• Number of budget hotels will slow down...
• ...however number of hotel rooms will increase
• Factors used in the forecast