Budget Hotel Market Thrives During Recession
A recent announcement by the budget hotel chain Travelodge highlights that low cost accommodation business models are thriving, as thrifty consumers continue to seek out more and more ways to beat the credit crunch. The announcement by Travelodge will create 250 new jobs and involve opening 10 more hotels in the UK next year. The 2010 investment of £47 million will include sites at London, Manchester, Ipswich, Edinburgh and Llanelli. Travelodge’s Managing Director for Development, Paul Harvey, said: “With 60 exchanges announced in 2009, we have now signed more hotels this year than ever before. Whilst the property market is still challenging we have been able to add some fantastic sites to our estate.”
Most of the 250 new jobs will come from Job centre plus who will work together to create 857 new rooms. The new hotels will include two major hotels in Edinburgh with a 93 room hotel at Waterloo Place and a 43 room hotel located in Rose Street. Despite difficult commercial property conditions investments represent a long-term commitment to increasing room availability. The target market is both for business travellers and tourist holiday makers staying in major UK cities and seaside resorts.
The addition of 10 new sites by Dubai International Capital (the owners of Travelodge), will bring the total number of new sites in 2009 up to 60. The rapid growth in development of a low-cost business model in middle of a recession reflects consumers desire to save money while enjoying more family holidays in the UK. As the cost of air travel and holidays abroad continues to rise (due to surging oil prices and a fall in the relative value of the pound), business travellers and holidaymakers alike are seeking better deals here in the UK. They are also prepared to accept last-minute offers by becoming more trusting of online deals that use flexible pricing models and up-to-the-minute availability checks. Bob Atkinson, a travel expert at travelsupermarket.com, said there had been an increase in UK short breaks.’We have seen lots of people looking at camping and cottages, not just B&Bs and hotels. This year we have seen the rise of the Northumbrian coast, which had been an undiscovered gem, as well as the Western Isles and the Isles of Scilly.
Ironically the collapse in business confidence since the credit crunch it is prompting more and more companies to send their employees to lower cost overnight accommodation. Prior to the credit crunch corporate organisations were comfortable authorising their staff to stay in four star hotels allowable under their employee expense scheme. The focus of cutting costs by line managers has changed attitudes and seen business travellers using budget hotel operators such as travel lodge as their preferred supplier.
The Travelodge group is now 24 years old and manages 385 hotels with 27,000 rooms. it plans to increase this to 1000 hotels and 70,000 rooms by the year 2020. Six and a half million people stayed with Travelodge last year and 87% of reservations are currently made online at travelodge.co.uk, where room prices start from £19 per night. The chain employs 5,500 staff and in January 2009, Travelodge launched the UK Hotel industry’s first retail-style price checking programme where it compares prices of all of the major UK hotel chains to ensure that it remains that number one on price. Travelodge also offers double, disabled access or family rooms (catering for two adults and two children under the age of 16). All rooms are en-suite, with luxury king size beds, TV and free tea and coffee making facilities.