As reported in November, budgets hotels are big business at the moment with over half of the hotels in the UK’s development pipeline budget properties, so the trend is set to continue for a long while yet.
Guests are attracted to their cheap prices and their basic approach to hospitality.
Russell Kett, chairman of HVS, said that guests appreciate the emphasis on having a decent bed, shower, free Wi-Fi and a television.
“While the economy is now much stronger, cheaper hotel stays have become the new norm and guests are reluctant to go back to spending more. Budget hotels are popular with operators as they are cheaper to build and run. With the check-in and check-out function becoming increasingly automated, the cost of running a budget property is relatively low,” he said.
There are even plans for a ‘super-budget’ hotel in the same pipeline, with EasyHotel looking to expand into the market after making changes to its management and operations structure to increase the pace that it opens hotels and establish itself as a leader in the sector.
Serviced apartments really made their mark in the UK in 2015 with the arrival of new brands such as Union Hanover’s Urban Villa and the expansion of existing ones. This year the sector is expected to increase in popularity, particularly with the business traveller.
According to Mark Harris of the Travel Intelligence Network, there has been an increase of 86 per cent of UK companies using serviced apartments instead of hotels in the last year.
He says that London’s serviced apartment sector is attracting a number of new investors and a growing interest from the bigger hotel investment and construction businesses.
“The serviced apartment industry is on the cusp of big things, with an exciting future ahead,” he said.
Furthermore, it isn’t just London making waves in the sector, with some of Britain’s smaller cities also getting involved.
John Wagner of Cycas Hospitality said that he is expecting 2016 to be the ‘breakthrough year’ for the fledgling industry.
“It’s fantastic to see openings in 2016 in secondary cities like York and Reading, as well as continuing growth in primary cities such as London and Birmingham. I am convinced that, above all, 2016 presents a clear coming of age for the UK Serviced Apartment sector,” he said.
Consolidation and merging of brands
2016 will be the first full-year where the industry will start to see the effects and feel the ripples of the Marriot Starwood merger, and more consolidation is expected. Indeed, Accor already snuck in at the end of 2015 with its acquisition of luxury brands Fairmont, Raffles and Swissotel.
“We will now start to see further merger activity as other hotel groups seek to match the titanic organisation that Marriott and Starwood have created. Consolidation among the major brand companies has been talked about for a number of years and boards are biting the bullet on the need to merge to achieve further growth in a cost efficient manner,” said Mark Wynne Smith, global chief executive of JLL’s Hotels & Hospitality Group.
Future mergers may also more hotel portfolios hit the market. In the case of Marriot Starwood, Wouter Geerts, travel analyst at Euromonitor International, said that there is a ‘possibility’ that Marriot might sell off some of Starwood’s poor performing brands.
“"Sheraton, Starwood’s flagship brand has been performing poorly in recent years, but whether Marriott will put Sheraton up for sale, or rather use its expertise and capital to make it profitable again, is to be seen," he said.
According to Geerts, the biggest impact on customers will be those who have loyalty schemes with brands.
"The major impact of this acquisition for travellers will be around the loyalty schemes of both companies. It has to be seen whether Starwood Preferred Guests will be swallowed up by Marriott Rewards/Hyatt Gold Passport," he added.
Greater guest spend
Hoteliers can prepare themselves for a bumper 2016 if the latest TripAdvisor TripBarometer study is anything to go by.
It predicts that one third of travelers will increase their budgets this year, but be warned: 63 per cent of people will not stay in a hotel that lacks air conditioning and 46 per cent of people will not stay somewhere that doesn’t offer free Wi-Fi.
Helena Egan, director, global industry relations, TripAdvisor, said: “Value is key for global travellers in 2016, as they look to get the most out of their trips. While a third plan to increase their travel budgets for next year, the majority of global travellers expect essential amenities, such as Wi-Fi, to be included in the price of their hotel and more than half say special offers can play a big part in their choice of destination.”
Tech takes control
With the National Living Wage set to make life just that little bit more difficult for hoteliers, hotel industry consultant Melvin Gold says that now is the time to ‘give a boost’ to technology.
“It would be nice to see droids running around with room service orders or automated self-propelled vacuum cleaners but perhaps I’m just being influenced by the latest Star Wars offering. But seriously, there are reasons why 2016 should give a boost to technology especially the introduction of the National Living Wage in April and the promise that it will increase over the next five years,” he said.
“Secondly there is the ongoing skill shortage so why not use the best people to support and speak to guests while the technology does the routine stuff? And thirdly, the big brands are growing bigger and that is likely to enhance their investment in research and development to enable them to stay ahead of the competition and strengthen their offer to hotel owners and asset managers.”
For bigger brands, Gold says, introducing technology as soon as possible will give them a head-start on their competition.
“That doesn’t necessarily help the independent hotelier but the more entrepreneurial will embrace technology when they can see the long term payback – easier to envisage when wages are rising – and the competitive advantage. Hopefully we will see some of that progress in 2016.”
‘Empowerment’ is the buzzword of 2016 in the eyes of Peter Torbet, director of product innovation for Acentic with hotel guests expecting to be given the tools to create their own entertainment using their Wi-Fi enabled mobile devices, which are ‘an integral part’ of their daily routines.
“In-room entertainment is no longer solely provided by the hotel. Instead guests want to connect with their own data, update their own status, log into their own Netflix or track their fitness on an Apple Watch,” he said.
“Hotels are now at the hub of the guest communications – empowering them to stay connected to their own world and lifestyle. The quid pro quo is that guests also connect with the hotel and their facilities and special offers. This enables the hotel to learn far more about customer behaviour than ever before.”
This ‘empowerment’ spreads into ‘personalisation’ with technology playing an important part in the process. Torbet references brands such as Hub by Premier Inn who allow guests to control every aspect of their stay through the use of their mobile phones.
“[These brands] enable guests to use their devices to control room temperatures, adjust room lighting, and change the channels on their televisions.
“If they decide to book again with the same hotel, everything in their room is the way it was during their previous stay. This sort of personalisation is great for increasing guest loyalty.
“Of course the backbone to all of this is a reliable Wi-Fi connection which is now the norm and poor Wi-Fi – the exception. “
Technology will also become a more integral part of the check-in process, providing more flexibility to guests. According to Fox PR, front-of-house systems will play a key role in welcoming guests and ensuring that their stay is as easy and care-free as it should be.
Flexible check-in and check-out times will be implemented to better cater to the modern hotel guest. If the system is implemented, hotels will ask guests when they would like to check-in and when they would like to check-out and check-in, putting them in control and potentially saving them hours of waiting for their room to be ready.
‘Swipe for Service’ could also become a popular concept among mainstream hotels. A mobile phone will be given to guests at check-in that will have one number on its system, that of a personal butler who will be available to help and serve 24-hours a day. The phone can be used anywhere the guests goes and with help just a phone call away they won’t have to worry about looking up numbers or data roaming charges.