1. A Strategic Analytical Review of The Hotel Sector In The U.K. By: Kirsty Ireland Luisa Tapner Chris Crook Andy Stock Claire Gulliver

2. Contents Introduction Key Markets and Trends D.E.E.P.L.I.S.T Factors (Macro-Economy) Porters 5 Forces Models B.C.G Matrix Sector Life Cycle Stakeholder Map S.W.O.T (The sector as a whole) S.W.O.T (Recommended area within the sector) Predicting the future of the sector

3. A definition of the hotel sector The hotel sector is a range of commercially rated businesses which provide accommodation, breakfast and at least one other main meal service to residents and non-residents. Additional facilities sometimes include room service, a gym, a licensed bar, and a swimming pool. Due to the diversity and complexity of the hotel sector, we have chosen to look at the U.K and divide the sector using the AA star classification system (1*- 5*) Introduction

4. Key Markets Corporate Leisure Conference Weddings Private Parties Masonic Lodges All of which exist: Nationally and Internationally On a budget to deluxe level

5. Trends – Pre September 11 th The U.K’s economy has shown steady growth since 1995. Increase in the value of the pound meant the U.K was seen as an expensive destination. Higher disposable income and cheaper flights/destinations means that much of the U.K population is holidaying abroad. The number of leisure guests visiting the U.K (Long stay or short break) are declining. High proportion of investment in the 3 and 4 Star markets. Corporate clients remain the hotels’ main revenue earner. Conference business is slowing down due to advances in technology. Rise in national and international hotel chains Lack of adequately trained/qualified staff (Skills shortages)

6. Trends – Post September 11 th Fewer people are travelling (staying closer to home) Consumer confidence is getting weaker Job cuts have already been made by many companies Declining overall investment Manufacturing is in recession whilst services are holding up Only a 1 in 3 chance of U.K going into full recession Airlines have slashed routes and staffing Major decline in RevPAR in most large cities

7. D.E.E.P.L.I.S.T Demographic U.K population is stable but an ageing “grey” population is emerging.Economic Possible Recession Foot and Mouth, B.S.E Terrorism and War EuroEcological Foot and Mouth Increased Environmental AwarenessPolitical War Terrorism

8. D.E.E.P.L.I.S.T Cont. Legal Disability Discrimination Act Monopoly and Mergers Commission Minimum Wage EuroInformational Increased availability of worldwide information eg World Wide Web Sociological Ethnic Issues Personal Disposable IncomeTechnological Internet Awareness Transport Infrastructure Key cards, in-house movies

9. Porter’s 5 Forces 1 Star Hotels Buyers Cost Orientate d “Cheapes t Option” Supplie r Very Little Supplie r Power Threat House Conversions Property Acquisitions SubstitutesGuest HousesInnsCaravansTents

10. 2/3 Star Hotels Buyers Selectiveness Location Incentives for business markets Supplie r Some Supplie r Power Threats Foreign Chains Uprating Substitutes Other hotels Luxury Static Caravans

11. 4/5 Star Hotels Buyers Affluent Higher PDI Loss of Busines s trade Supplier Luxury items Brand awarenes s Quality Food Supplier Threats Entry of “Flagship” Hotels Uprated Hotels Luxury Chains Substitutes Other luxury hotels Apartments Celebrity Venues Timeshare

12. BCG Matrix LowHigh Low Market Share Growth 3* 4* 1* 5* 2* ???

13. Sector Life Cycle RevPAR 4*3* 5* 2* 1* N.B – Only a static view of which phase each segment is currently in DeclineMaturityIntroductionGrowth

14. Stakeholder Map For Investment In The 2 Star Hotel Sector Level of Interest Power LowHigh Low High Minimal EffortKeep Informed Keep SatisfiedKey Players Casual Staff Suppliers Community Other Operations Independants Long Term Staff Government Customers Chairman Shareholders

15. Strengths Weaknesses ThreatsOpportunities S.W.O.T For The Hotel Industry In General Linked closely to the economy There will always be a demand Plentiful staff Lower PDI in short term Linked closely to the economy Lack of trained & qualified staff Volatility of demand 6-12 months = good time to invest Declining airline usage = Recapture U.K short break and longer holiday markets. European markets instead of America Technological Advances. Operationally mature but investment is only really just starting to emerge. Foot and Mouth, BSE Terrorism and war High levels of competition (Nat/Int.) Established chain competition Travel to hot countries within a few hrs Increased insurance costs Cost of redundancies Main cities under threat due to terrorism

16. S.W.O.T For The 2 Star Hotel Sector Weaknesses Strengths ThreatsOpportunities Increased budget airline activity = budget hotels used by customers/staff High bankruptcy rates during recession may mean cheap properties available. Franchises eg Choice Hotels, Express Displacement of business from B&B’s and 3* hotels High revpar through refugees Possible bad image due to cheapness Established chain competition Same Nat/Int. threats as previous slide Budget sector is resilient Trained and qualified staff not needed Less volatility due to constantly high occupancy rates

17. Predicting The Future of The Sector Hot sectors will be the budget/economy resort hotels. (Indicated Growth of 52% over next 5 yrs in budget hotels) Major cities will remain exposed due to terrorism/Int. demand. However this may be shorter lived than first imagined. In this case the hotels in major cities will be the first to bounce back after recession RevPAR decline should start to slow down Potential for refurbishment programmes Recession predicted to last for between 6 -12 months Property prices will fall over the coming year posing an excellent opportunity to invest (Especially in strong cities)

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