UK budget hotel market breaks £1b barrier

The UK budget hotel market broke the £1b barrier for the first time last year, new research has revealed. 

Analyst firm Mintel found the market grew 38% between 2002 and 2006, three times as much as the overall UK hotel market (worth £11.2b) which increased by only 12% over the same period. 

The survey follows an earlier study from TRI Consulting, which also suggested the budget hotel market topped the £1b mark for the first time in 2006. 

Mintel said that today, the budget hotel market is worth £1.1b, with a total of 85,000 rooms. It expects the sector to grow by a further 38% over the next five years, with the market set to hit the £1.5b mark by 2012.

Richard Cope, Mintel senior travel analyst, attributed the growth to the increase in popularity of short breaks, independent booking and paying for “guaranteed basics”. 

“Brits bought into low cost airlines and now it is the turn of the budget hotel,” he said.

“The phenomenal growth of low cost air travel has spawned a generation of cost conscious but frequent travellers, and the UK budget hotel market has benefited greatly. Why pay more for a hotel room when you only plan to sleep in it for seven or so hours?”

Cope added that boutique and lifestyle budget hotels have helped boost growth and provide affordable but luxurious alternatives to traditional hotels while capsule hotels in prime locations offer modern designs and smaller living spaces.

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By Kerstin Kühn

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