UK budget hotel sector to double in size in two decades

The UK budget hotel sector is set to more than double in size in the next 20 years and will account for more than a quarter of the overall hotel market by 2027, according to wide-ranging new research.

In what is thought to be one of the most comprehensive reports ever carried out on the UK hotel industry, consultant Melvin Gold records the current market share of the budget sector at 12%.

He projects that over the next two decades it will more than double to represent 26.8% by 2027.

The survey suggests that over the next five years the budget sector will experience its biggest growth period, at 10% per annum, a rate 10 times that of the overall hotel market. Growth after this initial high will level out to 5% per annum for the following five years and 2.5% per year during the decade after that.

Grant Hearn, chief executive of Travelodge, which commissioned the survey, said it confirmed the hotel group's belief that the budget sector is the "engine room" of the hotel industry.

"If you look at the demographics of the UK, you have a pyramid in terms of wealth attribution, but the hotels sector represents more of an inverted pyramid," he said. "This isn't sustainable in the long term, and this is why the budget sector will continue to increase."

The survey also suggested that the traditional UK hotel sector will undergo dramatic change over the next 20 years as an increased consumer demand for low-cost accommodation will see substandard independent hotels converted into residential or other commercial properties.

Gold said the report is the most comprehensive view of UK hotel supply currently available, as attempts to obtain accurate data from the Government proved fruitless.

"The Government's sums for the hotel industry did not tally with individual local government numbers, and the whole data-capture infrastructure proved to be bankrupt," he said.

"How anyone can make informed economic decisions regarding tourism in this country is a mystery to me."

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By Kerstin Kühn

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