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The DIY Hotelier: Hotels in the Digital Age

23rd May 2017 Print

The hospitality industry is bigger than you think and contributes towards a large proportion of Britain’s overall GDP – whilst employing a significant number of workers too. Overall, the total gross value added contribution to GDP was estimated to be around £143 billion in 2014, which is 10% of the UK’s GDP. As well as procuring an indirect employment figure of 775,000 people while directly employing 4.6 million people, for every £1 million the hospitality industry directly contributes, £1.5 million is created and absorbed by other parts of the UK economy. 

Within hospitality and tourism, the hotel industry sits comfortably between the two and makes GDP contributions to both sub-sectors within the UK. In the years between 2014 – 16, hotels (excluding the London area) experienced revenue per available room growth of 10.4% in 2014, which was forecasted to increase by 6.3% in 2015 and 4.2% in 2016. Year on year then, it is evident that the hotel industry is experiencing steady growth. 

However, the emergence of smart technologies and their interaction with the hotel and B&B market has resulted in future growth prospects becoming less apparent. With the rise of apps such as Airbnb and Hostelworld becoming players in the market, this is compromising the traditional hotel space’s ability to compete competitively in the market. This is because people who have a vacant space to rent for the night are often appealing to younger consumers who are more inclined to pay for ‘shared space’ accommodation at a cheaper price.

Together with Shortridge, who specialise in hotel linen hire, we have looked to establish how this emerging DIY digital market is challenging the way we use hotel spaces and how smart technologies can help benefit the hotel industry in the future:

The shared space: popular for business

Through emerging breakthroughs in interconnectivity, technology and smart apps, rising urbanisation has led to consumers opting for ‘shared spaces’ rather than traditional hotel brands. Now that users can simply log onto an app and then view many different properties in a convenient location, the idea of a stand-alone hotel becomes less appealing when positioned on a digital platform. 

Research conducted by BDRC Continental has suggested that apps like Airbnb had outperformed hotel brands within a similar awareness scope to Airbnb. Therefore, it is clear that hotel brands who are sticking to tried and tested methods of brand awareness aren’t having the same appeal in a technologically driven market. 

The DIY space

It is estimated that 9% of tourists and travellers in the UK have rented a private space within someone’s home. Within Europe, this is lower than other countries, as France accommodated 11% of travellers in their homes and Germany accommodated 13% in their abodes. Within the European leisure market, it is clear this is an emerging trend and it is only expected to rise as millennials choose a cheaper alternative featured on a digital platform as opposed to more traditional hotels.

Within London alone, over 40 million guests have stayed in a shared space property posted onto an app, and there are 31,000 listings available throughout the capital at the time of writing. This is, however, still lower than the amount of hotel rooms available in the capital – figured in 2015 at 138,769. 

With low-cost hotel accommodation set to increase by 29% though, perhaps this is the way the hotel industry is fighting back against app-based forms of sourcing accommodation. If hotel brands are to compete then, understanding that the app or digital platform is as important as the accommodation itself, is one way of fighting against the DIY hotelier revolution.