A budget boom for the hotel market

While once a dream night in a hotel meant impressive views, Egyptian cotton sheets, designer interiors and luxury bathroom products, Brits today are going budget.

According to latest research from Mintel, the value of the UK budget hotel market* increased by 38% between 2002 and 2006, to reach £1 billion for the first time ever. This growth is three times that of the overall UK hotel market (worth £11.2 billion), which increased by just 12% over the same four year period. Today, the budget hotel market is worth £1.1 billion, with no less than 85,000 budget rooms to choose from in the UK alone.

"The Brits' desire for taking several short breaks a year, independent booking and paying for guaranteed basics has seen budget hotels surge in popularity," comments Richard Cope, senior travel analyst at Mintel.

"Boutique and lifestyle budget hotels such as The Big Sleep, the Hoxton Hotel and base2stay have raised the game by providing an affordable but luxurious alternative to their more traditional cousins. In the same vein, the new capsule hotels in prime locations by brands such as Yotel and nitenite offer high-spec, cutting edge design but in smaller living spaces. Both have also helped boost the budget hotel market," he adds.

For budget hotels, a further 38% growth is expected over the next five years, with the market set to hit the £1.5 billion mark by 2012. The run up to the Olympics is set to be a key factor driving this growth.

Low cost living

Like the low cost airlines, budget hotels have not created a new travelling class, they have simply maximised opportunities for wealthy holiday-loving ABs to travel more and opt to stay in hotels. Indeed, while as a nation around 54% of us have stayed in a budget hotel, this rises to some three in every four (76%) amongst these wealthier AB travellers.

"Brits bought into low cost airlines and now it is the turn of the budget hotel. 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?" comments Richard Cope.

* Budget hotels are purpose-built, branded accommodation units with a minimum of 50 rooms and standard low prices.