INDUSTRY ANALYSIS: A CASE STUDY OF THE UK HOTEL INDUSTRY
The hotel industry, (despite its importance to the UK economy) has not received the attention that it deserves from the central government at Downing Street. A report by the British Hospitality Association in 2010 showed that it has grown over the years to contribute 45 billion pounds to the UK economy. The hotel industry also employs about 3.64 million people both directly and indirectly making it the fifth largest industry in the UK in terms of labour force (British Hospitality Association, 2010). The hotel industry is regarded by Downing Street to be a segment of the leisure industry to which it is strongly related. It is pertinent to state here that users of hotel facilities can be categorized into mainly three groups: Leisure travellers (about 44%), Business travellers (about 45%) and Organizations (11%) like the London 2012 committee and perhaps London 2018 committee if a certain Octopus by the name of Paul is right.
INDUSTRY BOUNDARY AND STRUCTURE
The UK hotel industry for the purpose of this paper will follow the most commonly set boundaries which refer to the industry being inclusive of all hotels, motels and inns with or without restaurants, conference centres and other hospitality related facilities with operations in the UK. The structure of the hotel industry can be divided into two major groups: the hotel chains and the independent small hotels (Brooks and Weatherston, 2000; and Medlik and Ingram, 2003). Hotel establishments may also be categorized into: * Economy and Budget hotels like Travel lodge and Campanile * Mid-Market Hotels like Swallow and Garden Court
* Upper market hotels like Thistle and Hilton
The Hotel Value Chain Structure
This industry does not include campsites, trailers and parks, youth hostels and flats for short or long rent (in accordance with the Standard of Industry Classification 2007). It is pertinent to state that some hotel groups are international in terms of their operation like the Accor group and Hilton group. The major players in terms of market share based on a May, 2010 report by IBIS World are Accor, Hilton and Marriot groups respectively. Other major players are WhitBread, Intercontinental Group, Travel lodge, De Vere Group, Britannia, Thistle and Ramada Jarvis (mintel database, 2008). It is interesting to note that all these hotels fall under the hotel chain classification. Hotel chains are reputed to hold about 40% of entire market share while independent hotels together hold the rest but the hotel chains are ever increasing their foothold on the market due to obvious advantages in economies of scale.
Competitive Arenas of the Hotel Industry
Banks and Financial Institutions
Food and Beverage Suppliers
The diagram above shows the supply side and the demand side of the hotel industry. The supply side of the competitive arenas is to the left while the demand side is to the right.
IDENTIFYING THE KEY ISSUES OF THE UK HOTEL INDUSTRY
The Strengths and Weaknesses of the UK Hotel Industry
Source: adapted from Mintel database report, 2008.
The diagram above clearly summarizes the key issues in the UK hotel industry. However for the purpose of this report, three key issues shall be identified and the likely response or current response by hotels shall be discussed in greater detail.
The UK economy
The UK economy just like most western economies suffered a recession which started from approximately 2008, although current economic data released by the office for national statistics showed an increase of 0.8% in GDP in the last term.
However, despite latest signs indicating a recovery of the...
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