Business is booming in the hospitality industry – it seems to be bigger than ever and currently contributing 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.
But what about the hotel industry? Sitting comfortably between hospitality and tourism, the industry contributes GDP 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.
Despite this steady growth, it appears there could be a bump in the road ahead for traditional hotel brands. 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, the market is now saturated with a new alternative to accommodation.
Together with Shortridge, who specialise in work uniforms and hotel linen, 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 rise of the spared space
The emergence of interconnectivity, technology and smart apps, have led consumers to choose an alternative, cheaper accommodation. Having the apps readily available on your mobile devices, uses a platform that people are familiar with and enjoy engaging with – especially the younger generation who have grown up with the technology. The idea of a stand-alone hotel becomes less appealing when positioned on a digital platform.
It hasn’t taken long for these digital alternatives to outperform the traditional hotel brands. 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 hotelier
With the rise of apps such as Airbnb and the likes, home owner’s attitudes have changed when it comes to renting a room out to travellers. It has opened more opportunities for the home owner to make some extra money, and as for the traveller, it is again, a cheaper alternative to hotel accommodation. It is now 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.
In London alone, there are over 31,000 listings available for shared space accommodation and over 40 million guests have utilised these spaces. However, this doesn’t even make a small dint in the amount of hotel rooms that are available: 2015 at 138,769 rooms.
As low-cost hotel accommodation is set to increase by 29%, maybe it is time for hotel brands to start fighting back and showing guests that they are as good as their cheaper alternatives. 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.