Budget brands will wipe out traditional three-star sector

The UK's budget hotels are destroying their traditional three-star rivals, according to the boss of one chain.

"The tired mid-market hotel with its traditional physical structure and cost-draining facilities will find it difficult to compete," Stuart Harrison, managing director of brands and franchising at Premier Hotels, claimed last week.

Facilities such as "leisure, banqueting, two restaurants and large public areas" were not required by the individual business traveller, yet these overheads pushed up the price of a room, Harrison said.

The first budget hotel in the UK opened just 14 years ago, he pointed out. Today there are 560 hotels in the sector with 27,000 rooms and by 2003 there will be 1,150 with 70,000 bedrooms.

Harrison said the market had room to grow to the same level as in the USA, where budget properties account for more than 20% of branded hotel rooms, and 70% of all hotels are part of a branded chain.

"The potential to grow against an inconsistent unbranded market is enormous," he claimed.

Harrison was speaking at a lunch in London organised by industry networking club Arena.

Premier Hotels runs 14 Holiday Inn Express hotels. It also holds the master franchise for US budget brands Howard Johnson and Days Inn in nine European countries, including the UK.

by David Shrimpton