Budget hotels show resilience to credit crunch

19 August 2008 by
Budget hotels show resilience to credit crunch

Budget hotels are proving more resistant to the credit crunch than their full-service rivals with occupancy and revenue per available room growing more quickly at the lower end of the market, research has revealed.

The UK Chain Hotels Market review, based on analysis of more than 500 hotels by TRI Consulting, showed that occupancy for London budget hotel sector in the first six months of 2008 was 81.1%, compared with 80.5% for full-service hotels.

In the provinces, the budget hotel market's average occupancy was 71.5% compared to 69.4% for full-service.

The London budget sector experienced a 9.9% year on year revpar growth, while London's full service had 6.1%. The provincial budget market saw a 3.4% revpar growth while provincial full-service had just 0.9%.

Ben Walker, research manager at TRI Consulting, said the growth was impressive as there has been considerable year-on-year growth in room supply which would normally be expected to dilute average occupancy.

"The figures indicate that demand for budget accommodation is most definitely increasing and more than keeping pace with new room supply," he said. "It would appear to support Travelodge and Premier Inn's claims that they are attracting more business guests."

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By Gemma Sharkey

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