In collaboration with Shortridge, who are specialists in hotel linen hire, we take a look at how the digital accommodation market is challenging the way that we book hotels.
In 2014, it was estimated that the total gross value-added contribution of the hospitality industry to GDP was around £143 billion – 10% of the UK’s GDP. The industry is bigger than you imagine and whilst contributing towards a large proportion of GDP, it employs a significant number of workers too. 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.
Between hospitality and tourism, the hotel industry sits comfortably and makes GDP contributions to both sub-sectors of 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.
However, the future of the hotel industry is under threat by the emergence of smart technologies and their interaction with the market. With the rise of apps such as Airbnb and Hostelworld becoming players in the market, this is compromising the traditional hotel space’s ability to compete competitively in the market. This is because people who have a vacant space to rent for the night are often appealing to younger consumers who are more inclined to pay for ‘shared space’ accommodation at a cheaper price.
There are many factors that are leading to consumers opting for ‘shared spaces’ over their own private accommodation. Interconnectivity, technology and smart app and rising urbanisation are examples of a few. Now that users can simply log onto an app and then view many different properties in a convenient location, the idea of a stand-alone hotel becomes less appealing when positioned on a digital platform.
BDRC Continental released research that suggested apps like Airbnb had outperformed hotel brands within a similar awareness scope. 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.
Home stays – an emerging trend
When it comes to renting a private space within someone’s home, an estimated 9% of tourists and travellers in the UK have done so. 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.
It was discovered that over 40 million guests within London have stayed in a shared space property that they found on an app – there are over 30,000 listings available throughout the capital currently. This is, however, still lower than the amount of hotel rooms available in the capital – figured in 2015 at 138,769.
Low-cost hotel accommodation is projected to increase by 29% in the near future – perhaps this is the way that the hotel industry is fighting back. 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.