Research - 16/10/2018

Disruption and innovation in the hotel market

Hotel bedroom sizes in the UK are getting smaller, according to new LSH research, which reveals that compact sized hotel rooms will account for approximately 18% of all room openings in 2018, a record market share.

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LSH’s new report, Do Disturb: Disruption & Innovation in the Hotel Market, finds that the compact hotel room concept, which typically prioritises location, design quality and hi-tech features over room size, is gaining traction in major UK cities.  This trend comes as hotel brands seek to offer new experiences to visitors and differentiate themselves from their competitors.


The report states that more than 4,000 rooms were delivered in new compact hotels during 2017-18, while there are a further 5,000 compact hotel rooms in the development pipeline, indicating the growing significance of the sector.  Overall, there has been a 95% increase in the number of compact sized hotel delivered annually rooms since 2016 – a figure that underlines the relatively recent emergence of the compact format.


Commenting, Nick Boyd, LSH Operations Director Hotel and Leisure, said: “The hotel market is currently in a period of exciting change and we have seen a number of hotel groups turn conventional wisdom on its head and successfully operate hotels with compact sized bedrooms.  Not only do these cleverly designed rooms appeal to the younger end of the hotel customer base but they have enabled hoteliers to provide affordable bedrooms in high value locations.” 


“Hotel operators are exploring new ideas in order to set themselves apart from competing brands and alternative accommodation types, with innovative technologies and novel room formats being adopted to offer new experiences to hotel visitors.”


Brand diversity

The report highlights how compact room layouts are used by a wide range of hotel operators, including Premier Inn through its offshoot brand, hub by Premier Inn. This currently has 10 UK properties with typical rooms measuring 11.4 sq m, approximately 45% smaller than a standard Premier Inn room.


Other brands in the compact sector include “super budget” easyHotels and YotelAir, while more luxurious offerings include the Z Hotels brand, which incorporates high quality design and innovative technological features in rooms sized from just 8 sq m.  Point A, which entered the market last year, now has seven hotels in London and Glasgow, and has rooms typically in the 8 to 12 sq m range. Several international brands operating with small room footprints have also entered the UK market, including Germany’s Motel One and the Netherlands’ citizenM.


Underpinning the growth of the compact hotel segment is the recognition that some hotel users, particularly young people and business travellers, require little more than a comfortable, affordable and well-located room for the night. Compact hotels are primarily targeted at single travellers and couples on overnight or short stays, particularly in city centre locations.


Matthew Colbourne, Associate Director Commercial Research at LSH, commented: “The rise of the compact room demonstrates the hotel industry’s ability to adapt to changing demand and new challenges. We anticipate continued growth in this part of the market, as compact brands are rolled out across a growing number of UK cities. The compact sector will be one of the most innovative parts of the overall hotel market, as operators explore new ways to squeeze value-adding features into smaller room footprints.”


To download a copy of the report, please click here.

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