Consolidation speculation in the budget hotel market
Sunday, March 16, 2008
Print
Email
Tweet This!Save to Favorites
Recommend on Google+
The budget hotel market in the UK has enjoyed stronger than average growth in the last decade. A small number of operators have steadily built their market share, and now there is media speculation that the two largest competitors will soon merge.
The Sunday Times speculates today that leisure group Whitbread has been holding secret talks to merge its Premier Inn budget-hotel business with the rival Travelodge chain in a move that would create a £3 billion hospitality giant.
Whitbread is a publicly quoted company, whereas Travelodge is currently owned by Dubai Investment Capital, a so-called sovereign fund (i.e. funds controlled by government that invests in overseas assets).
The budget-hotel sector is one of the bright spots in the leisure industry. It is growing three times faster than the rest of the hotel sector, according to Mintel, the market-research firm.
My guess would be that the budget sector will continue to out-perform the rest of the UK hotel industry, particularly as the economic downturn starts to bite (consumers will be increasingly looking for better value).
The deal is purely speculation, of course. Although in such matters there is rarely smoke without fire.
It is possible the deal might be referred to the Competition Commission, although even with a combined inventory of over 55,000 rooms, the enlarged business would still have a relatively low market share.
The UK hotel market is not heavily concentrated and is highly fragmented. However, it looks like there might soon be a dominant player in the star segment.
blog comments powered by Disqus
M&A: 8 ways to make a success of a takeover [12 Feb 2012]
Q&A: What are synergies in takeovers and mergers? [12 Feb 2012]
Insights on takeovers and mergers from KPMG’s 2011 global survey [12 Feb 2012]
Takeovers - the search for cost synergies [7 Feb 2012]
Takeovers in the UK - the long-term trend [5 Feb 2012]
Mastering the art of merger integration [1 Feb 2012]
BUSS4 2012 - Mergers and Takeovers on the Business Studies Blog [31 Jan 2012]
The Guardian on Takeovers and Mergers [31 Jan 2012]
Unilever hit by rising costs [6 Nov 2011]
Olaf takes the knife to management hierarchy [5 Sep 2011]
Tesco and Retrenchment [31 Aug 2011]
The costs of redundancy [5 Jul 2011]
Samsung seeks a ban on Apple products [30 Jun 2011]
Strategy Video - Innovation through technology at Fern Howard [10 Jun 2011]
Whitbread goes for organic growth [2 May 2011]
Q&A - What is meant by “synergy” in the context of a business acquisition [28 Dec 2010]
Advent business (2) - online marketing [2 Dec 2010]
CEO admits “the biggest mistake in corporate history” [29 Sep 2010]
37 Ways for a Business to be More Competitive [24 Aug 2010]
Kraft’s Cadbury takeover triggers management exodus [26 Jul 2010]
Betting firm cries fowl and turns to offshoring [26 Jul 2010]
Farmers v Supermarkets - the battle continues [19 Jul 2010]
Business survival strategies for independent bookshops [14 Jun 2010]
Supermarkets set for a new price war? [13 Jun 2010]
Is the mega-merger falling out of fashion? [7 Jun 2010]
Growth strategy - takeovers return to building supplies [3 Jun 2010]
Book wars! [5 May 2010]
UK Recession - Hotels Suffer Despite the Trend towards Staycations [3 May 2010]
A good example to use when explaining what firms do as they come out of a recession [22 Apr 2010]
AQA BUSS4 Section B Practice Question - Royal Bank of Scotland [7 Feb 2010]
9 business survival tips for getting through the recession [1 Feb 2010]
Strategy in a recession - Fusion Systems [1 Feb 2010]
What business students can learn from how businesses have handled the recession [1 Feb 2010]
Reflections on the ‘Worst Deal in History’ – and the Best [6 Jan 2010]
Revision Presentation - New Businesses and Competition [1 Jan 2010]
Video case study - competition drives down prices in India [28 Dec 2009]
Breakfast for $1 tests price elasticity of demand [12 Dec 2009]
What’s behind the BA and Iberia Merger? [19 Nov 2009]
A tale of two bakers [16 Nov 2009]
Eurostar’s competitive forces [13 Nov 2009]
Innocent Drinks - Teaching Accounts Exercise [9 Nov 2009]
Competition regulator blocks Friends Reunited sale [3 Nov 2009]
Q&A - What are the main causes of unemployment? [27 Oct 2009]
Managing Cash Flow - Beware the Economic Recovery [26 Oct 2009]
Napster - Trying to compete, or getting desperate? [9 Oct 2009]
Meet the Young Entrepreneur of the Year 2009 [30 Sep 2009]
Could mergers come back into fashion? [25 Sep 2009]
The dramatic slump in advertising revenue continues [18 Sep 2009]
Is a recession the perfect time to launch a technology start-up? [14 Sep 2009]
Video case study: battling for survival in the restaurant trade [31 Aug 2009]
A dramatic fall in business investment [27 Aug 2009]
Plastic car is a blast from the past [25 Aug 2009]
BA cuts out the cost of short-haul meals [29 Jul 2009]
How to improve profitability? - give customers a “staff appraisal” [12 Jul 2009]
Business angels take flight - just when small businesses need them [12 Jul 2009]
Innovation helps firm buck the recession [9 Jul 2009]
Microsoft and Google compete head-to-head [9 Jul 2009]
Coffee Republic struggles with the daily grind [6 Jul 2009]
What makes a profitable menu? [6 Jul 2009]
Q&A - Explain the role of corporate objectives in business strategy [1 Jul 2009]
Budget Hotel Chain Now Feeling the Squeeze [17 Jun 2009]
Video case study - Rebranding acquisitions [1 Jun 2009]
Britain’s Got Talent - Extending the Brand [1 Jun 2009]
Protecting a business idea - the irn-bru way [26 May 2009]
Video case study - Vodafone strategy turns to cost-cutting [19 May 2009]
Video case study - German Car Industry [1 May 2009]
Q&A - What are commodities and how are their prices determined? [1 May 2009]
Small businesses in the middle of the crunch - insights for students [22 Apr 2009]
Can Fairtrade buck the UK recession? [20 Apr 2009]
Viability of wind farms poses a “sources of finance” challenge [9 Apr 2009]
Independent schools hit by the downturn [7 Apr 2009]
Innocent turns to Coca-Cola to finance international expansion [7 Apr 2009]
The never-ending sales promotion proves a winner [28 Mar 2009]
Cash flow management - dividends in the spotlight [6 Mar 2009]
Q&A - What factors affect the demand for a product? [1 Mar 2009]
Q&A - What are the advantages to a start-up of being a franchise? [1 Mar 2009]
Improving cash flow by reducing stocks [1 Mar 2009]
Q&A - What is meant by adding value [1 Mar 2009]
Sauces of Finance - Masterchef finds it tough [27 Feb 2009]
What a bunch of cobblers [20 Feb 2009]
Cost-cutting made simple for small businesses [17 Feb 2009]
Flexible employment at Mini - the upside and the downside [16 Feb 2009]
Seeing things in black and white? [10 Feb 2009]
Blue Peter - End of its Product Life Cycle? [10 Feb 2009]
A Bigger Competitor for Specsavers [29 Jan 2009]
Not even the Dragons are immune from the recession [26 Jan 2009]
Video case study - LG moves away from mass production [25 Jan 2009]
Cutting capacity in the service sector [17 Jan 2009]
Why small firms suffer from unavailable bank loans [17 Jan 2009]
Making a mint from “out-of-time” [15 Jan 2009]
Retailer Survivors Like a Deep Recession [7 Jan 2009]
A Great Overview of the UK Retail Sector’s Problems [4 Jan 2009]
The Corporate Jet Under Pressure [4 Jan 2009]
The Grim Outlook for UK Unemployment in 2009 [1 Jan 2009]
In a recession - cash is King! [30 Dec 2008]
Measuring consumer spending and retail activity on the high street [22 Dec 2008]
Bracing ourselves for a series of retail business failures? [21 Dec 2008]
A tale of two retailers with contrasting fortunes in the slump [19 Dec 2008]
Will the Crunch deflate the Football Bubble? [2 Dec 2008]
Business cutbacks and job losses [26 Nov 2008]
BUSINESS TEACHER RESOURCE NEWSLETTER
Get first news of business teaching resources, ideas and other materials from tutor2u. Over 9,400 business teachers from the UK and around the world receive our regular teacher email newsletters. Sign up for free here!
Popular Topic Tags
recession, demand, prices, price, unemployment, profit, economics, costs, investment, inflation, supply, employment, trade, competition, gdp, risk, china, debt, euro, entrepreneur, capacity, production, innovation, downturn, tutor2u, revision, pay, exports, manufacturing, confidence, profits, food, incentives, banks, strategy, globalisation, aqa, expectations, oil, csr, usa, startup, retailers, housing, productivity, sterling, supermarkets, takeover, google, economies of scale, mortgage, cash flow, advertising, quiz, leadership, property, buss4, tesco, economic growth, video, efficiency, enterprise, motivation, stakeholders, apple, deflation, corporate social responsibility, ebea, market share, airlines, pricing, taxation, merger, slowdown, bank of england, acquisition, interest rates, market failure, borrowing, competitiveness, sustainability, product life cycle, credit crunch, budget deficit, aqa business studies, facebook, twitter, aqa business, bbc, nelson thornes, philip allan updates, starbucks, philip allan, monopoly, diversification, recruitment, organic growth, stocks, training, oligopoly, starter activity, shareholders, uk economy, poverty, emerging markets, dollar, government failure, retailing, management, suppliers, buss1, marketing mix, tim harford, cpi, branding, opportunity cost, breakeven, government spending, hodder education, vat, product, customer service, eu, losses, wages, evaluation, india, external growth, wealth, environment, edexcel, location, promotion, technology, information failure, business studies revision, sources of finance, franchise, aqa gce business, elasticity, regulation, spare capacity, welfare, jobs, economic cycle, marketing, zondle, strategic direction, british airways,View all tags for the Business Blog
