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Hotel Industry In The United Kingdom
旅游业是英国的第五大产业，第三大出口创汇产业，每年1150亿英镑。然而，这篇文章将讨论英国的酒店业。它将提供一个简短的历史背景，并随后讨论如何应对当前的经济因素，如全球经济放缓，持续的信贷紧缩，经济衰退和通货膨胀，可能会影响其未来的增长。本文还将考虑英镑与美元和欧元的价值，并据此评估这对出境游和入境游的影响。
Select a sector of the UK's tourism or hospitality industry and discuss how the current economic environment is likely to affect its future growth.
Tourism is Britain's fifth largest industry, third largest export earner, and worth £115 billion a year. Furthermore, it employs 2.6 million people (Visit Britain, 2010). However, this essay will discuss the hotel industry in the United Kingdom (UK). It will provide a brief historical background to the sector, and subsequently discuss how current economic factors, such as global economic slowdown, the on-going credit crunch, recession and inflation, might all affect its future growth. The paper will also consider the value of the pound sterling in relation to the dollar and the euro, and accordingly evaluate the impact this has had on both outbound and inbound tourism.
The hotel industry is a major sector of the tourism industry (Go and Pine, 1995). According to Medlik (1989) hotels play an important role in providing facilities for the transaction of business, meetings, recreation and entertainment. Medlik's (1989) key study of the hotel sector also shows that, for many forms of tourism, the tourist requires an accommodation.
Back in the 19th Century, when hotels began being built, there were only a select few big hotels in UK; however, the development of the railways ultimately affected its future growth. Then, in the 20th Century, after the Second World War, there was economic growth, and subsequent increase in income and living standards, and the hotel industry expanded largely. This growth has led to a large number of modern build hotels which prove the growth and significance of this sector (Page et. al, 2001). However, the growth of the hotel sector can be affected by a changing economic environment.
With this in mind, this essay will further consider the current economic situation in the UK, and those factors which can affect the future growth of the hotel industry. However, before discussing the current economy of the UK, it would be reasonable to explain the economic situation globally and how this began.
The current economic slowdown was apparently started in the United States, when homeowners, who had their mortgages from subprime lenders, began defaulting on their payments (Parkinson et al., 2009). In 2007, US federal banks notably raised interest rates, which caused house prices to fall, leaving people with 100% mortgages with negative equity (Greater London Authority, 2008). As house prices started to decline, major lending institutions with the large stakes in subprime loan companies subsequently reported significant losses. Negative equity triggered a wave of repossessions, but because banks were unable to recoup the amount lent, they became reluctant to offer any loans (Parkinson et al., 2009). As a result, the unavailability of credit and high quantities of ‘bad debt' that had to be written off led to many companies - including international banking corporations - to go bankrupt. Interbank lending became very expensive, and lending to businesses and individuals was virtually non-existent (Parkinson et al., 2009). This became known as the ‘credit crunch', which can be defined as, ‘a reduction in the general availability of loans or a sudden tightening of the conditions required to obtain a loan from the banks' (Parkinson et al., 2009). Although the United Kingdom did not have so many ‘bad mortgages', the interdependency of UK and US financial sectors nevertheless caused similar problems for its nation.
After the economic slowdown began, hotels experienced a sharp slump in demand and faced the most challenging trading conditions for 17 years (PriceWaterHouseCoopers, 2009). Companies and consumers tightened they belts, and demand for leisure trips, business travel and hotels became fragile.
Global economic and financial crisis and fears of a deep recession are difficult times for the hotel industry. ‘In economics, a recession is a business cycle contraction, a general slowdown in economic activity over a period of time' (Parkinson et al., 2009). According to PriceWaterHouseCoopers (2009), the hotel industry as a market is difficult to read, simply because hotels tend to be a late cycle industry in terms of registering the impact of either positive or negative economic trends. This lag occurs because corporate clients review their own travel polices when they see business slowing, but it takes time for these changes to filter through, and the effect is often delayed until the annual round of rate negotiations. The entire cycle may take between six and twelve months before a change in performance is noted. According to the PriceWaterHouseCoopers (2009) report, there was an overall annual UK occupancy decline of 10.3 per cent, as well as a room rate fall of 9.6 per cent, thereby pushing RevPAR (revenue per available room) down to almost £51 - a fall of 18.9 per cent, which is twice the rate expected in the predicted scenario in November, 2008. Hoteliers told that they expected a rate decline of between five and 15 per cent in 2009, and many thought occupancies could also fall by 10 per cent (PriceWaterHouseCoopers, 2009). The forecasts made by TRI Hospitality Consulting (2009) reported that London experienced a 10 per cent drop in RevPAR, and RevPAR in provinces declined by 8 per cent in 2009.
Inflation is another important aspect of the UK economy. ‘Inflation is a general rise in prices across the economy. This is distinct from a rise in the price of a particular good or service. Individual prices rise and fall all the time in a market economy, reflecting consumer choices and preferences, and changing costs' (coursework.info, 2010). The Consumer Price Index (CPI) inflation sharply rose to 2.9 per cent in December, 2009; this rise was due to high petrol prices, and the restoration of the VAT (value added tax) rate to 17.5 per cent. However, the latest inflation report of the Bank of England (2010) states: ‘In order to maintain price stability, the Government has set the Bank's Monetary Policy Committee (MPC) a target for the annual inflation rate of the Consumer Prices Index (CPI) of two per cent and Bank rate at 0.5 per cent'. The UK economy recorded slow growth in the final quarter of 2009, although spending by households picked up a little. The rate of decline in business investment spending appears to have eased. In addition, the world economy has continued to recover, raising the demand for UK export (The Bank of England, 2010).
There are various current and upcoming opportunities for the UK hotel industry of which should be taken advantage. Following the global financial crisis in late 2008, the pound depreciated very quickly, falling below €1.25 against the euro in April, 2008, and reaching $1.35 per £1.00 in January, 2009 (Office for National Statistics, 2010). The depreciation of sterling means that international tourists have increased spending power in the UK, thereby making it a more attractive destination to visit. Equally, it will incentivise increased domestic tourism, as foreign destinations become relatively more expensive. A report commissioned by Travelodge in 2009 surveyed 3,300 British people in an attempt to investigate their holiday plans for the summer of 2009; their results found that the number of people going abroad had fallen from 33 per cent in 2008 to 27 per cent in 2009. Moreover, 32 per cent of UK citizens planned a holiday domestically (PriceWaterHouseCoopers, 2009). The British Chambers of Commerce (2009) said in their notes: ‘there are definite signs that exchange rates are giving the tourism industry a boost with less people travelling abroad and more overseas visitors'. This picture was recently confirmed by the Office for National Statistics (2010), who reported that, during 2009, the number of visits abroad by UK residents decreased by 15 per cent, and a number of overseas visitors in the UK between November, 2009 and January, 2010 rose by two per cent to 7.4 million.
Notably, there are upcoming events in the UK, which will attract large numbers of visitors, such as the 2010 Ryder Cup in Newport, the 2012 London Olympics, and 2013 Rugby League World Cup. Furthermore, there is the potential to host the 2018 Football World Cup. Such events provide the UK hotel industry, and the tourism sector as a whole, with many opportunities. Importantly, the Olympics itself will offer over 50,000 contacts to companies. In addition, the recent Oxford Economics Study estimates that the gain to UK tourism will be an extra 32 million visitors UK-wide as a result of the games, which means that there will be huge demand for accommodation, and the hotel industry will largely benefit from these events (The Independent 2009). The InterContinental Hotels, for example, have signed an agreement with the City Site Estates to open three hotels in London before the Olympics (The Evening Standard, 2008).
PriceWaterHouseCoopers (2009), reports in their latest forecast for London that RevPar will grow to 5.8 per cent in 2010 and a further 7.8 per cent in 2011. It will be a more difficult journey for the Province, where the forecast of RevPar growth for the 2010 is 1.6 per cent and 3.1 per cent in 2011.
