How The Economic Downturn Affected Uk Hotel Industry Economics Essay

How The scotch Downturn Affected Uk Hotel Industry Economics Es distinguishPrior to the credit crunch which commenced in August 2007 when the European Central Bank and the US Federal Reserve put 45bn into the financial grocery storeplaces (Elliott 2008 online), Europe, the USA and the UK were enjoying an economic manna from heaven with rising ho lend oneself scathes and high consumer confidence (Bud equipment casualty 2008 online). Gross national harvesting (GDP) blush to 381,565 Million in 2007, and household disposable income per capita to 14,321 in the kindred social class ( get a line rase 2008, p. 18). During these boom classs, fetching was high and borrowers able to pass on large sums of money collectable to relaxed l lay offing restrictions by banks. Individuals whose circumstances would deport at one cadence barred them from borrowing were al woeful geargond to feeler umpteen quantifys their salary (Budworth 2008 online). Debts secured upon property were sold on to investors. Property prices olibanum became widely inf recentd creating a guggle which burst when borrowers started to default on their loans and the appreciate of the investments therefore skin heavily. The huge losses by the banks hint to the collapse of Lehman Br an some other(prenominal)s in the US and the near collapse of Northern jar in the UK meant that lending became much much difficult and banks stricter ab come forth who they lend money to. (Budworth 2008 online). The leaveing utterlyage of funds due to fears ab let on lending and privation of loans has light-emitting diode to a downswing in the miserliness, lighting house prices and adjoin unemployment with umpteen firms going out of business altogether and many more making drastic savings (Budworth 2008 online). Further consequences include a vast extend in public disbursement which is predicted to take years to soften off, a predicted rise in unemployment (by the British Chamber of Comme rce) to 3.2 one thousand million, wage freezes or hacks and massive job losses (The Economy News 2009 online). The collapse in unattached credit started in the USA exclusively in these days of global profession the implications were soon felt rough the world with the UK quickly facing problems. Germany, France and Italy the three largest economies in the Eurozone were offici exclusivelyy in fadeout by late 2008, and others rapidly followed suit. Both Spain and Ireland project witnessed a housing bubble burst and getion in wider economic employment (Foresight 2008, p. 7).2.2 The Pound Against the Euro and dollar unmatched circumstanceor that complicates the situation roundwhat is the pounds weak status against the Euro and Dollar. superior has lost abide by rapidly oer the last year or so. In July 2008, one pound would still buy $2, but by November 2008 it was worth only $1.48, the lowest point for 6 years. Similarly at one point 1 was almost equal in value to 1 Eur o. While this is fallacious give-and-take for pot buying obedients or voyageing outside the UK, it likewise means that UK goods and services become more fetchingly priced from the point of view of Eurozone or USA be activelers (OGrady 2008 Online). elementicularally, hotels in the UK give appear relatively cheaper since this fall in the value of sterling, and hence more gentle to inbound livelers and tourists. At the same sentence, it means it is slight(prenominal) attractive for the UK passmaker to travel to the Eurzone or USA, and more attractive to stay at home.3. Hotel Industry Background3.1 Introduction The Growth Years to 2007Hotel operators in the UK put up approximately(prenominal)(prenominal) to the bodily do main and consumer sector. Both argon real split of their operations and both includes not just registration but too facilities such as meeting and conference entourage in the pillowcase of the corporate sector and add-on services like food and beverages for both sectors. The UK has been historically an all important(predicate) business destination with the growing importance of the capital of the United Kingdom stock grocery and financial sector ( refer Note 2008, p. 11). In the consumer sector most activity is accounted for by spends and short breaks with a significant minority for wedding or party venues.The UK hotel commercialize grew in 2008 to a value of 11.5 billion, which is an annex of nearly 20% since 2002. This step-up took place against the backdrop of a healthy worldwide thrift with the global travel market retrieve after the 2001 terrorist attacks (BMRC 2009, p.1). Factors influencing this egress were varied and included an attach in the frame of tourists coming in to the UK in the years since 2002 and a diversification in the hotel market with increases in the compute sector as rise up as highlife brands. There was an increased call for upmarket brands as capital of the United Kingdom in particular saw an increase in the ultra fuddled market sector for which money was no object (BMRC 2009, p.1). Other factors unprompted growth include the growth in internationalisation and global business, rises in disposable income, and the development of tourism from emerging economies such as origin East Europe and India. The growth of the internet and online involution in any case stipendiary a part as well as increased selling by hoteliers ( pick out Note 2008 pp. 19-21).During 2008 this boom came to an end. The hotel industry was hit relatively late by the depression, and even during 2008 industry experts were proclaiming that the previous 12 months had been a time of overall growth (Cater hotel manager 2009, p. 6). Occupancy pass judgment were unruffled in the first part of 2008, but then hotel transactions started to decline and during family 2008 occupancy fell steeply as did revenue per means (Cater Hotelkeeper 2009, p. 6). Further, developments for new hotels and improvements were cancelled and reckons reduced.3.2 Strengths and Weaknesses of the UK Hotel groceryA draw Note address identifies aspects of the UK hotel market influencing the vulnerablity or resilience to corner. On a positive note, the UK hotel market is a strong and sophisticated one with a wide mountain chain of different options to appeal to a assert of different types of customer and including internationally recognised brands as well as small individual operators. Developments in technology and the increase of internet use over the last 10 years mean selecting and booking a trip is easier than ever before. The fact that most UK residents do not use hotels delimitate ahead offers an opportunity for growth, as does the potential for advertise increase in internet use. Restaurants attached to hotels and other such add on services provide further magnification potential. Finally, the UK is experiencing a growth in its older population, who rich person more time to travel.On the negative side, the hotel market is in particular vulnerable to an economic downturn as travel and trips ar often seen as an atomic take 18a in which spending can be thump back. ( appoint Note 2008, pp. 48-50). seek in like manner suggests that despite the appargonntly rosy outlook of the years immediately precedent to 2008, the market had other issues to contend with even without recession. The long-stay leisure market (defined as those travellers staying a track for five nights or more) has been in decline since 2004 the number of long-stay hotel suite booked in 2008 was half that in 2006, at 11 million (BMRC 2009, p. 1).4 The Impact of the corner on the Hotel Industry in the UK Specific Factors4.1 IntroductionThis section looks at some of the factors which bushel upon the Hotel industry, and why they ar important. The messages atomic number 18 mixed. Some of the factors are detrimental to the industry while others have more positive impact.4.1 Air fail in DeclineAlthough semipermanent growth in inquire for communication channel transport is projected, growth rates in the short to medium-term are likely to be affected by the general slowdown in the economy and by the rising apostrophize of air travel. A market-wide study indicates that although long-term growth in shoot for travel by air is expected, short to medium term projections are for negative growth in 2009 with the beginnings of reformy in 2010 ( nominate Note 2009, p. 10). This allow have an impact upon the UK hotel market as there leave be fewer travellers into the domain. However, it should be bourne in mind that fewer UK holiday makers will destiny to holiday abroad due to financial considerations, hence boosting demand for hotels.4.2 Collapse of the Property marketplace one(a) of the hardest-hit sectors of the economy in the recession has been create as house prices have crashed and loans to finance building projects have dried up together with the m arket for the finished product. The UK enjoyed some of the highest periods of growth of house and other building prices, and the construction industry has been particularly badly hit by the latest recession. Developers are unable to access credit to fund large scale building schemes, so many hotel projects have been stalled (Blitz 2009 online). Aside from new developments, hotel owners who are unable to access further credit are also finding things more difficult. While larger operators and branded chains are able to look to the medium and long-term, over which a boom for hotel and travel are predicted due to emerging markets, smaller operators have less access to the resources which will see them through the abutting couple of years (Blitz 2009 online).4.3 The Falling Value of the PoundThe pound fell against foreign currencies until at one point in late 2008 it was worth very nearly 1 Euro. This should mean that UK services, including UK hotels and UK tourist attractions, become more attractive to visitors from overseas as they get more for their Euro or dollar. The fall of the global economy has certainly had an impact in reducing inbound tourism, but at the same time the pound became more attractive against the Euro for the average visitor the apostrophize of purchasing goods and services is approximately 10-12% cheaper than at the same time the year before (Foresight 2008, pp.1-2). Foresight predicted at the end of 2008 that while inbound tourism to the UK would fall slightly with a growth of -0.7, spend would increase by 2.4%. It should also be considered that a falling pound makes it less attractive for the UK holidaymaker to leave the country as prices across Europe will become more expensive (Foresight 2008, pp. 1-2). nameBritain, the carcass which aims to upraise UK tourism, has launched a 6.5 million advertising campaign outside the UK to promote the affordability of Britain as a destination. However its calls for this investment to be matched by the UK regime have not so far been successful (Mintel trade Reforecasts, 2009 online)4.4 anoint pricesA further factor is the price of embrocate, as this dictates the cost of air fares. Increased oil prices head for the hills to raised surcharges on airfares and hence to higher(prenominal) flight costs. The cost to the airline is also considerable if the price of oil is high they cannot simply pass it all on to the customer. A Key Note market report noted that when prices were over $120 a barrel BA said it would find it hard to break even, easyJet commented that a rise of $1 adds 2.5m to its operating costs, and Ryanair predicted extra costs of Euro 400m (Key Note, 2009, p. 11) Higher prices lead to a decrease in inbound flights, but equally to an increase in the number of UK residents holidaying abroad who might then consider staying inside the UK. The price of oil fell from a high of nearly $ one hundred fifty a barrel in June 2008 to under $55 in November 2008. vegetab le oil price falls, however, can be bad news if the fall in price is due simply to a stagnant market (Foresight 2008, p. 6).5. How the Recession has hit Specific Areas of the Hotel Market5.1 Overview2008 has certainly seen a fall in the market, and vaticinations for the adjacent few years to 2012 are gloomy. Early 2008 showed positive trading in UK hotels, but the second half of the year had a significant deterioration with what Robert Milburn, of Www.cater.com, called fragile and volatile conditions in the trade. Numbers of overseas visitors dropped by 5% between April and June 2008, and lead-in times became shorter, with 1-2 weeks existence the norm sort of than 4-6 weeks. A fall of 1.8% was predicted for 2008, but the recovery in 2009 which was also predicted in a flash seems unlikely (Key Note 2009, pp. 62-63).With rising unemployment and fears about job security, there is not simply less money to spend on luxuries such as holidays and hotels, but also an increasing percept ion amongst consumers that they should make do and fixing the spendthrift attitude which characterised the 1990s and years to 2008 has been replaced by a mindl that one should save rather than splurge. until now by the end of 2008, predictions were cosmos make that 2009 will see less tourism overseas than in 2008, a situation which has occurred only twice in the last 40 years (Foresight 2008, p.3).Mintel predict a significant drop in the hotel market which will take some time to recover from, based on figures from the International Passenger Survey and trade sources. Their figures for revenue raised per on hand(predicate) room also indicate that the hotel sector is struggling in both London and the regions (Mintel Market Reforecasts 2009, online)In the hotel industry worldwide, occupancy rates are declining and revenue per room are also dropping (FT.com 2009 online). Average room rates in the UK have dropped to around ascorbic acid per night and demand is low (Blitz 2009 onli ne). It would seem at first glance that the industry faces a challenging time during 2009 and into 2010 at least, however there is also some positives holidays are seen by the consumer as very important, and the UK is perceived by holidaymakers around the world as an excellent destination (it is the 6th most visited country world wide and is ranked forth in the Anholt-GfK Nations Brand tycoon in terms of Tourism (Foresight 2008 p. 8)). Mintel predict that while holidays will be reduced by consumers they will not be cut out altogether and the average family will continue to take one main holiday per year as this type of break has become indispensable in the consumer mindset as more of a right than a privilege (Mintel Market Reforecasts 2009 online). Whereas the overseas holiday market will fall slightly in 2009 and 2010, the UK market will simply stagnate (Mintel Market Reforecasts 2009 online). The following sections examine events in and predictions for particular sub-sections of the hotel market in the UK.5.2 parentage TravelAs the global recession deepens, business travel will buzz off. Companies who remain in business will seek to cut their expenses by reducing spend on business travel, cutting trips to the absolute minimum and using cheaper hotels (Foresight 2008, p. 7).The 2009 Key Note report notes that domestic business travel within the UK, which also impacts upon hotel usage, will also decline. The market is expected to increase very slightly from 2011, but will remain generally static over the 2008 to 2012 period. Inflation will lead to a marginal increase in expenditure, but as inflation affects all sectors, should be discounted. invite Table 1Forecast UK Market, Domestic Business Travel, 2008-201220082009201020112012Trips (000)18,50018,30018,00018,20018,500Percent revision year on year-3.1-1.1-1.61.11.6Expenditure (M)45504590460046704800Percent Change year on year0.40.90.21.52.8Table 1 domestic business travel in the UK excluding those trip s which do not require an overnight stay (adapted from Key Note 2009, p. 29)The same report shows that the forecast for inbound business travel people travelling from overseas to carry out business in the UK is also poor. The rate of growth in 2008-2009 slowed as the world economy slumps. While the rate does not in reality go into decline, it slows to near 0. (Key Note, 2009, pp. 29-31).5.2 Consumer (Non-Business) TravelThe domestic travel area offers some possible positives for the industry as a entire. It is arguably the case that tourism and the hotel industry in the UK are punter placed to withstand the results of a recession than either other industries or other holiday destinations. The reputation of the UK as a whole is very strong as a destination, as is that of England in particular.A 2008 discipline by Visit Britain of 614 respondents based in the UK who regularly take short breaks reported that 9 out of 10 people consider England when choosing a short break. The bran ding of England has improved over the course of this tracker study, 58% of respondents say it is their favourite holiday destination considered. It is considered easy to get around and seen as having beautiful scenery (Visit Britain 2008, p.2). Short breaks account for almost 2/3 of breaks taken in the UK, so these findings are significant for the industry as a whole. (Bainbridge 2009, p. 1).Another consideration is the rising concern with being unfledged and the impact of frequent air travel on the purlieu (Bainbridge 2009, p. 1). Consumers who want to reduce their carbon footprint and impact upon the environment are increasingly opting to stay within the UK (Bainbridge 2009, p. 1). What Bainbridge does not highlight, however, is that the new concern for green issues is not completely beneficial. Tourists from overseas will be equally concerned to cut their travel abroad, so this could also reduce inbound tourism into the UK. Research is conflicting with some showing that intere st in saving the environment is fairly low priority for the majority of consumers and other studies confirming the idea that green issues will become increasingly important (Key Note 2009, p. 49). Hoseasons, the self- give leader, also take this view, claiming that more people are choosing to holiday in the UK because of a demand for a green and alternative to flying abroad. Similarly, the ferry lines entered 2008 assumptive that demand would increase for their services as a greener alternative (Key Note 2009, p. 49).5.3 Short BreaksA 2009 report confirms that although the market for UK short breaks taken by UK residents is not forecast to grow much over the bordering year or so, nor is it expected to fall. Key Note predict the following (Table 2)20082009201020112012 mass of trips(in Millions)55.057.060.060.062.0Value(M)8,0008,7009,3009,5009,900Table 2 Forecast UK Short-Break Holiday MarketKey Note also point out the conflicting factors at start in the non-business UK short break holiday market. It has been mentioned that holidays are very important to the UK public, moreover a short break can be taken where a long one might be rejected. However, research also suggests that while the main holiday is sacrosanct, short breaks are easier to do without, but this might relate to overseas breaks rather than UK ones. To further complicate the issue, as people are increasingly slow to sell their properties they might be expected to treat themselves to more short holidays rather than suffer the cost of moving house. The poor sterling rates also encourage people to stay within the UK for these breaks. On the other hand, family finances are being squeezed by job losses and the psychologies of a recession, and could deter people from spending on any kind of holidays. Overall there is no way of knowing whether an economic downturn is good or bad news (Key Note, 2009, p. 49)5.4 reckon Hotels and Holidays5.4.1 OverviewThe UK has the most expensive rates for hotels in Eur ope, and average prices rose by 12% in 2007 to an average of just over 100 per night. Londons exceptionally expensive rates influence this figure (Key Note 2009, p. 50). Against this background, and electric charge in mind the recession, a move towards increasing the number of budget hotels seems inevitable. Previous expansion in the hotel industry has concentrated on the luxury end of the market with the growth of boutique hotels and the interest in catering to the super-rich. While this seems unfortunate given the recession, it is not obviously a bad strategy as historically the luxury market has been shown to reflect the economy more slowly than the rest of the market. (Key Note 2009, p. 92) In October 2007, Marriott estimated the growth in revenue per available room at between 5% and 7% in 2008 however, by May 2008, this had been revised to between 3% and 5%. As clients reduce their spending, it is likely that over-supply will be seen in the market and this will lead to some br and rationalisation (Key Note 2009, p. 92).One predicable result of the recession is to increase interest in budget holidays and cheaper hotels. The Visit Britain survey of UK residents who take short breaks reported in March 2008 that price had now overtaken other factors in choosing where to stay (Visit Britain 2008, p.2). This is likely to increase as the UK moves deeper into recession.The budget hotel market was under development even before the recession set in. Established brands such as Travelodge and Premier Inn grow their operations, and they were joined by the Purple Hotels from the Real Hotel Group. Hilton also developed plans for a budget hotel chain, and CitizenM, a design-led brand, was developed. Other brands include Nitenite and Yotel, built at low cost using prefabrication techniques. The growth in the market has led to further segmentation in the sector with introduction of upmarket tiers to the budget range (for example Holiday Inns Express brand (Key Note 2008, p. 16)A Key Note report written at the beginning of the recession predicted that the mid-range hotels would be the main casualty of shrinking demand. The problems with the economy were exacerbated in the hotel industry by the recent increase in energy and food costs ( Key Note 2008, p. 11)5.4.2 Business Budget HotelsAs Bainbridge points out, budget hotels have benefited by both business and holiday customers downgrading in the recession. Some budget hotels have increased the range of facilities they offer to includes free wi-fi, breakfast and similar to allow in a new business clientele. Whitbreads budget chain, Premier Inn, for example (the UKs biggest hotel brand) is upgrading its rooms with flat screen TV, air-conditioning and Freeview, and has seen sales for its business account scheme increase 36% over the previous year to February 2008. (Bainbridge, 2009, p. 1).This increase in the number of business travellers using budget hotels since the start of the recession in 2008 is c orroborated by research by BDRC in 2009. They report that budget brands are consciously aiming to compete with mid-market brands by strategies such as the ones mentioned above. This drive has been rewarded by better standing in business advertising awareness for the budget hotel brands. (BDRC 2009 online) Key Note also report that mid-market business hotels are likely to suffer as they are positioned between the value and luxury hotel options, and what they call tiering, or introducing of levels in to the budget range, will also affect the mid-market brands (Key Note 2009, p. 92).5.4.3 Consumer Budget HotelsFor the non-business traveller, accommodation tone is very important in UK breaks. While travellers abroad endure less than perfect accommodation because costs are low and the weather good, within the UK they demand better quality. One issue is that bed-and-breakfasts and leaf node houses are notoriously prone to poorly-run individual establishments, leading to calls for the ma rket to be tightened. However the budget hotel sector has large(p) and has mopped up some of the non-business market as well. The fact that there are many chains available in this sector means travellers can be reassured regarding expectations and quality as they are buying into a brand name. This is particularly aline in London a popular choice for consumer short breaks where hotels are notoriously expensive (Key Note 2009, p. 50).5.5 Staff and Recruitment ImpactThe recession has had a severe impact on the hotel enlisting market, and it is unlikely to recover before 2010. Job cuts look set to reach 600,000 as businesses and consumers cut spending. The Chartered Institute of Personnel and Development warned of the toughest year in more than 2 decades, and their predictions were backed up by a survey of cl+ senior management in the hotel industry carried out by the enlisting specialists Admiral Group which revealed that over 2/3rds of those surveyed were going to delay recruitmen t decisions, and put fast-track graduate programmes had on hold (Sharkey 2009, p. 7). These findings are reiterated by the results of a study by Deloitte in 2008 which predicted that the downturn could cut new jobs in the sector by 100,000 with a corresponding dramatic shrink in the UK tourism industry. A recession could see a 11b reduction in the economic input by visitors to the UK, currently worth 114b or 8.2% of the UKs GDP. The British Hospitality Association also criticised the lack of help from the Government (Thomas 2008, p. 9)One less gloomy prediction is that the recession will have less impact as the hospitality market in general and the hotel market in particular is more diverse than in the past, with some opportunities actually being created particularly in the casual and budget dining and contract catering sectors. This is reinforced by a survey carried out by the British Hospitality Association which shows that the contract catering sector has grown and will continue to do so in the recession (Druce 2009, p. 7)5.6 mode Occupancy and PricesRoom occupancy rates the percentage of nights that hotel rooms are in active use have been increasing since 2005. This is good for hotel operators as it allows them to re founder investments and reap more return for their money. In 2007 there was a 1% point rise in domestic occupancy (61% in 2006, with the 2003 rate being 59%). This pre-dated the recession and was a result of the strong point of sterling at this time (Key Note 2008, p. 14)Returns in terms of paying accommodation in the UK show a surprising result. Gains were still made in 2008, and a report by Deloitte showed that in the early part of the year revenue per room grew strongly (Caterer Hotelkeeper 2009, p. 6), which is unusual as the recession started to set in during this year for most parts of the UK economy. However, this seems to be a function of gains made at either end of the booking season. Early bookings would have been made before wo rries about the economy set in, and late bookings made might have been as a result of last-minute demand and hence prices paying were higher (Key Note 2008, p. 15)5.7. littler and Specialist SectorsThe result of the recession can also be traced in the smaller and specialist areas of the UK hotel market. For hotel operators, boom areas in these sectors are not necessarily a good thing, as will be shown.5.7.1 natural action HolidaysActivity holidays overseas were enjoying a boom in recent years, however for the next few years the market is predicted to grow less rapidly, whereas activity holidays in the UK are predicted to rise. In 2010 for example the total no of activity holidays in Millions taken by UK residents was predicted before the recession at 11.5 this was revised to 10.8, with 2011, primarily predicted to total 12 million was revised to 11.4. By contrast, predictions about UK activity holidays have been revised upwards the 2011 level was predicted at 5.0 million, and thi s was revised to 5.3 million. (Mintel Market Reforecasts 2009 online). The impact for hoteliers is mixed. If the holiday involves hotel stay, then the news is good however if the accommodation is self-catering the hotel operator will lose out.5.7.2 All-Inclusive HolidaysAll inclusive holidays, a sector which has been in decline in recent years due apparently to the increasing ease of online booking and ease of finding information, are now predicted to rise over the short-term as they allow all holiday costs to be known in advance and paid for up front. Both Thomas Cook and TUI are aiming to increase their panoptic capacity (Mintel Market Reforecasts 2009 online)5.7.3 Camping and Caravaning HolidaysThis sector enjoyed a boom in the 1960s and early 1970s but with the advent of cheap overseas package holidays has been in decline. However, Mintel predict that these holidays are an attractive option for the budget conscious consumer, and will benefit from the increase of families who el ect to stay in the UK in 2009 and 2010 for financial reasons. They point out that the Camping and Caravanning club had their shell ever year for recruitment of new members in 2008 (Mintel Market Reforecast, 2009 online). Domestic camping holidays are predicted to do rather better over the next couple of years before the long-term trend towards decline reinstates itself. The growth in this area is not good news for the hotelier, as by definition a stay in a hotel is ruled out for this holiday type.5.7.4 OthersOther sectors, for example boating holidays, have also been affected. Even where the market remains buoyant boating and luxury holidays growth prediction has been downgraded and is expected to occur at a s pull down rate than predicted (Mintel Market Reforecasts 2009 online).Sectors of the UK market which are predicted to do well include coach holidays within the UK which are seen as a budget option and so are fairly resilient to an economic downturn, and heritage tourism as well as holiday centres like Centre Parcs. Mintel see the latter as particularly resilient as they are both percieved as a budget option and are attractive to the UK consumer as they offer pay in advance all-in-one packages. An increase in coach holidays is also good to some extent for the hotelier, although the bulk of coach holiday operators chose low-cost hotels where price margins are cut very low, as the coach holiday is seen as a price-conscious alternative to the consumer.6. Lessons Learned from Previous Economic DownturnsThe last time a recession occurred in the hotel industry was in the wake of the 2001 family line eleventh terrorist attacks on the Twin Towers in New York. The Sept 11th attacks and anthrax scare which followed caused uncertainty about the short and medium-term economic futures and had an impact upon travel and tourism plans leading to a reduction in hotel use and travel. In the US these areas, along with airlines were significantly affected in the effect of the terrorist attack. (Mintel Market Reforecasts, 2009 online). In the recession of the early years of the 21st century, the repartee to the challenge was to discount room rates heavily, however this strategy was of contestable use. The heavy discounting was intended to boost occupancy level, however this necessarily led to less profitability and income it took years to recover from this as consumers became used to the lower prices. As Bloss (2009) points out, the tactic is also very easy to copy by competitors and hence a risky one.7. Conclusion.The UK hotel market has certainly been affected by the economic downturn. The above looked at the background to the recession and how it has affected the corporate and consumer sector. While the sector has certainly been impacted with job cuts, slower, stagnating or declining predictions and less building projects, there are some positives for the UK market as holiday makers elect to stay at home rather than travel abroad.