Budget hotels set to benefit from price-sensitive travellers
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Budget hotels set to benefit from price-sensitive travellers

By GlobalData 11 Jun 2021 (Last Updated June 11th, 2021 12:08)

A live GlobalData poll overwhelmingly revealed that price is the most important factor when selecting accommodation, and budget hotel operators are set to benefit as a result.

In a recent live GlobalData poll*, 47% of respondents said price was the factor that played the largest role when choosing a hotel brand or other accommodation.

Budget hotel operators will be well-positioned to benefit from an increased desire for the cheapest accommodation possible. With many countries still only permitting outbound travel to a handful of countries and domestic holidays booming in the short term, accommodation prices have risen. Research conducted by consumer group Which? revealed that UK breaks were 35% more expensive this year compared with last year. Travellers will, therefore, be looking for a bargain amongst a sea of inflated rates.

GlobalData’s most recent consumer survey (Q1 2021) showed that travellers are more price-sensitive compared with before the pandemic, which is unsurprising given that price is the most important factor for accommodation selection. 87%** of global respondents expressed that they were ‘extremely’, ‘slightly’ or ‘quite’ concerned about their personal financial position during the pandemic.

Although the pandemic has placed a considerable strain on travellers’ finances, travel demand is still high, with many looking to escape in desperate need of a change of scenery. Travellers are more likely to trade extras offered at mid to upper-scale hotels for a more basic ‘pay for what you need’ service standard. The pandemic has altered travellers’ mindset, and with less budget for travel but a strong desire to escape, many will turn to budget providers to satisfy their travel cravings.

Loyalty is not as important

The same GlobalData poll showed that ‘prestige and loyalty offered’ was the least important factor when selecting a hotel or other accommodation. Many upscale hotels have invested in developing a loyal following. The pandemic has, however, caused a shift in traveller sentiment that could impact this type of investment.

The financial squeeze from the pandemic will likely push travellers towards budget travel options, forgoing loyalty benefits in the process. To counteract this shift towards budget alternatives, mid to upper-scale hotels should focus their efforts on price promotions. Offering additional discounts for loyalty programme members, freebies or free upgrades could entice those looking to make their stay more comfortable despite a depleted travel budget.

As travel begins to return, post-pandemic travellers’ funds are likely to be reduced, and budget hotels will benefit from this. Price promotions and incentives could be a crucial strategy for mid to upper-scale hotels to counteract this trend, but travellers are more likely to be influenced by price in the initial travel recovery period.

*GlobalData live tracker Verdict poll of 425 respondents, live since 19 April 2021.
**GlobalData Q3 2019 consumer survey, 29,744 global respondents.

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