Travelodge Company PEST Analysis

This report will be providing a detailed analysis of the existing Budget Hotel market, and how to improve the competiveness of the Travelodge UK, the second largest Budget Hotel chain in the United Kingdom, Second Premier Inn. This report will contain the following, a profile of the organisation’s current target market, which will include demographic, psychographic, geographic and behavioural variables. That will then be followed by a well-referenced and well-researched PEST analysis that will highlight the most important and relevant factors that could have an impact on the business.

Once the pest analysis has been completed, the report will be concluded by recommended changes to the marketing based upon the findings of the PEST analysis.

Brief Introduction to Travel lodge

Travelodge Hotels Ltd (Travelodge) is a budget hotel company based in the UK. The company was established in 1985 by Lord Forte. Travelodge operates more than 500 hotels with over 37,000 rooms located in major cities and regional centres in the UK; 11 hotels in Ireland and four hotels in Spain.

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It operates hotels under the Travelodge brand. The company serves around 17 million customers every year. The hotels also have bar cafe and restaurants which offer breakfast, lunch and dinner with varied cuisines. It serves over two million breakfasts every year. Furthermore, the company provides online and mobile reservation applications services. Travelodge is headquartered in Thame, Oxfordshire. With being a budget hotel chain, the rooms and facilities are low priced and most branches are located, in many town and city centres across the United Kingdom and Ireland, with other locations purposely placed near all United Kingdom major tourist attractions, for example many of the major cities have more than one Travelodge within the city, specifically located to suit the customer needs, for example, Birmingham has 10 Travelodge branches with a 10 mile radius of the city centre.

According to the ACORN categorization of UK consumers stated in Dibb, S (2012) the main category of customers would be in the ‘Comfortably Off’ category. The town and city centre hotels target many demographic variables of the target, with the main customers being families and group holidays on city/weekend breaks. The low price appeal mainly to these segments as most families in the lower-middle/working class cannot always afford to stay at more premium higher end hotels, while for group bookings it is just a much easier option due to the central locations and the lower prices, an example of a type of group would be hen/stag parties with ages varying from 18 to over 60 on a weekend break in one of many of the UK’s lively nightlife destinations. The hotel is also good for business groups or individual business partners having an overnight stay. The Behaviouristic variables of show that the brand loyalty of Travelodge.

Political

Travel lodge created a policy statement in order to demonstrate their commitment to the privacy of their customers. By using Travelodge hotels, their website, their dedicated telephone reservations line and any line or any other service of Travelodge Hotels Ltd, the customer is agreeing and giving their consent to the practised outlined in the statement issued in the privacy policy stating that they will always handle information in compliance with the Data Protection Act (1998). In april 2011, Travelodge launched the UK’s First budget hotel management apprenticeship programme for school leavers. The scheme, JuMP, is a fast track route into management and provides Alevel studnets with a real alternative with the chance of going to university. The programme provides a chance for the school leavers to continue their education, obtain work experience, receive a salary and become a manager by the age of 21. To date, travelodge has over 80 apprentieces participitating on the course in hotels across the UK.

The Economical Factors

UK tourism has weathered the double dip recession but 18% fewer people are holidaying abroad than before the downturn, a new study shows. The number of trips taken by Britons overseas has declined by 12.6 million, from 69.4 million to 56.8 million between 2007 and 2011, according to the research by Travelodge. This means that 5.9 million holidays and trips have come out of the market altogether when the number of domestic holidays and trips are factored in. This is shy of the government’s stated ambition for domestic trips to replace the number of missing overseas trips, the report says. However, the analysis shows that ‘staycation’ breaks were up by 5.6% as the recession proved that holidays are an essential rather than a luxury. UK city breaks account for 23% of domestic tourism but seaside towns are in decline by 5%. Total tourism revenue was up 12.6% to £40 billion between 2007-2011 against the general economy up 8%. Employment numbers in tourism have bucked the wider trend, thanks to strong growth in 2011 when 120,000 new jobs were created. The UK’s appeal as a tourist destination endured during the double dip, with overall visitor numbers up by 3.1% to 157.4 million, the report shows. Staycations form the backbone of the tourism economy, with domestic trips and holidays increasing by 5.6% to 126.6 million.

Social Factors

Travelodge is seen as a sociably acceptable hotel regarding to trust pilot, although there are many mixed reviews from that site and other sites such as tripadvisor. The use of social media can help attract customers but also put some customers off as one negative review can have a bigger effect than 10 positives combined. Travelodge has given its £15m media planning and buying account to Interpublic’s Initiative UK as part of its £223m brand investment programme. Initiative has been tasked with overseeing the media planning and buying ahead of a major campaign which will launch in spring 2014. The programme, announced earlier this year, is the biggest marketing push for the company to date and has involved the roll out of a new room design as well as an extensive refurbishment programme across all of the company’s hotels.

Technologic

Statistics brain stated that in 2012 57% of all hotel reservation bookings where made online, with 65% of same day bookings made on a smartphone. With online bookings becoming more and more popular as technology, Travelodge have set up a very easy and understandable booking system online and a specially designed mobile compatible page. When making an online booking, like many other booking websites, Travelodge have tactically placed multiple add-ons in a last attempt to gain more profit from the booking customer, these include breakfast & dinner, Wi-Fi, early check in and also some hotels offer pet facilities. The six-month, ‘Travelodge Future of Sleep’ study, carried out by award-winning futurologist Ian Pearson, has investigated the impact of new technology on sleep and how the hotel room of the future will respond to helping us sleep better in 2030. Within the next two decades, the hotel room will be so technologically advanced that it will almost be alive – fulfilling guests’ needs like a personal concierge, lifestyle coach, fitness trainer, psychologist and doctor. Cutting-edge technology will monitor customers’ energy levels, physical well-being, emotions and mood to help ensure they achieve a good night’s sleep.

The Sleep Revolution Key findings from the study revealed that by 2030, a good night’s sleep will provide recreation, training and medical monitoring, as well as rest and rejuvenation. By 2030 we will be able to manage the contents of our dreams as in the movie ‘Inception’. Video, audio, smells and tactile experiences produced using our bed or bed linen will play a key role in helping to make our dreams feel real. We will be able to replay our favorite dream from a menu just like choosing a movie. Also, we will be link into dreams with our partner or family and friends and enjoy a shared dream experience.

Strategic analysis of Travelodge & recommendations

Of the four sections of the marketing mix: price, product, place and promotion, Travelodge capitalizes on price. Its leadership in putting the price at a low level is its competitive edge. This is how the hotel chain attracts budgets and practical travelers. For the well-heeled tourist, Travelodge’s service is a disadvantage. Its weakness lies in the cutting frills the well-off tourist looks for in a comfortable hotel stay, but while the hotel chain does away with the Class A and B tourist, it has opened a flashflood of markets from the C and D category. Premier Inn is the main competitor to Travelodge although they offer a price that is £15 dearer than Travelodge’s £24. Aside from the price premier in makes it a point that it’s a hotel with a restaurant or pub either attached or in the vicinity of the location. Considering that the UK has a culture of drinking alcohol, Premier in has an advantage over Travelodge in this field, although most city centre and airport hotels now serve alcohol and food. At the current Travelodge is still behind Premier inn with the latter having a 41% share in 2012 to the 31% of Travelodge. Travelodge with its aggressive price strategy and customer friendly and convenient website the company is gaining upon its rival with claims that the Premier inn are over relying on their unreliable website. Travelodge is on its way to leading the budget hotel chain with pricing strategy and website technology. With a majority of the travelers relying on online reservations, the World Wide Web can be tapped as a marketing strategy. Travelodge has very competent executives and has hired experts with a background in state of the art IT systems.

References

Books Used
Marketing Concepts & Strategies – 6th Edition – 2012
Dibb, S. Simkin, L. Pride, W.M. Ferrel, O.C.
Marketing Management – 14th Edition – 2012
Kotler, P. Keller, K
Strategic Market Management – 8th Edition – 2008
Aaker, D.A.
URL’s used for PEST
www.travelodge.co.uk
www.premierinn.co.uk

http://www.thedrum.com/news/2013/10/23/initiative-uk-wins-15m-travelodge-media-planning-and-buying-account http://www.hotel-industry.co.uk/category/legal-and-tax-issues/ http://www.bighospitality.co.uk/Legislation/Travelodge-writes-to-local-councils-in-development-partnership-plea http://www.marketingweek.co.uk/3012706.article

http://www.marketingweek.co.uk/news/travelodge-gears-up-for-budget-hotel-battle/4009192.article

http://www.marketingweek.co.uk/news/-qa-travelodge-sales-and-marketing-director-catriona-kempston/4006128.article http://www.statisticbrain.com/internet-travel-hotel-booking-statistics/ http://www.hotel-industry.co.uk/category/legal-and-tax-issues/