UK cities could see an increase in smaller format lower-cost hotels which could have a positive impact on pricing across the industry, according to real estate advisors Savills.
Savills said with most ‘pod’ hotels costing £45-£100 a night, the expansion of the format could drive down costs at traditional hotels as they would be forced to become more competitive.
Hub and compact hotels are ‘limited-service’ properties positioned in the budget category and aimed at people who value price and location over space and comfort.
Examples are Hub by Premier Inn and Moxy by Marriott (pictured).
Moxy said its hotels are primarily designed for the Gen-Y traveller with technology and design being at the forefront of its business model.
Other brands in the market include Yodel, Citizen M and ZHotel.
“The rise of pods and smaller format hotels throughout the UK can largely be attributed to cost,” said Savills’ director of regional hotels, Martin Rogers.
“If room count can be increased by providing smaller rooms without significantly impacting on average daily rates there can, in the right circumstances, be a positive impact on value.”
The real estate firm claim pod concepts work best in locations where visitors don’t plan to spend a lot of time in their room. It would not be a trend for all locations but limited to those with significant business and leisure tourism, such as Bath, Oxford, London and Edinburgh.
Rogers added: “What these regional pod hotels will offer guests is a central location at a smaller price, two strong motivators to give up that extra bit of space.
“Improved technology and construction innovations such as flat screen TVs and improved storage will also mean the small space will begin to feel less and less like a sacrifice.”
However, Savills warns these smaller hotels could struggle to meet the star rating of a traditional hotel. It claims the smaller size may mean brands have to provide excellent communal facilities and services in order to maintain rates.
Savills’ associate director, Marie Hickey, said: “Star ratings can be subjective but smaller formats and pods introduce a new element that the industry will have to decide how to adapt to and rate.
“While we don’t expect them to replace traditional hotels, for some visitors size really does matter, but ultimately they will provide greater consumer choice to overnight visitors.”