The italian market of budget hotels

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The italian market of budget hotels

HOTEL & TOURISM MANAGEMENT GROUP
Pubblicato da Mino Reganato in Management · 1 Agosto 2019
The penetration of budget hotel chains is still contained in Italy  also due to the wide spread of small independent hotels, often  family-run. In my opinion, there is a high potential for the budget  chains in Italy and the fast increasing of B&B, holiday homes and  atypical accommodation is symptomatic of a strong interest and a need  for many customers, looking for services with a good quality (no  frills). HTMG  (Hotel & Tourism Management Group) has been running a  network of budget accommodation (B&B, little hotels, Guest houses  and so on) for two-year, and I was able to verify the high degree of  preference by many tourists.
   
Today, for example, the business customer appreciates budget hotel  for a good value-for-money. With the international crisis and the  consequent slowdown in the economy, companies have become more attentive  to travel expenses and, therefore, to value-for-money. Initially, small  media companies were the first to book rooms in mid-range hotels, but  today big companies also look more closely at their budgets. The  services field is surely the most "sensitive" one, in particular banking  and insurance and information technology.
   
The hotels in Italy is still inadequate in terms of organisation  structure and dimensions, energy facilities and services offered,  compared to the world average, although a good process of upgrading has  been started  in recent years. This problem, together with the high  impact of property taxes, sometimes discourages investment in the  Italian hotel industry.
   
Today we have different gross returns in relation to typology:  trophy asset from 5% to 5.5%, prime locations in Rome, Florence, Milan  and Venice from 5.5% to 6.5%. A 46% of hotels in Italy and 43% of the  beds belong to the category of 3 stars. 40.6% of the hotels are medium  size and have a number of rooms between 25 and 99; 55% have less than 24  rooms.
   
The tourism field represents 11% of the Italian gross national  income. In the last 10 years, incoming in Italy grew by 32.2%. Italy is  ranked fifth in the world, representing 4.3% of the international  movement. An increase of about 5% is expected for the next 2018.
   
The Federalberghi calculates that these are the characteristics of a three-star hotel in Italy, with 36 rooms and 74 seats:
   
• 12.6 employees per hotel;
   
• 1 person every 2,86 rooms;
   
• Cost per employee, 25,000 euros per year;
   
• Revenue per employee, 55,000 euros per year;
   
• Revenue per room per year, € 20,000 per year;
   
• Average overnight stay rate, 50 euros;
   
• Overnights  represent 58% of revenue;
   
• Food & beverage represents 30.4% of revenue;
   
• Other services represents 11.6% of revenue;
   
Italy is among the most sought after destinations by tourists from  all continents. This success has many factors, including the uniqueness  of art cities and the immense cultural heritage, in a context of natural  resources and scenic landscapes of great beauty. Alongside these  values, our lifestyle and high quality food and wine products contribute  decisively to make our country particularly attractive and well-known  in the world.
   
In few words:
   
1. tourist vocation: seas, mountains, spas, a huge cultural offer based on innumerable and important sites of world interest
   
2. offer accomodation: hotels, campsites, villages, apartments, B&B excursions, amusements and especially food and wine.
   
3. Staff: courtesy, hospitality, efficiency, professionalism.
   
In Italy, the phenomenon of chains has not yet been fully  established, today the most famous hotel indipendent chain is the Best  Western. In my opinion, the causes of the lack of interest are mainly  due to these factors.
   
- high affiliate costs together with royalties to be paid
   
- the strong individualism of most of the owners who in large  proportion do not come directly from the hotel industry but from other  sectors such as building business. Most of them see the hotel as a  tangible asset and do not apply in the start up phase, the right steps  (promotion and marketing to the right “clusters”, continuous training of  staff, application of revenue management)
   
However, In my past experiences and during my current work as hotel  consultant, during project presentation and revenue forecasts it is  important to explain to owners, the project development, relative times  of application and expected results, they must be "formed" in a few  words. Concluding, it’s possible that the owners may be interested but  it all depends by the minimum business guaranteed, It’s very important  in this step to present the project in a best way.



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