Special report: Budget hotels mimic budget airlines

1 Dec 2008 by Mark Caswell

In these
difficult times every pound counts. If hotels, just like airlines, can grab
customers’ attention with dramatically lower prices, they stand a better chance
of securing the business.

That is why
some hotels have adopted the sort of pricing that has, until now, been the
preserve of budget airlines. In other
words, they woo guests with attractive headline rates but then raise extra cash
by selling them extras. It means
that amenities which traditional hotels would include as a matter of course are
becoming “paid for extras” at some budget hotels.

Easyhotel (the budget chain founded a couple of years
ago by Easyjet founder Stelios Haji-Ioannou) is believed to have started the trend. When Business
sought a cut-price room in Central London
for this Tuesday (Dec 2) Easyhotel’s website displayed a headline rate of £39. But
on the actual booking pages we found that rate applied only to small rooms (6
to 7 sqm) without a window. The cost for
a window would be £6 with another £14 payable if we wanted a larger room (7.2
to 9 sqm). (Both room sizes are tiny compared to what a traditional hotel would
offer). Easyhotel levies a further fee of £5 if we wanted to hire a TV remote
control. Pay by credit or debit card? There’s a further fee of £1.50.

In other
words, Easyhotel’s headline room rate of £39 could easily become £65.50. It’s similar
to the situation where British Airways provides amenities free of charge (credit card fees aside), while with Easyjet and Ryanair they are paid-for

spokesperson for Easyhotel said the idea was “to cut out unnecessary costs in
order to reduce room rates.” But
Easyhotel is a niche player in the UK. It has only a handful of
properties. More important is Travelodge’s decision to adopt aggressive pricing.
Right now its website promotes rates starting at £9 or £19 a room.  The chain currently has 20,000 UK rooms and,
backed by Dubai International Capital, has ambitious expansion plans with 40
additional properties set to open next year. 

On December
2 a twin room at the Travelodge Kings Cross Royal Scot in Central
London would cost £85. That’s great. But on the booking page I
find £1 automatically added to my bill for what’s termed “cancellation insurance”.
I have to de-select this option to avoid paying it.

Then I’m
told that the hotel’s check-in time is 1500 but a £10 fee lets me check in
between 1200 and 1430. Check-out time is
1200 I’m told but, again, a payment of £10 will extend my leaving time until

Do I need
wi-fi? If so then Travelodge will sell
me vouchers starting at £5 for an hour or £10 for a day’s access. Do I want
any meals?  If so, I can prepay for breakfast at £6.75 or dinner at £8. Need a text confirmation? That’s a further 15 pence. And finally
there’s a £1.50 fee when settling the bill by credit card (debit card payments
do not incur a charge).

If all
these extras are selected then the total cost comes to £132.25. Granted that’s
a good deal less (when the meals are included) than what a conventional hotel
would charge but it’s substantially more than the original price.

Travelodge spokesperson defended the chain’s pricing policy, “Our whole
rationale is to offer the lowest rates for our customers. That is why we can offer
rooms in some cases for as little as £9 a night. We don’t want to penalise guests [by
charging] for the services they might not use.”

So far budget
rivals like Premier Travel Inn, Express by Holiday Inn and Ibis haven’t
followed suit. But who knows? When Ryanair started charging for extras it was
widely criticised at the time. But some carriers have followed.

So what’s
next for these budget hotels? If airline experience is anything to go by then
be prepared to pay more when booking off-line, for the tea and coffee tray, or for
those more desirable “end rooms.”

For more information
go to,

Report by
Alex McWhirter

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