Low price, high quality

I recently flew a low-cost airline for the first time from the Mediterranean to Luton. Purchasing the ticket, selecting the seat and boarding the flight were easily done. The aircraft was immaculately clean and well presented, and the yellow-and-blue décor was pleasant and bright. The legroom for my prebooked seat — for which there was a small additional cost — was impressive and more expansive than most European business class seats, or certainly felt like it. If you wanted to sample indifferent airline food it was an optional cost, and the bar service was adequate.

The airline seemed to understand both price and value, and the customer experience was better than I had been told to expect. If the price-value equation is sustainable and the product maintained, this segment could eat further and further into traditional airline market share. If this segment pays a little more attention to the human element, customer interaction and journey, it could become awesome. Well done, budget sector.

My thoughts immediately turned to the hotel business, where we have a similar range of sectors but with fewer differences in price points. This could really start to squeeze the lower end of the hotel service sector even further, and more so if the limited-service sector starts successfully following lifestyle trends and introducing some popular food and beverage product.

What are your thoughts? How do you see the hotel non-service sector developing in terms of product and price points over the next five years?