'There has to be a cull. It is a natural consequence of changing events,' says Paul Slattery, hotels analyst at Kleinwort Benson.
Problems in the 370,000-room UK hotel market make the headlines almost on a weekly basis. The collapses of Queens Moat Houses and Resort Hotels, volatile swings in trading performances of Forte, Ladbroke and the Savoy and a continual flow of hotels into receivership have rammed home the message that all is not well.
'The past 15 years have been a period of consolidation in the industry,' Mr Slattery says. 'Independent hotels have become the corner shops of the industry, the unprofitable Fawlty Towers.
'Most of the problems are with hotels in the secondary and tertiary locations in small towns, villages and seaside resorts.'
Hotels in small locations find it difficult to make money, he points out. They are often old, which means they are difficult to maintain and have a high cost base.
'Some of them are full-feature hotels, which means that they need a lot of people to go in and do a lot of things such as using the restaurant, the bar and the gymnasium,' he says.
They are also facing growing competition as many of the larger chains have chosen these kinds of location for limited-feature hotels, with which it is easier to make money.
The Travelodge chain run by Forte and the emergence of Travel Inn, part of Whitbread, in particular are making life exceedingly uncomfortable for hotel owners throughout the country.
Travel Inn is the fastest-growing hotel group in the UK. It recently launched its 50th hotel and aims to open two a week this year.
Sir Michael Angus, chairman of Whitbread, says: 'Travel Inn's no- frills concept, offering first-class accommodation for just pounds 33.50 a room per night, is one of the great success stories of the hotel industry in the 1990s.'
Forte, Whitbread and a host of other drinks-cum-hotel companies such as Boddington and Greenalls have recognised that consumers have become reluctant to part with cash. At the same time, though, they have placed more demands on service.
Most want more quality for less money, many want more leisure facilities and some want a mixture of both.
Now that they can satisfy their needs at hotels run by the larger operators they are spurning previous haunts. Spending the weekend at the seaside bed-and-breakfast has become a thing of the past.
This consumer pressure being applied to the industry is remarkably similar to that being faced by pub operators, many of whom are going to the wall.
It is a wall recognisable to hundreds of hoteliers. About 20,000 hotel rooms are at present in the hands of receivers. And the banks are defiantly maintaining a presence in the industry in the belief that buyers can be found to take over distressed hotels.
That is part of the problem, however, Mr Slattery says.
'Banks are prolonging the problem,' he alleges. 'There have been innovative developments in hotels that have folded, but not enough.
'In some instances it has been cheaper to buy a small hotel than a house. Some have been converted into retail outlets and some into pubs.'
A radical change of use, though, is easier said than done. Money, or the lack of it, is the biggest constraint, particularly among those operators who leapt on to the back of the Eighties property boom.
Being in possession of negative equity hardly places a hotelier in a strong bargaining position with the bank. And it virtually closes the exit door to the sell-out route.
The chances of these hotels benefiting from a recovery in property values in the medium term are low. Billions of pounds have been wiped off values by the bigger owners of higher-quality room stocks over the past two years, inexorably inflicting more wounds on the industry's long list of casualties.
Forte showed this week that hotel values are, if anything, still too high when it lopped another pounds 183m off the worth of its UK estate.
This year is set to play host to a savage fight for profits by the dominant band of quoted hotel companies, which can afford to hold room rates in the confidence that returns will recover as occupancy levels rise.
Among the main consumer targets are the forty-somethings. 'These are people whose families have grown up, their mortgages are getting paid off and they have got all the material kit at home,' Mr Slattery says.
'They are also getting near-peak earnings and want to enjoy themselves.
'And the good news for the industry is that the number of over-40s is set to grow by 20 per cent in the next five years.'
There are also encouraging signs that the burgeoning band of over-40s in the US are discovering the taste for travel. And, like their UK counterparts, they want value for money.
Their movements helped London hotels to report a recovery in occupancy levels last year. Average occupancy improved by six percentage points to 74.7 per cent.
This improvement, however, favoured the middle and lower end of the markets more than the top end, where occupancies, while showing a dramatic leap from 59.2 to 67.1 per cent, are still well short of yielding solid profits.
And the difference between the haves and have-nots at the top end of the London market is stark. Those that have adapted to change have done well and those that have stuck to their guns in the belief that the glory days will return have suffered.
Results on Wednesday from the Savoy group were a case in point. Taxable profits for 1993 were just pounds 725,000, and included the benefit of some hefty one-offs. They included a pounds 555,000 gain from investment disposals and a boost to trade from hosting the world chess championships.
The Savoy has all the appearences of being locked in a time warp. In particular it stubbornly refuses to lower its room rates - pounds 193 a night on average.
Forte, its main competitor in London, makes around pounds 17m a year from three leading London hotels - Browns, the Hyde Park and the Grosvenor - which are similar in size to the Savoy and its sister hotels, the Berkeley and the Connaught.
From the top to the bottom of the industry the next couple of years will be all about the survival of the fittest. Time, then, for some operators to check out of the industry and indulge in some more luxurious surroundings.
(Photograph and graph omitted)