Budget airlines have taken off in a big way, but are budget hotels here to stay too? JO HAYWOOD investigates.

THERE was a time when a "no frills" hotel meant a back street B&B with a landlady in a pinny and a communal bathroom on (almost) every floor. Now, however, no frills mean big business.

Travelodge, which has 240 hotels around the country, including one in Piccadilly, York, has just unveiled its new 120-room Grade II listed building in London's King's Cross, where it is promising to slash rates to as low as £7.50 per person per night.

The standard family room rate at York Travelodge is £59.95, rising to £69.95 on April 5.

Customers can get a special £25 rate, but this is subject to availability and only on offer via the internet.

As part of a barnstorming year of 20 openings, the company will be unveiling a new hotel in Harrogate in 2004. Room prices have not been confirmed, but they are likely to be less than £40.

"Many people on the move want only a comfortable bed, private bathroom and TV," said Shakila Ahmed, spokesman for the hotel group, which boasts it is the only UK low-cost chain fixing prices by demand, like the no frills airline model pioneered by the likes of Easyjet.

Guests in other British hotels, he said, were "wasting" at least £186 million a year on extra facilities like gyms, room service trouser presses and shower caps.

But what if guests want optional extras - will more traditional hotels be able to withstand the price battle launched by the bigger boys?

"There is a lot of structural change happening in the industry," said Michael Hjort, secretary of York Hospitality Association, which merged with York Guest House Association last year. "In plain English, this means a lot of the more traditional guesthouses are disappearing.

"To what extent the budget hotels are generating new business is debatable. It is a fact, however, that they are taking business away from guesthouses."

Smaller hotels rated by the tourist board as "three diamond", which make up a large part of the accommodation available in York, are particularly suffering. Mr Hjort said he knew of at least five in the city that had closed in the last 18 months.

"Guesthouses should concentrate on promoting what they can provide that the big chains can't," he said. "They have personality and high levels of service - they are the human face of the hotel business.

"It's also important that they recognise that they do have advantages over budget hotels. Word-of-mouth recommendations are a vital tool for the smaller guesthouse. I've never heard anyone recommending a budget chain hotel on anything other than price. No one ever says how lovely the hotel was or how much they enjoyed their stay. For some customers, price isn't everything."

Travel Inn, the current market leader, is equally as unimpressed by the latest Travelodge offensive.

"The no-frills airline analogy doesn't fit hotels," said marketing director Gill Baker, "because we can't send prices sky high at the last minute, as airlines do.

"Special deals are all very well, but most people in this sector need to be somewhere on a certain day when deals don't apply."

This refers to the fact that many price deals - including the £7.50 Travelodge offer - only apply when demand is weak, on Sundays, for instance.

"Guesthouses have to work harder at marketing themselves," Mr Hjort said. "They might not be able to match the special deals, but they have a lot of other positive attributes. They have to be more proactive and not just wait for business to come to them."

Updated: 08:42 Thursday, March 11, 2004