Patrick Dempsey, managing director at Whitbread Hotels, tells Sara Turner why, despite competition from other hotels, he will not be cutting rates at Premier Inns
The recession has forced most hotels to cut rates substantially. The HRG hotel survey published earlier this month said three- and four-star properties are cutting rates to compete with budget hotels.
But Patrick Dempsey, managing director of Whitbread Hotels and Restaurants, said Premier Inn will not be dropping prices in response, despite reporting “flat sales” in the 13 weeks to the end of May this year.
But he said the drop in rates would be temporary. While it is a nice opportunity to stay in upmarket hotels, he said, it can’t last. “With three and four-star properties cutting prices, what corners do they cut, and will they bring those standards back up again?” he asked.
While some may be offering more perks for the price of a room, such as free breakfast, Premier Inn’s rigid pricing model will not change – £7.50 for breakfast and a set fee for WiFi. “We have a very simple model. We have a very simple pricing process. It works very well for us,” Mr Dempsey said.
He added: “It is a difficult marketplace at the moment and we need to be assuring value for money, great standards and great quality. I think it’s about maintaining our standards. We are very competitive on price, we are very good value for money. We’re not going to suddenly massively cut our prices.”
Premier Inn’s chief also predicted that it will be companies which have not invested in their properties that will suffer most in the recession. “I think you will see budget continue to expand in the UK. But, a budget hotel that has substandard accommodation, with chintzy wallpaper and broken beds -businesses that have not invested in their products and have charged higher prices in better times – I think we will see a lot of those businesses get in trouble. Perhaps that’s a good thing. Perhaps that washes out some of the rubbish on the market place.”
At Premier Inn, Mr Dempsey said, hotels receive constant investment. “We refurbish every two to three years, and we have a regular brand standards audit at every hotel.”
The hotel group has launched Premier Offers, however, with one million hotel nights available for £29. “We had to react with Premier Offers, but that’s the only promotion we do. We had to get out on the market place and say ‘Look, we’re great value for money'”.
Some 40 Premier Inn hotels have also introduced dynamic pricing, with others in the chain set to come online through the rest of the year. “That will allow us to compete when we have trough periods by lowering our prices, which is something we didn’t do before,” he said.
Premier Inn’s expansion plans are also ongoing, with six new hotels in the UK, including London Victoria next month, a new property in Dubai before the end of the year, and the debut of Premier Inn in India, with Premier Inn Bangalore set to open in October.
The rate of expansion has been affected by the recession, however. Mr Dempsey said: “The right thing to do was scale back this year, and see how we fare. Once we feel confident again that the market is going to grow, we will go back into our growth strategy.”