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Are you Aldi or Fortnum?

19 March 2014
Are you Aldi or Fortnum?

Hotels are lowering their prices to appeal to everybody, says Peter Hancock, but why should they?

Fortnum & Mason, the venerable London emporium that first opened in 1707 and boasts a Royal Warrant, seems to be enjoying something of a renaissance. With profits in seven figures, the business is planning to open a branch in Dubai. I had occasion to visit the Piccadilly store recently and was impressed by the amount of high-value merchandise, from toy boats to vintage Champagne, all beautifully presented and with knowledgeable staff.

Meanwhile, supermarket chain Aldi is stealing market share from its competitors and now has more than 500 branches. Apparently, one in three households shops at Aldi at least once a month.

Both of these companies have a clear strategy. They know which bit of the market they are aiming at and concentrate unashamedly on that. One is all about quality, the other very much driven by price. If only life could be that simple for hoteliers, you may say.

But why isn't it? Surely those who have invested in the best china, the most talented chefs and a state-of-the-art spa must be pitching for the very people who go to Fortnum's. You might think so, but search on the web and you may see rooms at surprisingly low rates. Are they hoping to muscle in on the Aldi brigade? I fear the market is becoming influenced by the notion that "cheap" rooms should be found everywhere, even in "expensive" hotels.

The reverse almost never applies. I have yet to see rooms at Premier Inn or Travelodge offered at astonishingly high prices.

If you are a hotelier, which end of the market you aspire to should determine your pricing. Yes, rooms are "perishable goods" so, unlike silver cufflinks at Fortnum's, you can't keep them to sell another day. But having some empty rooms in a hotel that is trading profitably must make more sense than ramming the place with guests who do not want to or fail to appreciate its finer qualities.

I make no comment here about the mid-market, except to say that a fair number of these hotels have clearly been drawn into a dangerous downward rates spiral, while a few very imaginative people have managed to create their own special niche by offering good food and hospitality in a simple, attractive way.

So are you Aldi or Fortnum? Because I don't believe it's possible to be both.

Peter Hancock is chief executive of Pride of Britain Hotels

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