Can Premier Inn really do without general managers?

24 June 2011
Can Premier Inn really do without general managers?

The announcement last week that Whitbread Hotels and Restaurants is to shed some 120 Premier Inn general managers in favour of cluster managers - each responsible for about five hotels - resonated with those who remember Forte Hotels' attempt to do the same in the 1990s with Posthouse and Forte Heritage properties. It followed Granada's takeover of the hotel group, when costing savings were the main focus, and it lasted until the properties were sold and GMs were reintroduced.

In fact, this is where the similarity ceases. Forte used the model with more conventional, full-service hotels, whereas the budget market in which Premier Inn operates involves centrally operated pricing policy, bookings and sales and marketing departments.

The cluster manager system is being introduced at a time when Whitbread is launching a new breed of smaller hotels (30-40 bedrooms), allowing the company to sign up for properties which are part of large mixed-use developments, and over high street stores. Stratford-upon-Avon was the location of the first such hotel, which opened in April 2011, and there are six more in the pipeline.

maximising return

"We continually review the design of our new hotels to ensure that we are providing our guests with what they need and where they need it, whilst also maximising return on investment," said Mark Anderson, property and commercial director for Whitbread.

Russell Kett, managing director of hospitality consultancy HVS, said that Whitbread's plans to make so many people redundant looks like a complete restructure of the cost base. "They are saying, let's go back to basics: each of these properties is a mini bed factory," he says.

"Most of the operational jobs have been as de-skilled as they can be, it is a formulaic approach - and very successful. So a manager can spend half a day or a day a week on each property and do what is necessary to motivate, supervise and make sure things are being done properly."

Hotel consultant Melvin Gold said he believed the model could work, provided the distance between the clusters is not too great. "Hotel companies at all levels are continuing to look at their cost base and this suggests we are not in steep upward growth at the moment," he said.

biggest rival

Premier Inn's biggest rival, Travelodge, was run on a cluster management model for two years, but moved away from it six years ago. "We run the business like low-cost food retailers, like Aldi or Lidl," said the company's chief executive officer, Guy Parsons. "All the decision-making is taken centrally, we set the rates and control the food and beverage. We take the power away from the general manager.

"There is no reason why it should not work. The question is why they are doing it: the only reason would be to take cost out of the business."

Some would say that there is no customer loyalty in the budget hotel market, which would also render the general manager role less important, but editor of Hotel Analyst, Andrew Sangster, disagreed. "Premier Inn is the number one hotel brand in the UK," he said. "With the cluster model, they are getting away from the Mein Host concept of hotels and into a new level of hospitality. They are looking at what consumers care about."

Sangster said he didn't care about being greeted by a general manager when checking into a budget hotel, what he wanted was a clean, comfortable room with soundproofing and a decent bed and shower.

"The guest does care that there is someone there who can deal with issues and that is a question of staff training," said Sangster. "Whitbread, more than most hospitality companies, has the training and control systems to make it work."

whitbread results

Sales at the 600 hotels within Premier Inn were up 3% from January to March 2011, according to Whitbread's first quarter results announced this week.

The company, which also runs Costa coffee stores, Beefeater and Brewers Fayre pub-restaurant chains, reported that its total sales grew by 9.2% in the 13 weeks to 2 June, including new openings.

Like-for-like sales at Costa Coffee, which has 1,200 shops in the UK and more than 650 internationally, were up 4%, while sales at Whitbread's restaurants fell 1.4%, owing to a more difficult dining market in the provinces.

Over the next five years, Whitbread intends to grow Premier Inn in the UK by 50% to 65,000 rooms." target="_blank" rel="noreferrer">Premier Inn to shed up to 120 general managers >>

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