Premier Inn’s ‘consistent brand evolution’ spurs revenue

Video: Premier Inn’s 2014 TV campaign

Revenue generated by the Whitbread-owned Premier Inn business grew 13.4 per cent year on year to £967.9m in the year to 27 February 2014, amid a climate where hotel bookings have only just started to pick up. Like for like sales grew 5 per cent.

In January Premier Inn kicked off a £15m marketing campaign it said broke the mould of the hotel sector by not following the traditional path of showing the room or other hotel interior, nor a focus on price. The key message of the campaign, starring brand ambassador Lenny Henry, was the hotel’s “Good Night Guarantee”. 

The chain also spent about £80m in the last fiscal year on the maintenance and refurbishment of its hotel estate, which included the introduction of its “Best Ever Beds”.

The efforts have not only helped boost bookings but have increased customer satisfaction. Premier Inn says 70 per cent of guests in its “Guest Recommend Survey” rated their stay nine or 10 out of 10 and that the brand continues to come top in YouGov’s “best value for money” survey.

Premier Inn also says efforts to substantially upgrade its digital capabilities have seen online reservations growing from 67 per cent to 85 per cent of the total. The chain recently launched a new mobile website and iPhone app in an effort to improve customer conversion.

In 2013/14 Premier Inn opened 23 net new hotels taking its total UK hotel estate to 672, 172 more than its closest competitor Travelodge. It expects to grow its estate to 750 locations by 2016.

George Saunders, food analyst at retail research agency and consulting firm Conlumino, says: “At the root of Premier Inn’s success is consistent brand evolution…it has invested beyond price to broaden its differentiation; including a systematic site refurbishment programme and focused initiatives such as its next generation ‘Best Ever Beds’ campaign.”

Saunders says Whitbread has also succeeded in using its wider brands such as Costa Coffee and its pub chains to complement the overnight experience.

Whitbread, which also owns the Beefeater Grill and Brewers Fayre restaurant chains, posted total full-year operating profits grew 1 per cent to £332m, on a 13 per cent increase in revenue to £2.3bn.

The group was boosted by strong UK sales at its Costa Coffee chain, which opened 177 new cafes in the period, taking the total to 1,755.

Whitbread says Costa’a sales were driven by its Christmas marketing campaign alongside the introduction of a new breakfast range and note chocolate drinks.

Costa’s brand preference score is also strengthening, with its position among the YouGov coffee shop brand preference survey having increased by five percentage points since last year, Whitbread says.