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Marketing the budget hotel concept

Tom White

3rd July 2013

It’s three years now since we got excited at T2U by the budget hotel concept (there’s a reminder link here) and the format seems to have been a success. Imitation by Whitbread, with their new 'hub by Premier Inn' format suggests this is a successful innovation.

According to The Guardian, the USP is to focus on cheaper, smaller rooms – but in the best locations. Whitbread offer a quote that clearly pinpoints what their value analysis has told them their customers want: the hubs (will) be compact and contemporary with "excellent connectivity that will offer good value for money and appeal to customers who value price, location and design over space". Rooms will be 11.4 sq metres and feature a desk that folds into the bed, luggage storage beneath the bed, an en suite bathroom with power shower, free Wi-Fi and a 40-inch smart screen television. There will be a hub app allowing customers to book, check-in online and pre-select room, temperature and light settings, as well as television and radio channels.

The Whitbread chief executive has obviously looked at the market and his product portfolio, and says that there is enough “room in the market” for both its established budget Premier Inn brand and the new hubs. They have 6% market share in the central London market at the moment, so think there is more that they can grab.

Hub rooms will be up to 30% cheaper than Premier Inn rates, with an average room rate in central London below £100 and starting prices and off-peak rates likely to be around £60. The budget concept extends to lean running costs too; the hotels will have 25% lower build and operating costs compared with a central London Premier Inn.

Here’s another good quote "With substantial operating and commercial synergies from the Premier Inn network, we are confident that 'hub' will deliver good returns for our shareholders," the CEO said.

Whitbread, which also owns Costa Coffee and Beefeater has been very successful with its recent strategy.

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