Jim Armitage: Whitbread caught napping with this ill-timed roll-out

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Whitbread is one of our best-run companies. Its sharp focus on rolling out Costa cafes and Premier Inn budget hotels across the country was impeccably timed to hit the public’s appetite for better coffee and cheaper, but more regular travel.

But it has clearly got the timing of its recent rapid-fire roll-out of Premier Inns in London wrong.

At great expense, it added 1000 new rooms to London in the past year alone. As its website boasts, it has recently opened up for business in Hackney, Brixton, Archway and Lewisham, bringing its total number of London hotels up to 30. 

This latest surge has seen the new rooms come available just as the referendum put off business travel and tourism felt the after-effects of the Paris and Brussels terror attacks. The effect: you can get a room in Old Street for under £50.

Tourist traffic will bounce back like it always does, and business travel will resume if we get a Remain vote on Friday. But it’s still doubtful the budget end of the hotels market can bear the rapid recent growth in supply, particularly as Airbnb offers even cheaper alternatives.

Either investors will have to get used to a long-term future of cheaper, less-profitable Premier Inns, or some sort of retrenchment is in order.

Perhaps some of Whitbread’s new hotels will one day be put to use where they’re actually needed, as affordable homes for Londoners.

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Source Article from http://www.standard.co.uk/business/jim-armitage-whitbread-caught-napping-with-this-illtimed-rollout-a3277321.html

June 21, 2016 |
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