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Assignment 2 - Report

Premier Inn

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Thames Valley University Faculty of Professional Studies London School of Hospitality and Tourism

Sales and Marketing for THL (TH50040E)The Company Report & Promotion Plan of Premier Inn in UK

Assignment 2 - Report

Premier Inn

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Contents Page1 Executive Summary 04 04 04 06 06 08 10 10

1.1 Introduction 2 1 Overview of the Company Current Market Situations

3.1 PESTLE Analysis 3.2 Competitor Analysis 4 Key Opportunities 4.1 An Analysis of the Companys Marketing Mix Strategies 4.2 SWOT 5 Promotion Plan 6 Action Program 7 Conclusions Bibliography Appendices Appendix 01 origins - background Appendix 02 - size Appendix 03 - growth Appendix 04 - revenue Appendix 05 - Business travelers first choice Appendix 06 Globalization & Premier Inn Appendix 07 Economic factors Appendix 08 World Cup impact Appendix 09 Leisure Habits

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Appendix 10 - Technology for guest survey feedback Appendix 11 - Environmental friendly Premier Inn Appendix 12 - Budget hotels competitors Appendix 13 - The idea of product mix Appendix 14 - Good night Guarantee proposition Appendix 15 - Terms and conditions Appendix 16 - Excellent performance on Revpar Appendix 17 - Flexible pricing according to demand Appendix 18 - Higher returns due to low construction an operation costs Appendix 19 - Premier Inn Recession Action Plan Appendix 20 - Increased weekend occupancy in comparison to competitors Appendix 21 - The prospects for growth of UK Budget Market Appendix 22 - International expansion Appendix 23 - Premier Inn rooms expansion Appendix 24 - Promotion Terms and Conditions Appendix 25 - Promotion price Appendix 26 - Promotion advertising Appendix 27 - Promotion artwork Appendix 28 - Promotion time plan & Budget Appendix 29 - Forecast Revenue

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1

Executive Summary

Premier Inns strategy is to create value for their shareholders by focusing investment and growth in expanding sectors of the hospitality industry and delivering outstanding performance across its businesses. (Whitbread, 2010)

1.1

Introduction

This report will analyze an overview of the hotel Premier Inn with the purpose of planning a promotion for revenue enhancement. In order to effectively develop a effective promotion, some key factors of Premier Inn will be discussed: company overview; SWOT analysis; PESTLE analysis; Marketing Mix; and Competitor analysis and finally the promotion plan will be developed.

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Overview of the Company

With nearly 600 hotels, Premier Inn is the UKs largest hotel chain. The Premier Inn brand is only just a little over a year old, yet it has already become the favourite budget hotel brand for business travellers. Premier inn is part of Whitbread, UK's largest hotel and restaurant group operating market-leading businesses in the budget hotel and restaurant sectors. (Appendix 01) Premier Inn is UKs fastest growing hotel brand with 578 budget hotels and 40,559 rooms across UK and Ireland. It opened 4553 rooms in 2008/09 and plans on opening 2000 new rooms in 2009/10. Premier Inn launched it brands overseas in Dubai and India in 2008 and 2009 respectively. Premier Inn also has a joint venture with Emar-MGF to roll out 80 budget hotels in India by 2017. On a domestic front, Premier Inn is set to be the largest provider of budget hotels in London by the time of the 2012 Olympics. Premier inn plans for Capital expenditure to be 170 million to deliver new rooms in the UK and overseas. (Appendix 02 & 03)

2008/2009 was a strong year for the group despite the challenging economic backdrop. The sales rose

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14.0% to 601.5 million with the like for like sales up 6.0%. They have taken actions to increase efficiencies and reduce costs in the current economic climate. Their balance sheet remains robust and is underpinned by a strong freehold asset base and their target to run the current operation in cash flow neutrality. Revenue per available performance grew by 2.8% on a like for like basis (Appendix 04) Premier Inn targets both business and leisure travellers. The hotel has good offers and facilities like meeting rooms and touch base centres and special offers for families like free kids back which has led to bringing in customers from both side of the target segments; Around 755 of UKs Population lives within 5 miles of Premier Inn. Premier Inn has continued to attract corporate customers and is now a leading choice for Business travellers. (Appendix 05) Sales via the Premier Inn business Account grew by 24% to 171 million. It is also becoming a leading choice for leisure travellers due to premier inns focused marketing strategies. Premier Inn has come a long way since it was first acquired by Whitbread PLC and is now a leading brand in UK budget hotel industry with guest satisfaction rates over 80 %.

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33.1

Current Market SituationsPestle Analysis

PESTLE analysis is an investigation of political, economic, socio-cultural, technological, legal and environmental factors that affect business. PESTLE factors are dynamic and consumers attitudes and behaviour are affected by these changes. (Bowie and Buttle, 2006) Political Factors: - The demand of the Premier Inns product would be affected by the changing of local, regional or national government taxes such as value added tax, general sales tax rates and tax on alcoholic beverages. - The war on terrorism may lessen unnecessary leisure-based travel, so Premier inn has to be aware when recruiting or contacting the suppliers to keep up with the demand. (Cetron, 2004) - Globalization keeps on changing according with the world, and it must be taking in concern .(Montana, 2008 Appendix 06) Economic Factors: - The company has reported revpar had improved after a year when previously it had 7.9% dropped in sales as the recession hit last year. (BBC, 2009 -Appendix 07) - The constantly weak pound is another factor. It pulls more travellers to visit London, which can be treated as opportunity for the company Socio-cultural Factors: - Household structures have changed to more single families and divorced couples. Eating and drinking out habits have risen as well. - An increase of elderly in the developed countries would be an opportunity as they have spare time and money to spend for leisure activities. (McCaskey, 2008)

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- 2010 World Cup being held in June, will impact consumer behaviour and their consumptions. (Oxygen Mintel, 2010 appendix 08) - Leisure industry habits are changing against hotels and restaurants, according with Mintel (2010) appendix 09 Legal Factors: - Employer must pay their workers a minimum amount as defined by law which is national minimum wage. In each October, Premium Inn should check the national minimum wage. This implies an increase of expenditure on workforce. Technological Factors: - The self-check in system in Premier Inn reduces the check in time from ten minutes to a min, which implies the time and monetary cost would be less for the company. - Druce (2010) reported that Premier Inn uses its guest satisfaction survey to tackle problems (appendix 10) - Online booking has been one of the biggest factors affecting hotel business nowadays. (Internet World Stats, 2007) More people are booking holiday on the internet, as they would like to get cheaper deals than the offers from travel agents this reduced costs for Premier Inn and customers can book rooms just staying at home. Environmental - The board of directors is committed to the implementation of environmental Factors: policy and energy saving policy, by complying with the law and regulatory requirements. (Whitbread, 2010) Weather and climate are unstable in 2010, which have major effect on hospitality industry. The trips of European travellers could be ruined by further volcanism of Iceland. (Osborne, 2010)

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With the increase in awareness of environmental issues among consumers, companies continuously have to show that they are also care. (Appendix 11)

3.2

Competitor Analysis

The Budget Hotel Market has nine key players which, in addition to Premier Inn include Travelodge, Jurys Inn, Holiday Inn Express, Easy Hotel, Comfort Inn, Days Inn, Ibis and Innkeepers Lodge. Data from the BDRC Hotel Survey 2008 showed 107 million adult room nights for 2008, a year-on-year fall of 1.8 per cent. Due to the drop in the number of domestic leisure guest, hotel staying penetration receded slightly to fewer than 36 per cent of all adults which equates to just under 16.5 million people. Total UK business volume remained unchanged from the previous year at 59 million room nights while domestic leisure volume fell to 48 million room nights. The development of the budget sector, led by Premier Inn, continues to grow. Furthermore, usage of budget hotels by business travellers exceeded that of midmarket and upper tier sectors for the first time, according to the BDRC.

Brand Premier Inn Travel Lodge Holiday Inn Ibis

Number of Room 32762 19335 11078 6536

Market Share (%) 38.20% 22.60% 12.90% 7.60%

No of Hotel 488 304 108 48

Market Share (%) 41.70% 26.00% 9.20% 4.10%

The remaining 20% of budget hotel market is motley of other 12 brands. Premier Inn is taken as one of the best budget hotel among their competitors; as they have Good Night Guarantee statement and 72% of first time customers chose Premier Inn as a cheaper alternative with the best service and most of them are possible to visit th