Premier Inn owner hails brand marketing a ‘powerful tool’

Whitbread, owner of UK hotel chain Premier Inn, has credited brand marketing as a “powerful tool” in driving bookings, which has led to the brand increasing profits by 556% on last year.

In a call to investors today (25 April), Whitbread CEO Dominic Paul said revenues and profits had “grown strongly to surpass even pre-pandemic levels” and “outperformed the market” while increasing UK returns.

Paul highlighted Premier Inn’s “reputation for quality and value” and said its “highly effective marketing” was helping to drive large volumes of customers to its website.

“Our brand marketing, including our latest ‘Rest Easy’ campaign, is a powerful tool in driving bookings, reducing customer acquisition costs and sustaining our market leading brand awareness scores,” he said.

He highlighted how Premier Inn’s marketing activity had helped to boost customer volumes from 4.2 million in 2018 to 5.9 million in 2022 (see chart below) and went on to praise the chain’s “vertically integrated operating model” as the key driver of performance.

“It has meant we have been able to secure clear market leadership in the UK by putting our hotels in the right locations and using the right format to maximise returns,” Paul said.

Thanks to its “consistent, high-quality offer at a great price” he said the brand has also been able to build stronger direct relationships with customers, which in turn has lowered the cost of customer acquisition. Paul said less than 1% of its bookings now come through third-party online travel agents.

Premier Inn created its own trading model, which allows the brand to manage its pricing strategies across all of its hotels centrally, giving it greater control. The company says the tool provides a clear view of demand and creates further opportunities to maximise revenue as it has now been integrated into its digital marketing, which is resulting in “greater occupancy and higher yields”.

Paul told investors: “As we developed it in-house we are able to respond quickly to changing market dynamics, opening up new opportunities to extract additional RevPAR [revenue per available room].”

The figures show it has been a successful endeavour as 52% of site nights were at 100% occupancy in FY23 compared to just 31% in FY20 (see chart above).

Beyond ‘revenge travel’: How Premier Inn is changing its brand positioning amid cost crisisPremier Inn’s brand health is also strong, coming out top of the hotel category across a series of measures on YouGov’s BrandIndex, including satisfaction, impression, value, awareness and likelihood to recommend, while coming second only to Hilton on quality.

“There is clear blue water that now exists between us and our competitors in terms of quality and value,” said Paul. “Premier Inn is, and remains, the UK’s number one hotel brand synonymous with high-quality and great value. We are the clear market leader on this combined measure and it’s why 75% of our bookings are made by guests who have stayed with us before.”

In the UK, Premier Inn saw total accommodation sales rise by 55% in the year to 2 March 2023 compared to its 2022 financial year, and 37% ahead of 2020, with the business claiming it continues to outperform the UK midscale and economy hotel market at a rate of 25.2pp.

Premier Inn’s UK adjusted profit before tax reached £492m in the year, up from £75m last year, a 556% improvement. It is also a 19% increase on its 2020 financial performance.