Whitbread to add Hub as UK’s second sweet spot
 
Whitbread to add Hub as UK’s second sweet spot
11 MARCH 2014 6:52 AM

Whitbread’s Hub by Premier Inn is set to launch in the third quarter of this year to target savvy, location-oriented guests who desire high-tech, quality rooms.


LONDON—As urbanization marches on, cities grow more congested, human beings become more accepting of smaller spaces and good hotel locations get eaten up, Whitbread is rolling out a new budget and economy brand, Hub by Premier Inn, that minimizes space yet strives to provide the quality economically savvy guests demand.
 
The new brand, first announced last July, will debut in the third quarter of 2014 with Hub by Premier Inn St. Martin’s Lane, which is a London office conversion.
 
“The initial Central London pipeline will consist of 1,700 rooms, but the idea is for there to be between 4,000 and 5,000 keys in London, maybe even up to 8,000 across Greater London,” said Simon Ewins, business development director, Whitbread Hotels and Restaurants, parent company to both Hub and higher price point product Premier Inn, which has 55,000 keys across the U.K.
 
“Premier Inn is a U.K. household name, which can be leveraged. At the moment Premier has 6% of the hotel stock in London, so the idea is to cannibalize other hotels rather than seek new locations, which in London requires complex planning permission and a minimum of three years of development,” Ewins said.
 
“Space constraints mean we now micro-manage exact (postcodes), and we see Hub as the perfect solution to reach into tight markets and buildings,” he added.
 
Hub hotels also are in the pipeline for Edinburgh, Scotland, but Ewins said the U.K. provinces remain difficult markets.
 
Testing the concept
Hub is the result of research focused on a series of mock-up rooms in the London Kings Cross Premier Inn. Since June 2012, more than 2,000 guests have stayed in five slightly different versions of Hub and reported their likes and dislikes. The only thing sacrosanct is the room size of 11.4 square metres (123 square feet).
 
Guest response, according to Ewins, was that space was not an issue, but convenient locations and hip design and technology were. He also believed the last recession caused deep scars on guests’ psyches that determined what they were now willing to pay, even within more affluent income levels.
 
Whitbread originated the phrase “compact” in terms of hotel rooms, according to Ewins, who said he believes this space will continue to be a global phenomenon during the next 15 years and beyond. 
 
Not for Hub hotels are the social lobbies seen in new or revamped brands such as CitizenM and Mercure, although Whitbread’s stand-alone Costa Coffee chain has the option to get involved. A deli and bar concept is soon to be unveiled at a Hub location close to the Kings Cross Premier Inn.
 
“Lobbies are huge luxuries, and we’ve also concluded that guests want a level of food and beverage but are more interested in exploration outside the property,” Ewins said.
 
Business model
The primary objective of Hub is to have freeholds, said Ewins, a model that will allow the group to drive rates while cutting capital expenditure.
 
“Hubs are 25% cheaper to build than are Premier Inns on a room-to-room basis, and even though their average daily rate will be 25% of that of Premier Inns, they will have 40% more rooms. That is sensible mathematics for the urban location,” Ewins said.
 
Whitbread owns and operates more than 70% of its properties, which Ewins said is the company’s historical preference and also has the advantage of reducing risk and withstanding the threat of increased competition.
 
Premier Inn will remain Whitbread’s principal hotel brand in the U.K., with 75,000 keys planned by 2017.
 
“We see there being two sweet spots in the U.K., one satisfied by Premier Inn, the other to be satisfied by Hub,” Ewins added.
 

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