Premier league for Whitbread?

Spirit Group’s auction of the Premier Lodge budget hotel chain is entering the final straight. Sources close to the deal suggest a sign-off could take little more than a week, four at most. Two bidders are left in, Apax, the private equity house, and Whitbread. Latest, City talk makes Apax, which plans to take the present management team with it, favourite. However, there is also a feeling that Whitbread has the outcome in its own hands. It just depends on how much it wants the deal, now valued at over £500m. This column has argued that Whitbread can easily live and prosper without Premier Lodge. However, the addition of the 130 Premier sites would transform Whitbread’s Travel Inn business and the group itself, and set a positive tone for new chief executive Alan Parker’s incumbency. It would give it undisputed UK dominance and a real platform for international growth. Parker is already looking at a new structure for the business, with talk of merging the pub restaurant brands, Brewers’ Fayre, Beefeater and Brewsters, under one management, following the departure of Brewers Fayre boss Ian Webster. Parker is also said to want to create a new main board position, to bring more cohesion to the business. Stewart Miller, current boss of David Lloyd and one of Parker’s rivals for the top job, would be the obvious choice. The addition of Premier Lodge would underpin budget hotels as Whitbread’s core growth and profit driver, and likely prompt a shake-up in the Travel Inn structure as well. The worry for Parker over Premier may not be so much about being seen to overpay than being seen to lose. Meanwhile, Travelodge, Travel Inn’s main rival, is beefing up its team – and with Whitbread expertise. Grant Hearn, Travelodge’s chief executive and a former Travel Inn boss, has appointed Guy Parsons, another Whitbread trained operator, as his new marketing director. Parsons’ most recent job was managing director of Whitbread of TGI Friday’s restaurant chain. But he is essentially a hotel man, having worked at Marriott and as Hearn’s marketing director while at Travel Inn. It is interesting to see that the battle among UK budget hotels is increasingly between Whitbread-trained executives and all with a strong grounding in the consumer-focussed business of casual dining restaurants. Travelodge, which wants to position itself as the "smart option", the Easy Jet of the sector, and has been successful in cutting costs and driving occupancy. It now needs to push profitability through better yield.