When Britain’s major value hotel chains – Travelodge and Whitbread-owned Premier Inn – first began to ramp up expansion across the UK, they hit on a format to develop out of town locations often with a pub-style family eating establishment adjacent.
It seemed like a win-win scenario, with the pubs serving not just travellers but often proving to be popular local establishments too. Yet as the hotel chains have continued to grow and increasingly focused on urban locations, the two giants have taken a very different direction when it comes to F&B.
And while Travelodge has focused much of its expansion on partnering with branded F&B operators, Premier Inn has swapped restaurants for rooms. So why the divergence of approach?
Travelodge has embraced leveraging complementary brands and has signed a swathe of food & beverage deals, including dining, coffee shops and drive-thrus from operators such as Starbucks, Subway, Burger King, Greggs, Marstons, KFC and McDonalds, plus supermarket retailers such as Tesco, Sainsbury’s, M&S, Aldi, Lidl, Home Bargains and Waitrose. Late last year it became the first UK hotel brand to sublet to US fast food specialist Popeyes for its Northampton Upton Way Travelodge site, as the company ramped up its mixed development schemes.
Over a third of Travelodge’s circa 600 hotels are now located within a mixed development scheme and Travelodge is looking for a further 300 hotel sites across the country, with 120 of its target locations currently without a Travelodge hotel and 50 of the sites without a branded budget hotel at all.
“We are constantly looking at new and innovative ways to develop our estate. We have experience of working with major retailers and hospitality companies to help maximise development opportunities,” says Steve Bennett, Travelodge, chief property and development officer. “As we look to the future, we have identified that we can grow our business with a further 300 hotels and we welcome the opportunity to work with Popeyes as well as other major retailers and hospitality companies on mixed-development schemes.”
Travelodge is also revamping its own in-hotel Bar Café restaurants in a number of its hotels, with 85 Bar Café the name for its new look restaurant concept, debuted earlier this year. So far, around20 restaurants have been upgraded with the all-day dining offer.
“The expansion of 85 Bar Café forms part of a strategic hotel investment programme which will see us upgrade half of our rooms by the end of 2024,” adds Karen Broughton, chief sales and marketing officer at Travelodge.
Rival Whitbread has also outlined increasingly ambitious plans but those have seen it change tack on F&B. Recently, it announced plans to “unlock” 3,500 new hotel rooms at existing Premier Inn sites by converting what it called “lower-returning branded restaurants”.
The move will see 112 branded restaurants converted into rooms, once the F&B offering at the relevant sites has been transferred to an integrated restaurant, while a further 126 branded restaurants are set to be sold as going concerns, with Whitbread already having agreed terms to sell 21 of these for £28 million.
Whitbread currently operates a number of restaurant brands in conjunction with Premier Inn properties, including Beefeater, Brewers Fayre, Table Table, Cookhouse + Pub and Bar + Block.
However, the group said that although its UK hotel performance has gone from “strength-to-strength”, the performance of some of its branded restaurants had been impacted by a reduction in footfall from non-hotel guests with the result that they have “struggled to meet their targeted levels of return”.
Whitbread said that the new rooms would be added in “high-demand locations where we have identified a shortfall in supply”, and would enable Premier Inn to grow to 97,000 open rooms in the UK by the end of financial year 2029.
The move also reflects Whitbread’s determination to be flexible with real estate opportunities. In April, the company announced plans to open a subterranean hub by Premier Inn property in London’s Bloomsbury, housed within “under-utilised” car parking space under The Brunswick Centre.
And more recently it acquired the freehold of the 89,722 sq ft office, retail and restaurant building New London House at 6 London Street, in the City of London from clients of Orchard Street Investment Management for £56.5 million. The latest in its office-to-hotel conversions projects was developed in the 1970s and comprises a podium and tower structure adjacent to Fenchurch Street. Whitbread intends to seek planning consent from the City of London Corporation to repurpose and extend the current building into a hotel-led, mixed-use development.
Whitbread has converted a host of former office buildings into Premier Inn and hub by Premier Inn hotels, with two current developments in the City of London at Farringdon and Moorgate as part of its strategy of targeting office buildings which can be repurposed into hotels.
“We are seeing a structural shift in the London office market presenting opportunities to acquire office buildings that are no longer fit for occupier and investor purposes and to reposition and refurbish them into successful hotels. Our strong balance sheet, plentiful liquidity, and ability to buy and develop freehold property, which is rare in our sector, leaves Whitbread very well-placed to take advantage of this structural shift,” says Mark Anderson, managing director for property and international at Whitbread.
Whitbread’s shift from food-led pubs also reflects wider trends in the market which have seen a number of the UK’s property specialist largely exit the pub market as private equity has moved in. However, it is the previously challenged wet-trade sector which is experiencing the strongest growth.