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How damaging has Airbnb been to your business?
I think the online change is fantastic because we’re all consumers, we can all see that there will be new information, choices and efficiency. There are no signs that it has damaged our business, but we’re watching those changes carefully and investing heavily because we have to compete online with those new players, as well as delivering a great night’s sleep.
Has there been pressure on your room rates as a result, particularly as you are at the budget end of the market?
Airbnb is too small in London and the UK at the moment, and 60% of our business is b2b, SMEs who have large numbers of technicians or salespeople that they want to stay all over the country. We have 700 Premiers Inns all over the country that offer that good night guarantee. So I’m not complacent about the competition, we have to watch all forms of competition and continually improve, whether it is digital marketing or the quality of our rooms.
Did you find it difficult to persuade shareholders to back a programme of investment in a hotel’s business?
We’ll be spending £700m on capital expenditure, but ultimately it’s absolutely not about investing money. It is much more an internal issue about making sure the leadership have got the right attitude [on how to meet new challenges]. When there is disruption you have to look at new ways of working. You need to be able to bring those people [with new skills] into your organisation to create muscles that you didn’t have before. I think having the right attitude is more important than spending the money.
Attitude is important, but in a big incumbent where everything is changing around you, you do not want to go to work and think ‘I’m managing decline’?
This year Whitbread will make over £500m profit, we’re growing at 13-14% per annum, so our business is thriving. Two weeks ago Premier Inn was voted the best UK hotel chain in Which? by a long way because we offer a great night’s sleep. But we do need to move with the times and improved our distribution.
There is a pressure in the regulatory world which makes life harder for the disruptors, how big are your public affairs teams, and how actively engaged are they in blocking (or worsening the regulatory regime) around disruptors?
There’s one person in our public affairs team, two if you include me. But what we do think is that in the same way that companies like ours need to move fast to keep up with change, I think technology is moving faster than the regulators. If you look at Airbnb, 40% of their listings are multiple listings, which means a person offering more than one site. I was on their site at the weekend and there was a chap on there with 13 sites. These are probably professional landlords. How does the government – how does Airbnb – know that these professional landlords are complying with all the same laws that we are? Health and safety, fire regulations, consumer protection, paying their taxes? I think the government needs to think about how to use the available information in the market (and it is available), and how to make sure new companies feel the same degree of accountability as we do.
How much time do you spend pointing these things out to politicians and regulators? Do you point it out to government?
We write to the government, we wrote letters to the House of Lords, we talk to the CBI. We’re not looking for special favours, we just want to make sure that regulation keeps up with technology and there is a level playing field. Yes we point those things out – it is a fact that national and local government are not keeping up with technology, they’re not requesting the information that is already available, and I don’t think they’re putting a sufficiently strong requirement on new players to follow the same regulation that we do.
How are we ever going to reconcile making it great for entrepreneurs and disruptors to get into the market, and incumbents to be fighting challengers on a level playing field?
I am not against disruptors, but everyone needs to recognise what technology can do for business, and then the taxman needs to make sure he collects all the tax that is due.