Interview - Guy Parsons: Pillow talk from retailer of sleep

Published on Saturday 30 August 2008 15:09

The MD of budget hotelier Travelodge tells Terry Murden why Glasgow's Commonwealth Games present a golden opportunity

THE opening of another hotel in the Travelodge chain brought managing director Guy Parsons north of the border last week for what is likely to be the first of a series of visits in the coming months.

Big plans are afoot for the budget hotelier, which sees opportunities looming in the Commonwealth Games in Glasgow six years from now and also wants to capitalise on the public's current appetite for thrift.

The 4.1m hotel in Renfrew, next door to the Xscape leisure facility and the Braehead shopping centre, is the fourth in the Glasgow area and the company intends building another three in the city in the run-up to 2014 when it will host thousands of sporting fans. It will mean doubling the current tally of almost 400 rooms.

These are also good times for companies operating in the discount sector of the market. "Without doubt the current climate is tough and it is likely to get tougher," says Parsons. "But all the evidence in previous recessions shows that demand for budget hotels remains very strong during a downturn. People still have to travel and they will trade down," pointing out that in a promotion last Christmas, when the credit crunch was beginning to bite, the company was selling rooms at a rate of one every two seconds.

The company plans to increase the number of rooms across the UK from 25,000 to 70,000 by 2020, and Parsons says that after a period of stagnation when it failed to capitalise on opportunities for growth Travelodge is now taking advantage of changes in the marketplace. "A number of independent reports tell us that demand for the budget sector should remain strong. We have not scaled back our plans and we will still have a modest market share."

Significantly, Travelodge is now appealing to the type of customer who is also turning to the budget airlines and supermarkets: the middle classes who are looking at value for money and don't need or desire added luxuries. While the rooms are spartan, they offer the essentials and they suffice for those who don't require, or don't miss, the swimming pools, saunas, shoe-shining and conference facilities. Two-thirds of guests are leisure travellers and most are those who just want a comfortable room for the night without the extras.

Travelodge chief executive Grant Hearn describes his managers as "not typical hoteliers but retailers of sleep". Five years ago the headquarters in Thame, Oxfordshire, was renamed Sleepy Hollow, and in 2006 the company even appointed a director of sleep. Reclining on a bed in one of the new Renfrew rooms, Parsons maintains the theme. "It doesn't matter much what facilities there are once the lights are out," he says.

The average guest earns more than 45,000, takes multiple holidays, skis and reads the quality press. Parsons explains that among them are those who would never have previously considered a budget hotel. "We have brought people in from the three and four-star hotels, and many in that sector are actually quite poor."

He says the company's commitment to pricing at the lowest end of the spectrum will remain a cornerstone of its strategy and that it can achieve this through rigorous attention to costs. While to many visitors the facilities may seem austere, the company does what it says on the tin. For this reason it tries not to hire managers from other, more traditional hotels. "They usually want to complicate the operation by adding services we don't need," says Parsons.

"While demand is good in the budget sector, I see some of my competitors adding complexity to the business. Of course you need to give the customer a warm welcome and a clean room and there are some things we could not leave out. If we ever took the tea and coffee facilities away there would be uproar."

Travelodge was a creation of the Forte family, launching in 1985 next door to Little Chef restaurants. It switched ownership a number of times, including its absorption into Granada following the acrimonious acquisition of Forte, then catering chain Compass and the private equity firm Permira, which sold it to Dubai International Capital for 675m in 2006.

Parsons has been 19 years in the hotel trade following a short spell with Cadbury-Schweppes, for whom he worked after graduating in sales and marketing. He was managing director of Whitbread's TGI Fridays restaurant chain when in 2004 former colleague Hearn asked him to join him at Travelodge. Until two months ago he was chief operating officer and is now in charge of 337 hotels, spending a fair amount of time on the road and attending openings such as the one last week.

"We open one hotel every six days and there will be 18 in December alone," he says, adding that he doesn't get to all of them. The plan is to double the number in Scotland from the current 27, mostly new-build, but some through acquisition.

As the discount sector becomes more fashionable it is no surprise to hear that Travelodge has held talks with the budget airlines and supermarkets about closer collaboration, though nothing formal is planned. However, they do work together already. Two hotels for Newquay and Middlesbrough are being built above Aldi supermarkets. Travelodge is also opening hotels in a number of British seaside resorts, which is helping in their revival. "They saw double-digit growth this year," says Parsons, adding that the economic squeeze was almost certainly a factor.

The expansion is creating a substantial number of jobs and Parsons is pleased that the company is helping the long-term unemployed after signing up to the Government's Local Employment Partnership programme, a collaboration between business and the Department for Work and Pensions. Candidates are identified and prepared for work by a JobCentre Plus in conjunction with the employer.

Parsons sees it as a win-win situation for all parties while acknowledging that some may see it as a source of cheap labour. "I hold my hands up, but if someone is providing us with labour that is trained for our needs and people who want to work then why not do it?"

He says that in an industry characterised by a transient workforce many of those coming through the LEP programme are among the most loyal members of staff. "In many cases you have people who have either never worked or have been out of work for some time. Maybe they are single parents or have a disability. Whatever the case, they are often grateful to have a job and some self-respect and they are delighted to have the opportunity."

Hiring the right staff is a problem, he says, and getting people on the journey into management is vital. The company is backing the first budget hospitality sector degree course at Westminster Kingsway College and is considering replicating the idea in Scotland.