Here’s the thing, I tell Whitbread boss Alan Parker. I stayed in his Premier
Inn in Nottingham last week - £55 for the room, spotlessly clean, windows
that opened, nice bar downstairs, Costa coffee concession opposite,
efficient women at the front desk ensuring everything worked. The hotel was
full. You can see why Whitbread, which includes Premier, Costa Coffee and
Beefeater among its key brands, is tipped to have a good recession.
“Thank you for your support,” says Parker quickly, with a mock-formal nod.
Then he laughs. “But seriously, we have the highest occupancy and the
highest return on capital in the sector at Premier Inn. And what I like now
is that we are giving customers what they want. It’s a great investment for
shareholders, the job satisfaction for people working in them is high, and
it’s a business model that works.”
So perhaps he should leave now? Group sales up 13% in the 39 weeks to November
27, acclaim for the way he has refashioned Whitbread’s £1.2 billion
revenues, a CBE from the Queen on Friday - it can’t get any better.
Parker, an amiable giant, smiles hesitantly. “I’ve worked through downturns
since the three-day week [of 1974],” he says. “This is a time for cool heads
and experience, for a sagacious approach . . .”
Is he winking? He is certainly a hard man to judge. Cautious in manner, slyly
funny, with thin hair pulled across a balding pate, and eyes that slide away
when engaging you, Parker was a working-class boy sent to a posh boarding
school and he never wants to reveal too much.
Yet at 62, he has found his metier, transforming Whitbread, the former brewer,
from a ragbag of retail leisure brands into an operation focused at the
budget end of hotels, restaurants and coffee bars. And now its Premier Inn
chain, which he has built into the biggest hotel group in Britain, is
gleaning serious praise.
Only a few years ago, many used to mock Whitbread’s efforts at homogenising
and rolling out its brands. Not any more. Nor is there any shame at being
down-mar-ket as the recession looms. “There is,” says Parker carefully,
“nothing cheap and nasty about us.”
Sitting in his tight office off London’s Piccadilly Circus, he exudes sector
savvy. A hotel-industry veteran, Parker is known as a cautious, stubborn
operator, good at appointing talent and familiar with the ways of brewing
groups: he had worked through the hotel arms of Truman, Scottish &
Newcastle (Thistle) and Bass (Holiday Inn) before joining Whitbread in 1992.
Even so, few expected him to snatch the top slot when Whitbread sought a new
chief executive four years ago. He ran its biggest division, yet many
thought an outsider was the only answer to the group’s diverse and
underperforming interests.
Since then, Parker has proved doubters wrong with a series of deals that now
look smart: paying more than expected for Premier Lodge; getting out of TGI
Friday, Pizza Hut and Marriott Hotels – brands Whitbread didn’t own – and
selling David Lloyd Leisure clubs for £925m last year.
Hadn’t analysts been telling Whitbread to do that for years, though? Parker
bristles, ever so slightly. “Analysts tell you lots of things. They told me
to sell David Lloyd Leisure for £350m four years ago, and I hung on and got
£925m. Timing is everything.”
Whitbread has been the whipping boy of City critics for so long that Parker
has every reason to preen. And it’s not just his knack for selling. He
walked away from a £900m deal to buy Travelodge earlier this year. Whitbread
would now be far more highly geared and vulnerable to recession if that had
gone through.
Yet there is still a sense among some in his industry that Parker got lucky –
he wanted to sell the brands Whitbread didn’t own, but stumbled onto the
value proposition as the economy swung his way. And he was fortunate that
private equity didn’t break up his business first. Those who know him
dismiss that. They say Parker had the idea of converting Whitbread into a
budget-hotel group a decade ago.
“I think Alan is a visionary,” says Angie Risley, Lloyds TSB HR director,
formerly at Whitbread. “When he joined the business it was brewing with
pubs. If anybody had said it would be the biggest budget-hotel group in
Britain, nobody would have believed it, but that was what he proposed. He
spotted that opportunity years ago.”
What about Costa, though, which Parker has long championed? Paying £2 for a
cappuccino is hardly a value proposition, and why link coffee shops with
hotels?
Parker doesn’t flinch. “No, Costa’s not budget but it’s a small-ticket item,”
he says. And the skills that enable Whitbread to run hotels successfully
work in Costa’s favour. “We are very good at developing a management
competence that can run multi-sites at value-for-money prices in the economy
sector, be that budget hotels or restaurants or Costa.”
It wasn’t always so with Whitbread, but anyone who has stayed in one of its
558 Premier Inns recently can see that Parker and his team are good
operators. That, say others, stems from an old-fashioned concentration on
detail. Parker knows that value without quality does not encourage repeat
custom.
So the new Whitbread is obsessive about customer-satisfaction scores. It has
made Premier and Costa popular brands, and he wants to work the same magic
on his restaurants - 136 Beefeaters, 138 Brewers Fayres, 106 Table Tables,
and a new brand called Taybarns.
When I tell him I didn’t think Beefeater still existed, he hits back with a
volley of statistics. “Some 65% of our customers rate Beefeater highly and
will recommend it to others. In terms of branding, it is the most highly
recognised pub-restaurant brand in the country. Its trading is comparable
with anybody’s.”
Plus, he adds with a chuckle, I can get steak and chips for the same price -
£5.90 - as 10 years ago. As a loss leader? “No, we do it to make money.
We’re just much more efficient in the way we organise things. You must
go back,” he says.
Is it logical, however, to have any of this in the same group with hotels? Not
everyone is convinced. Parker, though, has deeper roots than most in the
hostelry trade. His parents ran a café on north London’s Holloway Road,
where Dad cooked eel pie and mash, and Mum worked out front. The value
proposition was ingrained from an early age.
The key in his upbringing, he says, was his parents’ decision to send him away
to boarding school - his elder sister went to the local grammar school.
“That was a watershed in my life,” he says. “It pushed me into an area of
opportunity that I wouldn’t have realised existed.” He fitted in easily.
Being big - already 5ft 11in at the age of 11 - meant he was never bullied.
His schooling also motivated him later when he realised how much his parents
had sacrificed to pay the fees. Behind his low-key front, say advisers,
Parker is intensely competitive and driven, but always careful. “Alan plays
his cards close to his chest,” says one banker. He does instil loyalty,
however. After a clear-out at the top, he has now surrounded himself with a
very able senior team.
Some of them may now be wondering how long Parker will stay. Until the age of
65? Rivals predict he won’t go before the stock market recovers - he has
share options to think about. And anyway, he fits the times, championing
shareholder value over flash acquisitions.
“Alan’s financial conservatism is what the company needs,” says former Hilton
boss Sir David Michels. “Everything he has achieved has been through hard
work and intelligence.”
Parker prefers to point out the obvious. He will make no predictions about
revenues for next year, except that the economy will make things difficult.
Inflation, deflation - a steady hand is vital.
“One of the toughest management challenges is managing through a
contracting market. Keeping the motivation and the long-term focus is
extremely important, and we believe in the long-term future of this company.
We are going to have a difficult couple of years, but long term we are going
to double the size of Costa and increase Premier Inn by 50% and we can
clearly see those market opportunities.”
Much of that growth will come abroad as Costa targets central Europe, the
Middle East and Asia. Likewise, Premier Inn has a joint venture in India and
new sites in the Middle East. And what about critics who bemoan bland
formats driving out quirky, individual offerings?
Parker shrugs. “If someone wants a coffee shop that is individual or just a
three-unit chain, fine, there’s a place for that. We believe in taking Costa
to those parts of the country that never had the benefit of such a coffee
shop. So when we open in Barn-staple, for instance, we take as much money as
in Regent Street.”
And with Premier, doesn’t he miss the luxury of fine hotels? His son now works
for the Four Seasons group. He shakes his head. “Been there, done that. I
absolutely don’t want to do upmarket,” he says. “And anyway, there’s lots of
opportunities for snooty people to go elsewhere.”
The life of Alan Parker
VITAL STATISTICS
Born:November 25, 1946
Marital status:married, with two children
School:West Bucklands, Devon
University:Surrey
First job:assistant to the general manager at the managed house division of
Truman, Hanbury and Buxton. “We covered several hundred pubs and dozens of
hotels. I’ve always liked hotels.”
Salary package:£692,000 plus bonus
Homes:Chelsea, Surrey and Majorca
Car:blue Lexus hybrid
Favourite film:Atonement
Favourite book:Young Stalin, by Simon Sebag Montefiore
Favourite music:Katie Melua
Favourite gadget:Acer notebook
Last holiday:New Zealand
WORKING DAY
THE Whitbread chief executive wakes at his home near Sloane Square in London
at 6am. By 7 Alan Parker is swimming in the pool at the RAC Club. An hour
later he is checking e-mails and overnight figures in Whitbread’s Jermyn
Street office in the West End.
“We get the trading figures in from all our businesses. I don’t react to it
daily, but it gives me a sense of what is going on.” By 9 he is in meetings.
He has seven executives reporting direct to him. Parker finishes at 7pm.
He works part of the week from Whitbread’s main base in Dunstable. He also
spends time visiting his hotels and restaurants - sometimes unannounced.
“Last week I was in Colchester, Plymouth and Liskeard.”
DOWNTIME
ALAN PARKER relaxes by sailing. He is having a yacht built in New Zealand. “It
arrives next year in a container. The boat is 56ft long, sleeps six, and is
a blue-water cruiser, built for comfortable distance sailing. I’m naming it
Oyster Reach after one of our Beefeater pubs. I want to sail the Atlantic to
the Caribbean.”
Parker, brought up on the Holloway Road in north London, is also a
season-ticket holder at Arsenal. “I am a long-term Gunners fan. I used to go
to the boys’ entrance at Highbury when I was seven years old.” He also loves
rugby, and supports Harlequins and England.
