Whitbread, the former brewer which now runs restaurants, hotels and coffee shops (at least until Coca Cola's deal to buy Costa gets waved through by regulators), released its interim results this week and mentioned another new concept for its Premier Inn chain.
Zip by Premier Inn hotels, the first of which will open in Cardiff in March 2019, are described as offering "good quality, small, very simple rooms targeting a large segment of the market, which is currently underserved; the extra-value seeking customer". Rooms will start at £19.
Corporate hotel buyers have long focused on seeking extra value. Will Zip appeal to them?
Perhaps the most important point about Zip rooms is their size — typically 8.5 square metres; this compares to the average 21.3 square metres of rooms in the rest of the Premier Inn chain.
So why does Whitbread think its onto a winner with Zip?
Let's first look at occupancy. The chart below shows trends in hotel occupancy in England over the past three years.
Source: Visit England
We wrote recently about how PwC is predicting record occupancy highs in 2019.
The budget hotel sector is the fastest growing sector, accounting for around 44% of the development pipeline over the next three years against 32% for four-star properties, according to AM:PM.
The sector is already substantial: it accounts for between a quarter and a third of the entire hotel room supply in the UK, depending on whether you also include hostels.
With supply in the budget sector increasing and continuing strong occupancy levels, Premier Inn is betting that a new type of budget offering could be the way ahead.
Guests staying at Zip will be allocated random rooms — some have a window, some have a lightbox instead. Rooms have a single bed, twin single beds or two pushed together to make a double. As well as a TV, there's a small bathroom with a power shower, body wash and a towel.
The room is cleaned every three days or daily at a cost of £5. Breakfast costs £3.95. The Wi-fi is free of charge.
Whitbread says its target customers are those who "do not currently stay at Premier Inn and are dissatisfied with their current options" — which includes cost-conscious business travellers.
While corporates will be interested in the cheap rates, will business travellers be happy to stay in them? For many road warriors who spend little time in their rooms, we suspect the answer may be yes.