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Strategy

Strategy at the heart of our business model

Our Board believes that our stated strategy continues to be the best way to achieve the Group’s growth targets.

Our business model:

A market opportunity
  • The budget sector has grown faster than any other sector in the UK hotel industry for the last 30 years, and this is set to continue.
Building hotels where people want to stay
  • We use a combination of owned and franchised hotels.
Maximising revenues
  • We don’t have restaurants in our hotels – we use every available space to sell bedrooms. We offer a consistent, good quality room at a low price. As a result, our occupancies are high.
Minimising costs
  • Our experienced management teams keep our staff levels to a minimum and outsource our cleaning to specialists. Our operating margins are high.
Customer understanding
  • Budget hotels are chosen because of location and price – consumers choose them because they are close to where they need to be.
  • Price sensitivity is high, but absolute price awareness of individual brands, is low.
  • Customer needs are relatively simple: a great bed; well trained, friendly staff; and well designed rooms. A brand that is easy and simple to do business with.

Our strategy

Speeding up owned hotel development

  • 8,000-room opportunity in the UK, 4,000 rooms in Europe in gateway destinations.
  • A targeted 15% return on capital employed (ROCE) (unless specific locations offer superior risk‑adjusted returns in the longer term).
  • A strategy to dispose of non-core assets is in place, maximising the capital available to build bedrooms.

Accelerating our franchise hotel rollout

  • 11,000-room opportunity in Europe and the Middle East plus 4,000 rooms in the UK. With further opportunities in Africa, the Far East, Australia, and North and South America.
  • Building brand presence without capital investment.
  • Delivering a high incremental margin and increasing Group ROCE.

Ongoing professionalisation of the business

  • Maximising revenues via the revenue management and eCommerce strategy.
  • Minimising costs with a relentless focus on removing waste and improving efficiency.
  • Focusing on our customers to increase repeat bookings.
  • Having the right team and expertise in place to deliver our future growth.