City Republic: Whitbread surges despite lack of ads

Sales are soaring at Whitbread despite its lack of advertising, writes Stephen Foster, who also examines Chancellor Darling's lecture to the City as UBM's bid for Informa comes off the rails.

Sales soar at the new Whitbread
Time was when Whitbread was a brewer and also adland's favourite brewer.

Under the genial stewardship of Tony Simmonds-Gooding, it unleashed CDP's Heineken "refreshes the parts other beers can't reach" campaign on an unsuspecting world (despite research showing it was mad) and then went on to build Stella Artois into the country's biggest beer brand.

But Whitbread exited brewing years ago (it still owns Beefeater and Brewer's Fayre pubs -- not quite such a boon to the ad industry) and became a big player in hotels through its Premier Inn budget chain and the coffee revolution through Costa.

It's just announced that Premier sales rose 40% in the quarter ending May 2008, with sales of its Business Account loyalty scheme rising an even more impressive 40%.

Costa sales grew 6% on a like-for-like basis and the chain itself has grown from 289 to 1,015 outlets in a year, with new franchises in Hungary, the Czech Republic, Slovakia and Singapore.

The budget hotels results reflect the squeeze on the middle market of the hotel industry, with Premier hotels now offering most of the facilities business travelers and families need to get their heads down for the night.

If they want breakfast, there'll be a Costa in the hotel or nearby.

So the company hasn't lost its instinct for clever marketing although award-winning advertising no longer plays much of a part, alas.

With a sharp slowdown in the economy under way, its good value products should continue to do well (at least Costa products taste of coffee, unlike some of its better-known rivals).

Property entrepreneur Robert Tchenguiz, who's on a one-man crusade to get pub companies and even Sainsbury's to spin off their property assets into separate companies, announced a 3% stake in Whitbread last month.

Let's hope Whitbread CEO Alan Parker tells him where to get off. The company and its shareholders don't need him.

Google eyes mobiles with Android
Google has given people a glimpse of its new Android (how alarming is that?) software system for mobiles and is promising to add some extraordinary features and bring the price handsets down.

Google man in charge Andy Rubin announced this week that Android would revolutionise the mobiles business in the same way that Windows did PCs in the 1980s, with the rather important difference that it would be free (hence the lower handset prices).

The first Android handset (from whom we don't yet know) will feature both a touch screen and a "trackball". Among other things, you'll be able, via a version of Google Maps, to point your camera phone at a building and it will tell you its name, address and inside leg measurement, plus how far you are away from it.

We've been able to live without this information quite happily. Something tells me we soon won't.

Chancellor Darling to tell the City what's what
Well he might, at his first formal Mansion House speech to the City later today.

There are two big issues here. The first is, will he wear white tie and tails, which Gordon Brown declined to do for these occasions?

The second is, will he stick to his guns and say that he's pressing ahead with unpopular measures in the Square Mile, such as taxation of non-domiciles and more banking regulation?

Let's hope he does; the City boys have played a big part in dropping the economy into the mess it's in. They deserve a slap.

Actually Darling has played his hand pretty well, despite the looming presence of former Chancellor Brown in Number 10.

Northern Rock was sorted in the end (it's actually paying its loans back quicker than expected, glory be) and he unraveled Brown's disastrous 10p tax cock-up, although not without financial cost and political damage to the government.

And things might just be turning in his favour (a bit).

The oil price is still at stratospheric levels although it's come off its $140 a barrel top and Western pressure, from George Bush and his new best friend Gordon Brown, seems to have persuaded Saudi Arabia to pump more.

200,000 extra barrels a day isn't that much but the oil price has been driven more by sentiment than reality and only brave traders are now betting that it's going to continue its rise, in the short term at least.

And the inflation figures announced by the Bank of England yesterday (3.1%) aren't actually that horrific. If official inflation goes to slightly above 4% as the Bank predicts, that won't be a disaster either. This was the norm in the 1950s for example, generally regarded as a benign economic decade.

Furthermore, there's evidence that consumers are tightening their belts, battered as they are by higher food and petrol costs. So this may curb inflation faster, which would leave open the possibility of interest rate cuts down the line.

His big nightmare is the certainty of much higher winter energy bills. Will he have the nerve to put a sighting shot across the bows of the energy companies in his speech today?

Private equity scuppers Informa deal
Talks to agree a nil-premium, all-share merger between information businesses Informa and United Business Media collapsed last night, with UBM announcing it had been unable to agree terms.

It may never have happened anyway, of course, but it looks as though a likely private equity bid of around £2.2bn for Informa has scuppered the deal.

This is good money in today's media markets and UBM would be right to walk away.

Names in the frame include US firm Providence in cahoots with another US outfit Carlyle and Apax from the UK.

Apax is stuffed to the gunwhales with former media magnates so it looks certain to play a part, with whichever partner.

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