PESTEL analysis of Premier Inn
This is an in-depth PESTEL analysis of Premier Inn. There is no doubt that it is useful to look at an organisation’s performance and circumstances through the lens of a PESTEL analysis. The process identifies different types of threats that an organisation faces. It also helps strategic planners devise strategies to address those threats and take advantages of the opportunities.
Political factors affecting Premier Inn
There are different political issues that affect Premier Inn. For example, the government’s policies and regulations can change quickly which may affect the business decisions made by the hotel management.
Premier Inn is a British brand, and its main operations are in the UK. It is widely known that obtaining a holiday visa to visit UK is difficult for most people around the world. If the process was a bit more flexible, it would have improved the occupancy rate of the hotel.
Premier Inn operates in the UK, Ireland, Germany, United Arab Emirates (UAE), and Qatar. Internal political stability is a common feature among those countries; however, legal systems and rules affecting the hotel business are different.
Economic factors affecting Premier Inn
Economic environment is a key part of this PESTEL analysis of Premier Inn. The economic factors affecting the hotel include but not limited to the costs of utility, the costs of labour, building rents, business rates etc. Utility price has gone up exponentially recently in the UK which is definitely going to impact on the hotel to a big extent.
The labour cost is generally high in countries such as UK, Ireland, and Germany. If Premier Inn had operations in other, particularly developing countries, it would have benefitted from cheaper labour costs and property rents.
The economic health of a country affects the hotel industry significantly. It is widely known that lockdowns affected UK and Germany very badly. Particularly, London, where Premier Inn has many properties, was badly hit. The performance of the hotel is yet to return to pre-lockdown levels; however, PwC (2022) sees encouraging signs for hoteliers in general in coming years.
The soaring inflation rate also affects Premier Inn like all other hotels. According to the UK Hospitality, cited in Lawrence (2022), a huge number of hotels will be forced to increase consumer prices by over 10%. While price increases should help Premier Inn to function in line with the inflation rate, it may also affect consumer purchase decisions negatively given that going on holidays is not a necessity. Most people in this circumstance will focus more on food and other daily necessities than on holidays.
Social factors affecting Premier Inn
Social factors relate to the customers’ needs, their expectations, and the services provided by Premier Inn. Certainly, the customers’ needs and expectations in the hotel industry have been growing for a long time. Their satisfaction depends on the amenities in the room, the quality of food and beverages, and the overall impression of the hotel. The level of room cleanliness is also an important factor.
Premier Inn is a budget hotel. Therefore, it targets customers who often look for very good deals. Craig and Edwards (2022) report that customers love the hotel for affordable prices of the room accompanied by free tea and coffee, free wi-fi, and other amenities.
Staff shortage is a problem for most hotels in the UK. Many people do not want work in the hotel industry because of a number of factors i.e. low wages, long hours of work, and limited career opportunities. Premier Inn has already reported staff shortages in areas such as housekeeping, reception, and kitchens.
Technological factors affecting Premier Inn
Technological environment is another important area of exploration in this PESTEL analysis of Premier Inn. Premier Inn has used technology to improve the customer experience and reduce the costs of operations. Its digital key system has been found to be very secure and very reliable. Its smartphone application for booking has been successful as well.
Premier Inn has recently adopted what3words location technology to guide guests to the correct entrance. With three random words, guests should be able to find their hotel faster and more easily, leaving more time for them to enjoy a restful and cozy stay (Premier Inn, 2022). However, it is worth mentioning that the cost of upgrading and developing new technologies is not cheap.
Environmental factors affecting Premier Inn
The environmental factors affecting Premier Inn include the carbon emissions and waste, the cleanliness of the place where its properties are situated, and the number of traffic drawn to the local areas by it. However, it should be mentioned that it has made an industry-leading sustainability commitment which aims to achieve carbon emissions intensity cut in half by 2025 (Premier Inn, 2022).
Legal factors affecting Premier Inn
The last factor to discuss in this PESTEL analysis of Premier Inn is the legal environment. Premier Inn must abide by the town planning and building regulations, health and safety rules, minimum wages rules and many others. Breach of any rules may lead to the risk of lawsuits from the guests, employees, and governmental agencies.
Summary of PESTEL analysis of Premier Inn
The Premier Inn is a good hotel brand. It has a good level of customer satisfaction and a good reputation in the market due to its quality services and affordable prices. However, there are many macroenvironmental challenges that are beyond its control. Therefore, its strategists review those factors regularly to explore opportunities and fend off any potential threats.
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Last update: 02 July 2022
Craig, D. and Edwards, L. (2022) Travelodge v Premier Inn: battle of the budget hotels, available at: https://www.thetimes.co.uk/article/travelodge-v-premier-inn-battle-of-the-budget-hotels-bwmblq7g2 (accessed 23 June 2022)
Lawrence, J. (2022) Hospitality industry braced for soaring inflation, available at: https://harpers.co.uk/news/fullstory.php/aid/29913/Hospitality_industry_braced_forsoaring_inflation.html (accessed 25 June 2022)
Premier Inn (2022) Premier Inn adopts addressing technology what3words, available at: https://www.premierinn.com/gb/en/news/2019/what3words.html (accessed 24 June 2022)
PwC (2022) Encouraging signs for hoteliers, available at: https://www.pwc.co.uk/industries/hospitality-leisure/insights/uk-hotels-forecast.html (accessed 25 June 2022)
Author: M Rahman
M Rahman writes extensively online and offline with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He holds an MSc in Tourism & Hospitality from the University of Sunderland. Also, graduated from Leeds Metropolitan University with a BA in Business & Management Studies and completed a DTLLS (Diploma in Teaching in the Life-Long Learning Sector) from London South Bank University.