There’s nothing like a job that involves travel. As I wearily dropped my overnight bag onto the purple-trimmed hotel bed, I reflected that the hotelier hosting my night’s stay was operating a rather slicker business model than most. Not more enjoyable or more customer-friendly, but the booking and check-in process were certainly more efficient.
Samuel Whitbread started his brewery in London in 1750. Those days are a far cry from where the Whitbread Company finds itself today. In 2001, the company disposed of its brewing operations and its pub business, focused on the hospitality sector, and is today celebrating an 11 per cent increase in total revenue for 2015/16 which places it well on the road to a £2bn turnover.
I mention this fact because Whitbread owns the establishment I found myself in as I ruminated on, and wrote, this piece. Premier Inn, as well as Costa Coffee and various other hospitality chains are all part of the Whitbread stable, and as chief executive Andy Harrison departs for pastures new, the company looks set to continue its impressive growth.
But back to my opening point – I believe that there are some interesting elements to the success of this company that are revealed whenever one checks into a Premier Inn. Not big things like bricks and mortar, but more the kind of thing that Dave Brailsford, as head of Team Sky Cycling called ‘marginal gains’. And, so the theory goes, if you add enough of those marginal gains together, you ends up with big changes.
So, I booked my stay at the Premier Inn online. That’s pretty much the only way, apart from its mobile app, that you can book a stay. You may already know this, but Premier Inn has pretty much done away with the traditional reception desk populated with welcoming staff (a major cost saving, and I’ll come back to that later). Immediately I hit the ‘purchase’ button on the website, I received my confirmation email, plus a default option to receive a PDF copy of my invoice by email (so the customer pays for printer ink!). I also got a choice to check in online, and when I did this, I received a text message confirming my stay, and the option to reply with ‘dine’ to book a meal in the adjoining (Whitbread-owned, natch) restaurant.
Arriving at the hotel, I was presented with two self-service kiosk machines instead of a smiling receptionist and an obliging concierge. Having already checked in online, I simply inserted my credit card into the machine and was issued with a room key. And so, as I wearily arrived in my room, you may see why I felt that this was a pretty slick operating model. It is conceivable that during the process up to and including your arrival, you potentially don’t deal with a human.
What does this have to do with the social housing sector? Well, it’s a pretty good example of using technology not only to deliver self-service, but also to drive the channel shift toward self-service – and to make what I imagine are some pretty major cost savings along the way. It seems that what Whitbread’s management has done is to ruthlessly examine the sales, booking and check-in processes and to reduce, refine and forensically remove all that is manual, redundant and costly. It even extends to the rooms; one large towel not two, and loo paper dispensers instead of wasteful paper rolls. Nothing you see, touch or lie on in a Premier Inn has escaped the attention of the cost cutters.
It’s what I always call the ‘Ryanair’ model, but it’s being adopted increasingly by other companies, and you can see its spread through different sectors. Staff costs are the major expense for most businesses, and unproductive staff time is the worst kind of waste. If you want to cut costs and improve responsiveness, then it’s time to get the magnifying glass out and look honestly at what you do now. Because if you don’t then somebody else is already doing it.
That’s all fine for the bottom line. But as a customer, I have to say I’m not delighted by this approach. I only stay in Premier Inns a small percentage of the time and they do exactly what you need them to do if you need a night’s accommodation at a reasonable price. And I think that they have decided that people in my position will tolerate a rather cold, faceless experience if it gives them cheaper, quicker and more convenient travel. I’ll use them when I have to, and I know what I’ll get for my money every time.
So what happens if we superimpose the Premier Inn customer service model on social housing in the UK? There are already landlords who have declared an intent to travel down a ‘digital by default’ route. This means online access to services ‘by default’, with telephone access and office visits an exception (and subtly designed to be more difficult to achieve than online access – nudge, nudge).
In my experience of working in housing, I would say that for the majority of tenants, this is something that will be accepted quite quickly, given that paying rent ad-hoc and possibly reporting a repair or a nuisance issue will be about as far as most tenants will need to go, especially as landlords continue their drive to make direct debits their default payment method. Tenant portals, mobile tenant apps and telephony software will become key tools in the day-to-day service delivery model.
Many processes within the lifecycle of a tenancy are pretty standard and lend themselves to a self-service approach. A growing number of landlords are already making processes available via their web portals, repairs and rent payments being at the vanguard, but also now areas such as reporting issues and requesting services.
Considerable savings could be made by further automating processes (why does the repairs process require people to spend hours every week printing and enveloping works orders, and typing in completion slips and invoices, for example? I mean, how much money is being wasted every week on those manual, error-prone processes?). So, the benefits are there to be seen, and with a rather more forensic approach, I am sure that many more areas could be optimised and automated.
But what about the five per cent? My experience of managing a busy local housing office back in the 1990s was that probably 95 per cent of our tenants in the local area would simply get on with their lives. They paid their rent by and large. They maintained their homes and gardens, generally got on with their neighbours, and to be honest we very rarely saw or heard from most of them. But most of our time was spent dealing with the 5 per cent of tenants who, for whatever reason, would not or could not, manage their tenancies, and in some cases their lives, themselves. This group comprises the kind of people who, convention dictates, would be failed by a channel shift toward online self-service. If they’re failing with a traditional approach, how are they going to succeed with a new and more technical one?
Well, as with many things in the housing world, there is no simple, slick answer to that. And it’s not just the housing market in which this group of people is being left behind.
Premier Inn operates in a market where people have a range of choices, of which they represent just one. If potential customers prefer the personal touch and a full English breakfast served home-made by the proprietor, then they can book a different hotel. However, tenants don’t have that choice, and no matter what the economic arguments, some will just not be able to cope with a new service model. And while some new technologies might just resonate with people for example, relatively few people these days find a smartphone to be an alien concept), we cannot expect total adoption.
In effect, do we admit to moving towards a ‘two-tier’ service model, where those who will not play the game receive a poorer service (don’t laugh, it has been discussed!), or do we perhaps redirect some of the resource savings we made elsewhere towards the harder-to-reach group, and using training, more intensive interventions based on data, and increased staff mobility to try and help this group to reap the benefits not only of online services, but also perhaps increased employment options through greater skills transfer?
I’d say that in the current climate, anything is possible. There are rumours that certain housing associations are considering the previously unthinkable – reducing their exposure to the ‘social’ sector – and a number already have divisions dedicated to servicing other, lower-risk markets. The degree of disruption to the income stream that welfare reform and the right to buy will engender means that radical approaches to cost cutting must be considered, and the traditional housing management approach is a hugely inefficient and costly one. Wherever the future takes the sector, I think it’s fair to say that the kind of ‘self-serve’ experience we have with Premier Inn and other such innovators will become commonplace in the future.
Paul O’Reilly is a senior consultant at Aareon.
