China in his hand? Parker takes Costa east

The outgoing Whitbread chief tells Mark Leftly that he wants to see a thriving coffee shop empire marching across the Orient
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The Independent Online

Cherry, the tiny Chinese waitress, leads the slightly stooping businessman through the labyrinthine ground floor restaurants and tea rooms of the Aman at Summer Palace hotel in Beijing.

Finally, she finds a suitable spot for Alan Parker to sit: a table by a window overlooking a pond and a lavish green pavilion very much in the Chinese style, with its intricately detailed, ornate roof and wall-less structure.

"You are in hotels also?" asks Cherry. "Are they like this?"

"Not quite," Parker smiles, knowing that this is something of an understatement.

Parker is the chief executive of Whitbread, the 168-year-old, one-time brewer that today is best known for the Lenny Henry ads that have promoted the group's Premier Inn budget hotel range since 2008. Even though the campaign features on the "TV's worst adverts" website, the promotion has been so successful that Henry has signed on for a third year.

Rooms at £29 a night in Burnley and Stockton-on-Tees are a far cry from this stunning, quiet hotel on the outskirts of China's booming capital. But this is a market that FTSE-100 stalwart Whitbread is keen to crack through its Costa Coffee shops, which have been popping up all over Beijing and Shanghai in the past two years.

China is close to Parker's heart. One of his first moves when he was made chief executive in June 2004 was to open a development office here. It was too late for Premier Inn, the market was already saturated with large hotel groups, but there was only really Starbucks in the coffee-shop market.

"If you get it right here, the numbers just roll off the page. There are 1.3 billion people and to call it a developing nation is not doing it justice," says Parker, who retires from Whitbread, after 18 years, in November.

One of his last acts is to ensure that his legacy of growth in this nation is protected. He is nominally here to speak at this year's Global Travel & Tourism Summit, but he has also used the opportunity to devise plans with his Chinese executives about expanding their burgeoning empire. Last week they decided to open 50 coffee shops a year between the two cities and considered new ventures – in Hong Kong and Guangzhou to the south-west.

Parker turns 64 in November, when easyJet boss Andy Harrison will fill his shoes. He felt it was a good time to retire and should enable him to secure two three-year terms as a non-executive director in other boardrooms. Under modern corporate governance stipulation, he was not able to become Whitbread's chairman as he had already held the top executive job.

The Arsenal-supporting north Londoner should find himself in demand, a result of his well-regarded leadership of Whitbread. Parker simplified the structure from 10 divisions to two – restaurants & hotels and coffee – in the process making one of the best-timed sales of the past three years. "It was confusing for investors seven years ago, with us having David Lloyd, TGI Fridays and Pizza Hut," he says.

The David Lloyd gym chain was a bit of an oddity in the Whitbread portfolio and Parker came close to selling it for about £600m in 2005. But the board held its nerve and waited for a juicier offer, finally selling to Versailles Bidco, a Royal Bank of Scotland-London & Regional Properties joint venture.

"We got a £925m cheque in the first week of August 2007," says Parker, pointing out that the scale of the credit crunch had not yet been realised. "That deal wouldn't have gone through a month later."

The sale was the start of what Parker describes as "a good recession" for Whitbread, borne out by last month's annual results showing revenue up 7.5 per cent to £1.435bn. Whitbread is benefiting from individuals and businesses trading down during the tough times, so that a Beefeater £5.99 seven-ounce rump steak and chips deal looks more enticing than splashing out at a Michelin-starred restaurant.

Parker has noted a surge in big business accounts, those worth £1m or more, with 21 new customers signing up with Premier Inn in the past financial year. B&Q owner Kingfisher set up an account recently, as did supermarket group Morrisons.

More intriguingly, the Department for Work and Pensions now has an account. The day after the general election, Parker made good on a public promise to write to the new Chancellor and suggest that he make all departments use Premier Inns rather than four-star hotels as part of the Government's cost-cutting drive.

"I haven't had a reply yet," he smirks, before branding his hotels as a way for politicians to escape last year's expenses revelations. "This would be a very obvious way of saving money – and MPs could use the hotels too."

Parker, a Conservative voter, was one of a number of FTSE-100 chief executives, including Kingfisher's Ian Cheshire and Marks & Spencer's Sir Stuart Rose, who signed a letter backing the party's plans to partially reverse a hike in National Insurance.

Given that this was during the build-up to the election, the news caused a bit of a stink. Parker is unrepentant: "It's a jobs tax which I'm absolutely against. I want to create employment in the country; we will employ 1,000 more people this year. It was only a 1 per cent [rise] but it all adds up."

Parker's prodigious letter writing doesn't stop there. London Mayor Boris Johnson received correspondence damning his plans to tax all new hotel development in central London and the Isle of Dogs to help fund Crossrail, the £16bn Heathrow-to-Essex rail link. This is part of a broader property development levy that City Hall hopes will raise £600m towards Crossrail's final bill. However, Parker says that this could be counterproductive as some hotel projects will inevitably be ditched.

"In the Greater London area, we have 13 hotels under development, three in this area [affected]," Parker says. "Add 5 per cent to the cost of development and it would make you think twice. That's the tipping point about whether or not a hotel is financially viable."

The tax could badly hurt Premier Inn's expansion drive, as Parker says the chain is "underweight" in London. Premier Inn has a construction pipeline of 10,000 rooms, 3,000 of which are due to open in the capital ahead of the 2012 Olympics.

Another bugbear for Parker is tourism's status as an industry. Rather than being located with other major GDP generators in the Department for Business, Innovation and Skills, tourism and travel have been left to rot in Culture, Media and Sport.

"The attitude is that we're not a business," sighs Parker, sipping from a glass of sparkling water. "We're lumped in with museums and culture in general, yet the industry is a huge export earner, a huge employer."

Written on the page, Parker might come across as a little grumpy. In fact, he is impeccably polite and friendly throughout the interview, some humour occasionally creeping through.

But as the mid-morning sun gleams off the pond outside, it would be difficult for a 64-year-old who grew up in the shadow of Highbury stadium to be anything other than happy with his lot.