Episode 66 Show Me the Money

Afghanistan last week. More on all those stories at the

top of the hour. Now it is time for This is your weekly guide to who is

making the cash. With us tonight, Richard Lewis, who runs the company

behind best western hotels. Joanne Seniors speaks for the shareholders

in Britain's biggest companies, and the man who was saved by a doughnut,

the riches to ration and back to riches again story Gary Frank. The

sun has been shining in some places. It looks like there are signs of

regrowth in business. Confidence is reviving. Order books are filling

up. The only way is up. It looks like the economy will have

returned to growth in the first quarter of the year. We slip back

into retraction in the final quarter last year. These numbers

are suggesting we we won't fall back into recession, though the

situation remains fragile. Our plan is to create 20,000 new

jobs in the UK over the next two years. Combination of new stores

that we are opening but also putting more staff into our

existing stores to give better service for customers. A couple of

years ago we were making 35 of these gas turbines a year. This

year we are going to make 81. Next year we are looking at making 100.

That's going worldwide, so we are exporting to India, South America,

Australia. How does business look to you at the moment, is it

encouraging? We have been growing consistently since 2008 when things

went pear-shaped. I have to say we have grown 25% in that time. People

are still treating themselves to small treats during the day.

are still investing? We are still investing heavily in the business.

We have spent �3 million on a completely new automated packing

and wrapping line. And creating jobs as well? Creating jobs as well.

What we are trying to do is move away from the more mundane jobs,

which we can automate and giving people a chance to do creative

stuff. We have a report from the Federation of Small Businesses,

which is expected to say tomorrow that confidence in smaller firms

has improved for the first time in a year. You run a representive body

but it is like a small business. Are you feeling confident where

about where we are? We are feeling confident more generally. We are

starting to see confidence come back. But for investor, I don't

know about the business, but for the investment seningtor, we are

still seeing very tough times, with volatile markets and poor

investment returns. For us as investors, it is a pretty tough

time. How can you change that, so the people who invest in businesses

become as cheerful as the people running the businesses? I think

what we need to see is a period of sustained growth in the economy.

The hotel business is a very sensitive barometer to how people

are feeling about the economy and money. How is it looking to you?

is looking patchy in places. Certainly in London, which is an

island for the hotel industry, last year was good. This year is looking

a little bit uncertain I must say. In August it is going to look

extremely positive with the Olympics but apart from that we

will have a small growth. Business for us is very strong, business

last year was 18.9% up and we are driving the business in hotels.

What does that mean for investment. Gary is talking about the

investment in new technology and jobs, are you doing something

similar? We are investing in our business and our people. We have

taken on a learning and development manager. We are looking to invest

in our business. Hotels would like to do the same, many are, but there

would be help from the Government in this budget which would support

them. That brings me to the budget. What do you want to see?

reduction in VAT, certainly VAT in this country for the hospitality

industry is a little higher than in some of our European counterparts,

we are at 20%, France is at 5%, we would love to see a reduction.

Corporation tax, we believe there is going to be a 1% drop. That is

going to be good news. Two cuts in tax, he wants, do you want

something else? Corporation tax is always a nice thing but if it can

be focused on businesses that are employing people, labour-intensive

businesses, that is going to help employment and help people get jobs.

What happens if the Chancellor says I will cut tax for business and

create these jobs but to pay for it I am going to take away that very

generous tax break that the very wealthy get when they put money in

their pensions? That would be a very short-sighted measure on the

part of the chancellor. Already the Chancellor's cut very significantly

the tax breaks available to pensions. That's netted the

Treasury �4.5 billion a year. We need to see people being encouraged

to save and a tax cut, actually impacts people way down the income

scale. Time for boom or bust, a quick look at some of the news this

week. Have you had a cup cake emergency, craved some icing when

the shops are closed? The owners of this bakery in Los Angeles have an

out of hours cup cake vending machine. Swipe your credit card,

out pops the bun of your choice. This is how I relax after work!

It is the USA yoga championships. They are judged on a number of

things. Is this the employee of the future.

This attracts thousands of fans to the concerts, never gets it wrong

when singing. Problem is she doesn't actually really exist. She

is computer generated. All music and lyrics are written by the fans.

10,000 tickets sold out within minutes.

As a maker of cup cakes, when you saw the cup cake vending machine,

did a little bit of you die on the inside? I have to say, we obsess

about invasion -- innovation, when I saw this, I wish I had thought of

that. Are you not worried about the cup cakes coming out dry, stale?

There are issues that need to be addressed, but this is just the

sort of out of the box or out of the vending machine thinking that

we bring to our business, which as a small business you really need.

Just a great idea. Which customers expect a cup cake 24 powers a day?

It is a brilliant idea. Just that point when the shops are shut and

you want a sweet treat, a vending machine would be brilliant. This is

the innovation you would applaud in bris? Absolutely. Are you going to

put them in your lobby? I am talk to go Gary about... Never mind

about giving him business. We are not a great lover of vending

machines. There are other hotel chains that have vending machines

in their foyer dispensing snacks and drinks or a full breakfast

service. Is there a pay off between customer expectations of the hotel

and a cost efficient way of delivering a service of some sort.

There is, without doubt some of the hotels do have vending machines. We

don't manage the hotels at best western. We allow them to do what

is best for the business. If you are checking into a hotel and saw a

vending machine as the dispenser for breakfast, would you check out

again? I am not sure if a vending machine for breakfast is a good

idea, but vending something that is a commodity perhaps, but it depends

on the hotel. Yoga. Do you practice it? I am not very flexible in body,

very flexible in business and flexible in mind. This is essential

to keep at the top in business? have to be flexible. We have to

look at new ideas. If we continue doing what we have always done, we

will always get what we have always got. We must be flexible. Yoga in

personal life or flexibility in business? I have done it in the

past, not now. I think certainly in terms of business and for us as a

lobbying organisation, how we deal with the Government, what we would

like to see is flexible thinking on the part of the Government.

Government yoga classes! You were talking about investing in new

technology, put me in mind of the digital diva, can any job be

replaced by a robot with technological advance? What we have

tried to do is concentrate our investment on taking costs out of

the business but replacing the jobs which aren't the most interesting

or exciting jobs to do. There is a saving to us as a business and it

means that we can get our people focused on doing the more

interesting, creative and really the more dynamic stuff. Best use of

their time. Yes. Cup cakes made by robots. Not keen on that. I like

the idea of hand made cup cakes. Automating those bits that can be

automated but keeping the quality. This is true of the hotel industry,

there is some automation that can be done, but in a business like

yours that relies on the face-to- face contact, the greeting, the

welcome, there is a lot you can't automate. Absolutely. There is very

little you can automate within a hotel. What we focus on is the the

customer experience. It is more about actually providing

personalised service. That is what the hotel can do very well. It is

about everybody being different, the hotels are very different. We

have some which are contemporary, some castles, some managess. We

have the oldest hotel in Europe, built in 1220, not many people can

say they have that type of hotel within their group. We have

personality and that is what we focus on, the service is key.

Chief Executive of best western, you don't run the individual hotels,

you provide the marketing support, the reservation support as well. It

means the brand name is very important. How can you control the

standard of hotels with your name on the door, when you don't

actually run the hotel? It is a great question. We work very hard

on that. We have to continually move the quality of our hotels

every year and we do so by taking our guests view of their stay in

the properties through something called medallions reports and they

say how they found the hotel. We have our own guest room and public

area review and that is fairly fairly strict. You give the hotels

advance notice you are coming to check them. Our view is the hotels,

we want to work with them, we don't want to catch them out, we want to

work with them. The bottom line is we are trying to provide a better

service to guests, not trick the hoteliers. But it is about getting

the same experience that you would that you would get if you were an

actual guest. I couldn't agree with you more. It is about consistency

and that is what we are aiming to do. Not about getting ready for us,

but getting ready for the paying guest. Do you think customers are

too demanding for the money they are charged? I think there is a

variety of guests who come into any hotel, whether it be marred rin

oriental, with the best western we have great guests coming in and

some are obviously... Some are a real chore. I wouldn't say they are

a chore. People want different things from their stay at a hotel

and it is up to us to meet those needs. Is it appropriate to say to

a guest, shut up, for the amount of money you pay for this room, you

have a good service. If you want something better go to another

hotel. I wouldn't word it like that. It is a difficult situation. We

have obviously our business is very human related and we are dealing

with guests who have an opinion. When you read reviews on sites like

trip advisor from a cranky overbearing demanding guest, how do

you deal with those? We have taken a very courageous decision to take

the last five trip advisor reviews on our own site. So a guest look

can at a best western hotel doesn't have to leave that site in order to

go to the trip advise advisor site to read what is what is being said

about our hotel. We are being very honest and open about the views of

our property. There aren't many businesses that are that open and

honest. That was a very tactful dodge of the question. I speak to

other hoteliers and they say privately they have been -- they

really dislike sites like trip advisor because they are open to

manipulation to people who are vengeful after a bad experience.

There are always people after the hospitality industry, after all

everybody has an opinion about food and about accommodation. We are an

easy target. But on the vast majority of the reviews, we as

hospitality operators, we believe they are genuinely quite fair.

There are obviously a number of bogus reviews and we need to stamp

those out. We are working very closely with trip advisor as a

partner in order to stamp out those bogus reviews. The answer is...

those reviews including reviews that are encouraged by the owners

of the hotels who might offer inducement to someone to write a

good review. If they are induced and that means they are given some

reward for doing that, trip advisor has very strict rules about that.

Therefore, we never encourage people by inducement, but if you

have had a great stay we may well ask you if you would like to go on

to trip advisor and make a review we would be delighted, but no

inducement is ever offered. scheme to get more cash flowing

from banks to to small bigss may get under way this week. It is

called credit easy. The banks will will lend the money and government

will guarantee to pay some back if the borrower can't. Shouldn't the

banks be doing this any way? Clearly that is part of the project

learning deal, that was agreed last year, but we haven't seen enough of

that. It is genuinely difficult for banks to really be able to lend and

to be able to assess which are going to be the right businesses

they should be lending to. We hope it will start to get small business

moving. The Chancellor says he sees small business as being the engine

of the economic growth. We need that government support for small

business through this difficult time. The criticism is, the bank's

assessment of risk or otherwise, the banks are too busy spending the

money giving themselves businesses and there isn't enough left in the

pot to give to small businesses. shareholders would say you need to

be paying out dividend to shareholders and also exercising

restraint on executive pay. If the banks don't step up to the plate,

they have a political risk, Vince Cable writing letters saying the

RBS should be broken up and a specialist small business bank

should be carved out of it. banks recognise there is that

political imperative on them to sort this out. The banks have a

reason to get their house in order and we as shareholders would be

pushing them tho do that. Do you think Vince Cable has a point?

I do think so. This is very relevant and I looked at my own

experience and when I started my business over 20 years ago I was

unemployed, I didn't have a penny to my name, no security, I had

nothing I could offer. I knew I needed �30,000 to get my business

off the the ground. I was able to borrow half from frenz and family

and go to my local bank to say I have a great idea, I have some

money, will you lend me the rest, I can't give you security but it is

going to work. The bank manager said yes that is fine. I don't

think today I would get that same reaction and then my business

wouldn't have got gotten off the ground. There could be lots of

other small businesses that could have been turfed off. The banks

have to ask themselves what they are in business to do. That riches

to rags and riches again, tell me the story. The initial riches to

rags was when I first went into business I was trading in New York

and Wall Street and built up a small amount which I lost overnight

when there was a big crash. Then I started my new business in 1989. We

turned into the fabulous baking boys in 1997. Now we turn over �20

million. I employ about 150 people which is very satisfying. It is so

much more interesting to make stuff than to trade money on the markets.

Thank you very much. Young people today, some day they will take our

jobs. As part of the BBC school report here is a report on why you

don't see so many children their age doing the paper round any more.

Is The generations, children have been a vital part of the economy.

We went to meet a 90-year-old to find out about her first job.

first job was working in a cardboard factory. How old were you

when you went there? 13. We were hungry, we had no shoes. It was

hard. I would hate those days to come back for anybody. I wouldn't

like to see youngsters having to work like I had to work. It was

dreadful. I didn't want to go to work of the I wanted to stay on at

school, but I had a stepfather who said no, I had to go to work.

until three weeks ago 15-year-old Katie made �12 a week on her paper

round. I got a letter saying that I had two more weeks remaining and

then my services were no longer needed. Do you think this reflects

what is happening all over the country? It is getting harder. The

only two jobs available for kids my age are delivering mainers and --

papers and leaflets, and neither are easy to get. This is important

to my age group, because not getting a job now is vital for CVs.

Students find it difficult in the future to adjust to the working

world and getting the feel of a work day. As a careers coordinator

for the school how do you feel about the cuts in funding to the

work experience programme. I am very disappointed because it has a

big impact on our students. The students that do work experience in

year ten, they gain a lot from it, they gain in confidence, develop

communication skills, they recognise the transferable skills

they are learning in school, and all of those things will be missed

out on. And it does have a big knock on impact for future life as

well, because students don't get the experience of work either.

Certainly not in our town. Jobs are becoming fewer and fewer. What

impact will it have on the younger students? Sther going to miss out.

They aren't going to gain the experiences that maybe you had as

being one of the last lot that went through our work experience

programme. They aren't going to get the experience of work. They are

going to struggle later on with just some of the of the basics of