Whitbread profit ahead of pre-Covid volumes

Whitbread’s profits are back above pre-pandemic levels thanks to the easing of coronavirus restrictions, sparking a recovery in occupancy at Premier Inn hotels.

The hospitality business made £233.9m of statutory profit for the six months ended September 1, compared with £172.2m for the same period three years ago and a £37.8m loss last year.

Sales at Premier Inn’s UK unit outperformed the wider mid-range and economy accommodation market, doubling to £1.3bn as the sector benefited from the absence of lockdown rules and a massive return of foreign tourists.

Growth was driven not only by renewed demand for leisure and business travel, but also by increases in the number of new seats and average room rates, with the latter up 40 percent year-on-year.

This strong demand continued in the third quarter, with hotel revenue more than a third ahead of 2019 levels, although the company’s food and beverage sales did not fully recover.

Whitbread predicts its sales will not beat pre-Covid figures during the current financial year, despite ​​launching a number of initiatives to try to attract customers, including a wider drinks offer and upgrades to its gardens.

The bidding update comes at a time of significant uncertainty in the hospitality industry, which is being hit hard by steep energy bills and shrinking consumer incomes.

The FTSE 100 company, which also owns restaurant chains Beefeater and Brewers Fayre, warned that inflationary pressures and the traditional fall in seasonal demand for hotels would reduce margins in the short term.

The group predicts that higher prices for labour, utilities, food and drink, as well as investment in IT and marketing, will lead to £60m of extra costs this year.

Revival: Hotel sales growth was driven not only by renewed demand for leisure and business travel, but also by an increase in new occupancy and average room rates

But the firm is due to pay out £49m in interim dividends to investors after paying nothing last year when much of the world was still under severe Covid-19 restrictions.

Looking ahead, the business still expects to open a further 1,500-2,000 rooms in the UK and 2,000-2,500 rooms in Germany by early March.

Alison Britten, chief executive of Whitbread, said: “Despite macroeconomic uncertainty, our current trading performance is strong and our business has proven resilient in previous downturns.

“With a robust balance sheet and significant growth potential in both the UK and Germany, we remain confident in our full-year outlook and our ability to deliver long-term value to all our stakeholders.”

Britten is due to leave the company at the end of February to become the Premier League’s first female chairman, succeeding interim chairman Peter McCormick.

McCormick’s predecessor, Gary Hoffman, lasted just 18 months in the job and his tenure was marred by controversy over the sale of Newcastle United to Saudi Arabia’s sovereign wealth fund, the Public Investment Fund.

Just before Britten was announced as the next Premier League chairman, she faced a major shareholder revolt over her £2.16m annual compensation package, which saw Whitbread lose £15.8m.

Whitbread shares also remain roughly 31 percent below their value when she took office. By late Tuesday morning, they were 0.34 percent higher at 26.20 pounds.