Whitbread’s profit rises above 2019 levels as Premier Inn owner’s customers return to hotels
- Whitbread made £233.9 million profit for the six months ended 1 September
- The food and drink sales of the catering company have not fully recovered
- Apart from Premier Inn, the company owns the Beefeater and Brewers Fayre . chains
Whitbread’s profits have risen above pre-pandemic levels again, thanks to easing coronavirus restrictions that have led to a resurgence in stays at Premier Inn hotels.
The hospitality business made £233.9 million in statutory profit in the six months ending September 1, compared to £172.2 million in the same period three years ago and a loss of £37.8 million last year.
Sales in the Premier Inn division in the UK outperformed the broader medium and low-cost accommodation market, doubling to £1.3bn, as the sector benefited from a lack of lockdown rules and foreign tourists returning in droves.
Earnings: Whitbread made £233.9 million in statutory profit for the six months ended September 1, compared to £172.2 million in the same period three years earlier
Growth was driven not only by a pick-up in leisure and business travel demand, but also by an increase in new locations and average room rates, the latter rising 40 percent year-over-year.
This strong demand continued into the third quarter, with hotel revenues up more than a third from 2019, although the company’s food and beverage sales have not fully recovered.
Whitbread predicts restaurant sales in the current fiscal year will not exceed pre-Covid numbers, despite launching a range of initiatives to attract customers, including expanding drink offerings and upgrading the gardens.
The trade update comes at a time of significant uncertainty in the hospitality industry, which is heavily impacted by rising utility bills and squeezed consumer incomes.
The FTSE 100 company, which also owns restaurant chains Beefeater and Brewers Fayre, warned that inflationary pressures and the traditional decline in seasonal hotel demand would weigh on margins in the near term.
Higher prices for labour, utilities and food and drink, as well as IT and marketing investments, are expected to add an additional £60 million cost this year.
Resurgence: Hotel sales growth was driven not only by the pick-up in leisure and business travel demand, but also by an increase in new locations and average room rates
Still, the strong result has allowed the company to announce £49m in dividend payments after failing to pay an interim dividend last year when much of the world was still under severe Covid-19 restrictions.
Looking further ahead, the company expects to open 1,500-2,000 rooms in the UK and 2,000-2,500 rooms in Germany by early March.
Whitbread chief executive Allison Brittain said: “Despite macroeconomic uncertainties, our current trading performance is strong and our business has proven its resilience in past downturns.
“With a robust balance sheet and significant growth potential in both the UK and Germany, we remain confident in the full-year outlook and our ability to deliver long-term value for all our stakeholders.”
The British will 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 and his tenure was marked by controversy over the sale of Newcastle United to Saudi Arabia’s sovereign wealth fund, the Public Investment Fund.
Just before Brittain was announced as the next Premier League chairman, she faced a major shareholder revolt over her £2.16 million annual fee package, after which Whitbread posted a £15.8 million loss.
Whitbread stocks also remain about 31 percent below their value when they took over. Late Tuesday morning they were up 0.34 percent at £26.20.