Whitbread is the owner of Premier Inn, the UK’s biggest hotel brand.
British hotel and restaurant company Whitbread has reported “very strong trading ahead of expectations” in the first quarter of its new financial year. UK food and beverage sales were down 4.3% on pre-covid levels but up 585.3% year-on-year.
According to Whitbread, the group’s UK hotels continue to perform well ahead of pre-COVID levels
: total UK accommodation sales were 235.6% ahead year-on-year, 31 % ahead vs. financial year 2020
. UK food and beverage sales were even 585.3% higher than in the financial year 2022
(4.3% behind vs. FY20). “Given a tight labour market
and our focus on maintaining our market leading position, we plan to invest additional costs of £20m to £30m in labour, refurbishments and IT in the current financial year. However, our high levels of occupancy and continued strong sales performance mean we remain confident in our continued margin recovery in the UK,” the company comments.
Strong recovery in the German hotel market
Since the lifting of restrictions, the German hotel market
has recovered more strongly than expected
and Premier Inn occupancy levels were 64.7% in last four weeks of the quarter. The open estate now stands at 40 hotels.
Alison Brittain, CEO of Whitbread
states: “The strength of Premier Inn’s recovery in the UK continues to be ahead of expectations with a particularly strong Q1 performance
that is well ahead of pre-pandemic levels
and we continue to significantly outperform the market. This outperformance is driven by a number of factors, including our commercial and operational focus as well as the strength of our brand and operating model, our direct distribution, national coverage and accelerated independent supply contraction.
, our open hotel estate now stands at 40 hotels
, with a further 38 hotels in the pipeline
. The quality and prime location of our hotels are proving highly attractive and are driving high customer scores. The trading performance of our more mature hotels in the two months post the lifting of COVID restrictions only reinforces our positive view of the significant opportunity in Germany. This impressive Q1 performance together with improved visibility into Q2, gives us increased confidence in delivering a strong first half
and remaining ahead of the market for the rest of the year.”
Optimistic outlook for the first half
“Premier Inn UK has traded strongly during the first three months of the financial year 2023 and based on improved visibility of the second quarter, where we are 40% booked, we are increasingly confident of delivering a strong first half performance,” the investors’ report continues. “Whilst the short-lead booking cycle for the majority of our customers
means that our view of the second half is not yet fully formed
, based on our performance to-date and a number of lead indicators, we are confident of remaining ahead of the market for the rest of the financial year. This strong sales performance coupled with the continued decline of the independent hotel sector means that we remain positive about our continued margin recovery in the UK in the financial year 2023.”
“However, labour supply remains tight
across the hospitality sector and assuming that consumer demand and occupancy remain strong, we expect some additional costs due to targeted pay increases
. We are also taking the opportunity to bring forward our investment in refurbishments and maintenance projects
as well as accelerate some additional IT spend
that will underpin our market leading position and drive future earnings. Taken together, these factors are expected to increase total costs by £20m - £30m in the financial year 2023.
Rollout of new menus und marketing initiatives
The company states: “UK total food and beverage sales
have recovered well throughout FY22 and into FY23 and are approaching pre-COVID levels
(FY20). We anticipate that the rollout of new menus, combined with targeted marketing initiatives, will help drive an improvement in sales as we move through the year.
In Germany, trading over the last two months post the lifting of Government restrictions has been ahead of our expectations. Our occupancy levels have increased, particularly across our more mature hotels which are trading ahead of the market. Whilst we have only traded during a restriction free period for a number of weeks, we are optimistic that the full year outlook in Germany is improving and there is no change in our view of the medium and long-term value creation opportunity for Premier Inn in Germany.”