Premier Inn owner Whitbread hit by 'acute political uncertainty'

Premier Inn owner Whitbread has warned that demand for its hotel rooms is being hit by an "acute period of political and economic uncertainty in the UK".

The group said it saw a decline in business and leisure confidence over the fourth quarter of its financial year to the end of February, with the weakness increasing into March and April.

Chief executive Alison Brittain said there were "ongoing signs of market weakness across both business and leisure especially in the UK regions".

Shares fell 6% by the close of trading.

The warning covers a period when the UK has faced intense uncertainty over the terms of its departure from the EU - though Brexit was not specifically mentioned by the company as a factor.

Whitbread said Premier Inn - which has more than 800 UK hotels - was worse hit than rivals because weakness was most felt outside London where it has a big exposure, rather than in the capital where it has a smaller presence.

It made the warning as it reported full-year results showing a 0.6% decline in like-for-like accommodation sales, largely blamed on a 3.2% slump in the fourth quarter.

The group's bottom line performance was skewed by its £3.9bn sale of Costa Coffee to Coca-Cola, which completed in January, but stripping out one-off items, pre-tax profits rose 1.2% to £438m.

Ms Brittain said: "In the fourth quarter, we saw a decline in business and leisure confidence, leading to weaker domestic hotel demand.

"This weakness has increased into March and April particularly in the regional business market, coinciding with an acute period of political and economic uncertainty in the UK."

The Whitbread boss said that at this stage it was "too early to know how business confidence and its impact on the market will evolve".

But she said the company's strong balance sheet and ongoing efficiency programme would be likely to help it remain "more resilient in a weaker market than many of our competitors".

Whitbread warned that the coming financial year would see weak growth in revenue per room amid a "subdued" UK market while taking a £12m loss in Germany, where it is looking to expand its presence.

It had previously warned in January that profit would not grow in 2019-20.

Russ Mould, investment director at AJ Bell, said: "Brexit uncertainty is clearly affecting demand, particularly from business travellers, yet that could only be a temporary phenomenon.

"Whitbread's model of affordable rooms in a broad spread of locations should serve it well when consumer and business confidence starts to improve."