Whitbread revenues down as Premier Inn owner warns of harsh winter for sector

·2-min read

Whitbread has warned that the UK’s most recent lockdown measures will see “a further decline” in hotel occupancy in the coming months.

The Premier Inn owner, which also runs a number of pubs and restaurants, also said in its first half interim results that it plans to continue to manage its cash position carefully as a result.

The FTSE 100 company last year completed a £3.9 billion sale of its Costa Coffee arm to Coca-Cola and raised £1 billion in a rights issue in June.

It reported an £196m net cash position on Tuesday at the end of the first half.

Revenues for the six months to September were down 76.6% on the same period in 2019, from £1.08bn to £250.8 million.

Whitbread chief executive Alison Brittain commented on the results on Tuesday morning (Whitbread / Alison Brittain)
Whitbread chief executive Alison Brittain commented on the results on Tuesday morning (Whitbread / Alison Brittain)

Whitbread had reopened 98% of its 530 hotels in Britain by the end of August, and all its restaurants.

Demand for rooms in London remained down over summer as the pandemic hit tourism, but overall UK occupancy increased from 51% in August to 58% in September.

However, market performance has slowed since the “Tiering” system was imposed in October.

The company stated: "Given the fast-changing nature of the COVID-19 environment in which we are operating, and increased levels of local and regional lockdowns, near- term visibility remains limited.”

Chief executive Alison Brittain said: “As we have gone into the Tiering system I would expect that we see a further decline as we go into November and December."

But Brittain highlighted the company’s advantageous position in that many Premier Inn hotels “can stay open at very low levels of occupancy” because the company owns a “large proportion of our hotels”.

She said Whitbread is planning for long term growth, and revealed the company had signed a deal for 15 new hotels in Germany, where it is looking to grow in the budget branded sector.

She confirmed that up to 6,000 jobs are at risk in the company, with redundancy process decisions to be made by mid-November. This represents around 18% of Whitbread's workforce.

The shares rose 11p, or around 0.5%, to 2,255p on Tuesday morning.

Analysts at Morgan Stanley did not alter forecasts. “The statement details in some length why Whitbread believes it has the correct strategy and is well-positioned, and it is encouraging to see current trading back this up with September hotel occupancy of 58%, well above August’s 51% and the market's 53% (excluding Premier Inn), and this also suggests it is not burning cash,” they noted.

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