TOP NEWS: Whitbread recovery ahead of expectations in first half

(Alliance News) - Whitbread PLC on Tuesday said its Premier Inn chain's recovery in the first ...

Alliance News 26 October, 2021 | 9:30AM
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(Alliance News) - Whitbread PLC on Tuesday said its Premier Inn chain's recovery in the first half was ahead of expectations as lockdown restrictions eased in the UK and Germany.

For the six months to August 26, revenue more than doubled to GBP661.6 million from GBP250.8 million last year. Pretax loss was nearly eliminated, narrowing to GBP19.3 million from GBP724.7 million, benefiting from GBP141.6 million of Covid-19 related government support schemes in the UK and Germany.

The company noted that it stopped participating in the government coronavirus job retention scheme in May, when the restrictions on domestic travel were lifted.

Dunstable, Bedfordshire-based Whitbread declared no interim dividend, in line with a year before. The company explained that dividend payments are not permitted under its bank covenant waiver conditions until March 2023, but it said it intends to return to paying a dividend at the first available point that it is permitted to do so.

Looking ahead, the hotel and restaurant operator said its sales recovery is ahead of expectations, and its UK like-for-like revenue per available room run rate has "potential" to make a full recovery next year.

Further, Whitbread said leisure demand remains strong in the UK into heading into the second half, while business demand was improving.

For the seven weeks to October 14, Whitbread said total UK sales were up 1.3% year-on-year, with total accommodation sales up 7.9% and occupancy at 81%. Germany total sales, meanwhile, were four times ahead of the same period in 2020, with accommodation sales tripled and occupancy at 63%.

The company warned, however, that it is about to enter the quieter, lower demand months of the year. The level of bookings into Whitbread's fourth quarter is always low, it said, making it difficult to predict revenue growth for this quarter.

"Whitbread traded significantly ahead of the market in the UK during the first half of the year, with our regional hotels trading ahead of pre-Covid-19 levels in the last six weeks of the half. This strong performance has continued into the second half, with sustained high levels of leisure demand and resilient demand from tradespeople. Whilst some uncertainty remains over the speed and timing of the market recovery for office-based and international demand and the evolution of the pandemic in the winter months, we believe that UK like-for-like RevPAR run rates have the potential to reach full recovery in at some point during 2022," said Chief Executive Officer Alison Brittain.

Whitbread shares were trading 3.1% higher in London on Tuesday morning at 3,252.00 pence each. The wider FTSE 100 was up 0.7%.

"It's taken a while for Premier Inn-owner Whitbread to regain momentum, but with trading ahead of pre-pandemic levels over the summer holidays and well ahead of the wider market the group looks well placed going into 2022," commented Nicholas Hyett, an equity analyst at Hargreaves Lansdown.

However, he warned: "Labour shortages have the potential to push up costs, while the course of recovery is unpredictable – with new restrictions a very real possibility."

By Evelina Grecenko; evelinagrecenko@alliancenews.com

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
Whitbread PLC 2,976.00 -

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