Wednesday 24 July 2019

Premier Inn owner Whitbread sees sales drop as Brexit woes bite

The group said like-for-like UK accommodation sales dropped 4.6% in its first quarter.

Premier Inn owner Whitbread revealed a sharp drop in UK sales (PA)
Premier Inn owner Whitbread revealed a sharp drop in UK sales (PA)

By Holly Williams, Press Association Deputy City Editor

Premier Inn owner Whitbread has revealed a sharp drop in UK sales as Brexit uncertainty continues to take its toll on business travel.

The group said like-for-like UK accommodation sales dropped 4.6% in its first quarter, while revenue per room – a key measure for hotel firms – tumbled 6.3%.

The firm – which last year sold its Costa Coffee business to Coca-Cola in a £3.9 billion deal – said UK like-for-like food and drinks sales also fell, down 2.1% in the quarter.

It warned that hotel demand in the regional business market – where most Premier Inns are located – was being knocked in particular by the Brexit uncertainty, while it is also seeing rising costs.

Whilst we are cautious about short-term market conditions, we are confident in our plans given the significant growth opportunities in the UK and internationally Alison Brittain, chief executive of Whitbread

Its first quarter update showed like-for-like sales in the London market dropped 4.2%, but the regional business saw a 4.7% decline.

It said while forward bookings look positive, “caution remains on the UK hotel environment given ongoing political uncertainty and the impact this has on business confidence”.

Shares in the group dropped more than 1% after the gloomy update.

Alison Brittain, chief executive of Whitbread, said: “We have delivered a resilient performance in the first quarter despite more challenging market conditions and we continue to make good progress with our efficiency programme, which is helping to partially offset another year of high industry cost inflation.”

She added: “Whilst we are cautious about short-term market conditions, we are confident in our plans given the significant growth opportunities in the UK and internationally.”

Whitbread, which has more than 78,000 rooms across its Premier Inn hotels, is instead looking to expand in the growing German market, where it is set to add more than 2,000 rooms this year thanks largely to its takeover of Foremost.

It is also adding up to 3,500 rooms in the UK, with 282 added in the first quarter.

Richard Hunter, head of markets at interactive investor, said the update was “light on cheer”.

He said: “Without the diversification and success that Costa brought, the company is now mostly hostage to the cyclical hotels market.

“With business confidence under threat from an uncertain economic outlook in the UK, accommodation sales have been weak, particularly in the regions where Premier Inn has a significant presence.

“Meanwhile, cost inflation generally is a worry and the food and beverage part of the business is also under pressure.”

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