The owner of Premier Inn has said profits have surpassed pre-pandemic levels as the UK’s biggest budget hotel chain benefits from a surge in demand from cost-conscious tourists.
Whitbread, which runs nearly 900 hotels in the UK and Germany as well as restaurant chains including Beefeater, Bar & Block and Brewers Fayre, said it would benefit from the scale of its business as smaller operators succumb to a combination of labor shortages and cost inflation. .
The company beat analysts’ expectations, reporting £375m in pre-tax profit for the year to March 3, up from £58m in 2022 and up 34% on the year ending in February 2020.
Investors applauded the results, which were driven by a 544% rise in adjusted annual earnings for Premier Inn UK, sending Whitbread’s share price up 5% and making the company the one to watch. more rose on the FTSE 100.
“The recovery in market demand coupled with a structural decline in the independent sector has provided a useful backdrop,” said Whitbread chief executive Dominic Paul, who replaced Alison Brittain last month. “We believe that the operational challenges created by labor shortages and cost inflation may put further pressure on the independent sector, creating structural growth opportunities for Premier Inns across the UK. The budget-branded hotel sector has consistently delivered attractive room growth rates and has also proven resilient during economic downturns as guests opt for lower-cost alternatives.”
Whitbread, which also announced a £300m worth of share buyback and increased its final dividend, said demand remains strong; UK sales were up 17% year-on-year in the first seven weeks of the company’s new financial year.
Premier Inn UK reported a 50% increase in total revenue to £2.5bn, driven by higher occupancy, business expansion and a 54% increase in average revenue per room, from £38.69 to £59, 45 year after year.
In January, Whitbread said it intended to raise room prices to help offset £60m cost increases due to skyrocketing inflation in its last fiscal year. Total costs increased from £1.24 billion to £1.6 billion year on year.
The company said higher occupancy levels helped fuel a 40% year-over-year increase in food and beverage sales, but spending remains 4% below pre-pandemic levels.
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“Despite an increase in per capita spend, customer volumes at our branded restaurants, which focus on final market value, remained below pre-pandemic levels,” the company said.
“The post-pandemic return to economic normalcy with the lifting of travel restrictions and the release of pent-up demand boosted demand for Whitbread hotel rooms and provided a boost to their bottom line,” said Victoria Scholar, director of Whitbread. Interactive Investor investments. . “The cost-of-living crisis and shrinking household budgets have also driven more customers towards their low-priced, affordable offer.”